Review Problems With Answers

Review Problems

A. Determining the balance of the account using T-Accounts.

The T-Account below is for the account’s accrued expenses.
Accrued Expenses
March 1, 20R4 P 150,630 July 31, 20R4 P 54,760
August 15, 20R4 P 95,170 December 31, 20R4 P 60,000
The balance of accrued expenses on January 1, 20R4 is P 245,675. What is the

balance of accrued expenses as of December 31, 20R4?
Answers:
Accrued Expenses
Debit Credit
January 1, 20R4 P 245,675
March 1, 20R4 P 150,630
July 31, 20R4 P 54,760
August 15, 20R4 P 95,170
December 31, 20R4 P 60,000
Subtotal of each column P 245,800 P 360,435
Debit-Credit column P 114,635
B. Expenses
The Happy Toddlers (THT) is a preparatory school for children three to five years old.
There are 10 teachers employed by (THT), 5 senior teachers with a salary of P 30,000
a month, and 5 junior teachers at P 18,000 a month. There are also 4 administrators
with an average monthly salary of P 35,000. Annual depreciation for furniture and
fixtures amounted to P 100,000. Utility expenses for the year total P 200,000. Revenue
is P 7,546,000. SY is from June-December.
1. List down the expenses of the Happy Toddlers following the nature of the expense
approach.
2. Prepare a single-step SCI (SY December 31) For the Happy Toddlers. Use the
revenue information
Answers:
1.
Senior teachers (5 x P 30,000) x 7 P 1,050,000
Junior teachers (5 x P 18,000) x 7 P 630,000
Administrators (4 x P 35,000) x 7 P 980,000
Salaries expense P 2,660,000
Depreciation expense P 100,000
Utilities expense P 200,000
2. Happy Toddlers
Statement of Comprehensive Income
December 31
Tuition fee revenue P 7,546,000
Less; Expenses
Salaries P 2,660,000
Depreciation Expense P 100,000
Utilities Expense P 200,000
Total expenses P 2,960,000
Net Income P 4,586,000
C. Partnership
The following are taken from the accounting records of Papasa Co.
Partner’s December 31, 20X3 December 31, 20X4
Aida, Capital P 54, 900 P 64,900
Lorna, Capital P 53, 200 P 63,900
Fe, Capital P 44,890 P 50,890
The partnership generated a net income of P 51,600 in 20X4. In the partnership contract,
Aida, Lorna, and Fe share profit and loss equally. The partnership contract allows each
partner to withdraw p 1,000 monthly. Aida and Lorna each contributed P 5,000 during the
year. Fe did not make any contribution during the year.
1. Prepare the partnership’s Statement of Changes in Equity.
2. Determine if any of the partners violated the partnership contract provision on
drawings.
1.
Papasa Co.
Statement of Changes in Partner’s Equity
For the year ended December 31, 20X4
Aida, Lorna, Fe, Total

Capital Capital Capital
Balance, January 1, 20X4 P54,900 P53,200 P44,890 P152,990
Add: Net Income P17,200 P17,200 P17,200 P51,600
Contribution P5,000 P5,000 ----- P10,000
Less: Drawings (P12,200) (P11,500) (P11,200) (P34,900)
Balance, December 31, 20X4 P64,900 P63,900 P50,890 P179,690
Drawings = Beginning Balance + Net Income + Contribution – Ending Balance

Aida: 54,900 + 17,200 + 5,000 – X = 64,900 – X = P 12,200
Lorna: 53,200 + 17,200 + 5,000 – X = 63,900 – X = P 11,500
Fe: 44,890 + 17,200 + 0 – X = 50,890 – X = P 11,200
2. The partnership contract allows the partner to withdraw P 1,000 monthly, which is
equivalent to P 12,000 annually. Withdrawals made by Lorna (P11,500) and Fe
(P11, 200) during the year were below the P 12,000 threshold. On the other hand,
Aida’s withdrawal of P 12,200 exceeded the partnership contract provision on
drawings by P200.
D. Statement of Cash Flows

The Statement of Comprehensive Income for the year ended December 31, 20H4 of
ABC Company is given below:
Sales revenue P 1,212,500.00

Cost of goods sold P 780,000.00
Operating expenses, excluding depreciation P 70,000.00
Depreciation P 75,000.00
Net Income P 287,500.00
The following were also taken from ABC Company’s comparative balance sheet as of
December 31
20H4 20H3
Accounts receivable P 93,750.00 P 75,000.00
Inventory P 13,750.00 P 8,750.00
Accounts payable P 51,250.00 P 35,000.00
1. Prepare the operating section of the Statement of Cash Flows of ABC company
using the indirect method.
2. Determine the amount of cash collection from ABC’s customers? Assume that all
ABC’s sales are made on credit.
3. Determine how much inventory was purchased by ABC during the year?
4. Determine the amount of cash paid to ABC’s supplier? Assume that all ABC’s
inventory purchase was made on credit.
Answers:
1. Net Income P 287,500.00
Add: Depreciation P 75,000.00
Changes in current assets and current liabilities:
Increase in accounts receivable P (18,750.00)
Increase in inventory P ( 5,000.00)
Increase in accounts payable P 16,250.00
Net Cash Flows provided by operating activities P 355,000.00
2.
Accounts Receivable
Debit Credit
Beginning Balance P 75,000.00
Sales P 1,212,500.00
Collection from customers X=?
Ending Balance P 93,750.00
Cash received from customers: 75,000 + 1,212,500 – 93,750

Cash received from customers: P 1,193,750.00
3. Inventory
Debit Credit
Beginning Balance P 8,750.00
Purchases X=?
Cost of goods sold P 780,000.00
Ending Balance P 13,750.00
Purchases: 13,750 – 8,750 + 780,000

Purchases: P 785,000.00
4. Accounts Payable
Debit Credit
Beginning Balance P 35,000
Purchases P 785,000
Payment to supplier X=?
Ending Balance P 51,250
Payment to Supplier: 35,000 + 785,000 – 51,250

Payment to Supplier: P 768,750.00
Note: This shows that cash flows from operating operations (CFO) may be
computed using the direct and indirect methods are equal.
Cash collected from customers P 1,193,750.00

Less: Payment to Supplier P 768,750.00
Payment for operating expenses P 70,000.00
Cash flows from operations P 355,000.00

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Review Problems

A. Determining the balance of the account using T-Accounts.

The balance of accrued expenses on January 1, 20R4 is P 245,675. What is the

Aida, Lorna, Fe, Total

Drawings = Beginning Balance + Net Income + Contribution – Ending Balance

D. Statement of Cash Flows

Sales revenue P 1,212,500.00

Cash received from customers: 75,000 + 1,212,500 – 93,750

Purchases: 13,750 – 8,750 + 780,000

Payment to Supplier: 35,000 + 785,000 – 51,250

Cash collected from customers P 1,193,750.00

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