CHAPTER 6 CASH TO ACCRUAL ACCOUNTING/ SINGLE ENTRY SYSTEM PROBLEMS 6-1.
(BRAIN COMPANY) Capital, end Assets Less liabilities Capital, beginning Assets Less liabilities Increase in capital Additional investments Withdrawals Profit
P609,000 138,000 P485,000 94,000
P471,000
391,000 P 80,000 (70,000) 120,000 P130,000
6-2. a. b. c. d. 6-3.
38,900 + 13,480 – 48,200 = 4,180 1,160,000 + 980,000 – 700,000 = 1,440,000 collections; 1,440,000 + 1,660,000 + 30,000 – 1,200,000 = 1,930,000 210,000 + 80,000 – 40,000 – 206,000 = 44,000 440,000 – 80,000 + 100,000 + 54,000 – 30,000 = 484,000
(GRAIN COMPANY) Requirement 1 Capital, end Assets Less liabilities (including P8,000 unrecorded purchase) Capital, beginning Assets Less liabilities Increase in capital Withdrawals Profit
P352,800 123,500 P293,200 117,800
P229,300
175,400 P 53,900 20,000 P 73,900
Requirement 2 Grain Company Statement of Comprehensive Income For Year Ended December 31, 2014 Sales (net of P21,000 returns) – Schedule 1 Cost of goods sold Merchandise inventory, January 1 Purchases (net of P13,000 returns) – Schedule 2 Merchandise inventory, December 31 Gross profit on sales Other income Operating expenses – Schedule 3 Operating income Interest expense Profit Schedule 1 – Sales Receipts from customers Accounts receivable, beginning
P725,000 P 97,200 551,200 (105,800)
(
P697,500 ( 59,400) 29
542,600 P182,400 8,000 (114,000) P 76,400 2,500) P 73,900
Chapter 6 – Cash to Accrual/ Single Entry System Accounts receivable, ending Accounts written of Sales returns Gross sales
76,100 10,800 21,000 P746,000
Schedule 2 – Purchases Payments to trade creditors Accounts payable, beginning Accounts payable, ending Unrecorded purchases Purchase returns Gross purchases
P536,600 ( 63,300) 69,900 8,000 13,000 P564,200
Schedule 3 – Operating expenses Bad debts expense Depreciation expense (85,000 + 20,000 – 95,500) Other operating expenses: Payments for operating expenses Prepaid expenses, beginning Prepaid expenses, ending Accrued expenses, beginning Accrued expenses, ending Total operating expenses 6-4.
P 10,800 9,500 P94,100 6,000 ( 7,500) ( 4,500) 5,600 P 114,000
(TRAIN FASTFOOD) Train Fastfood Statement of Comprehensive Income For Six Months Ended December 31, 2014 P2,100,000
Sales Cost of sales: Purchases Less Inventory, end Gross profit Depreciation expense Other operating expenses Net profit
P1,850,000 450,000
1,400,000 P 700,000 ( 24,000) ( 556,000) P 120,000
Train Fastfood Statement of Financial Position December 31, 2014 Assets Liabilities and Capital Current Assets Current Liabilities Cash P 24,000 Accounts payable Accounts receivable 200,000 Bank loan Inventory 450,000 Total current liabilities Total current Assets P674,000 Non-current Assets Tom Cruz, Capital Equipment P400,000 Initial investment P500,000 Less accum. Depr 24,000 376,000 Add profit 120,000 Total assets P1,050,000 Total liabilities and capital Computation of cash balance:
30
P230,000 200,000 P430,000
620,000 P1,050,000
Chapter 6 – Cash to Accrual/ Single Entry System Cash receipts from Initial investment by owner Collections from sales Bank loan Less cash payments for Purchases Bank loan Equipment Cash operating expenses Cash balance, end
6.5.
P 300,000 1,900,000 500,000 P1,620,000 300,000 200,000 556,000
P2,700,000
2,676,000 P 24,000
(HORN CORPORATION) (Cash Basis) Horn Corporation Income Statement For the Years Ended December 31, 2014 and 2013
Revenues Expenses Profit 2014 2013 2014 2013
6-6.
2014 P445,000 (255,000) P190,000
2013 P485,000 (277,000) P208,000
sales = 355,000 + 90,000 = 445,000 sales = 295,000 + 160,000 + 30,000 = 485,000 expenses = 40,000 + 160,000 + 55,000 = 255,000 expenses = 185,000 + 67,000 + 25,000 = 277,000
(BORN AND CORN) Cash Basis P750,000 ( 892,500) ( 96,000) ( 60,000) ( 84,000 ) P(382,500)
Sales Cost of Sales Salaries Expense Rent Expense Other Operating Expenses Profit 6-7.
2013 P295,000 (225,000) P 70,000
sales = P160,000 + 355,000 = 515,000 sales = 295,000 expenses = 67,000 + 160,000 + 45,000 = 272,000 expenses = 185,000 + 40,000 = 225,000 (Accrual Basis) Horn Corporation Income Statement For the Years Ended December 31, 2014 and 2013
Revenues Expenses Profit 2014 2013 2014 2013
2014 P 515,000 (272,000) P 243,000
(ATTY. D. MACAPANALO) Atty. D Macapanalo
31
Accrual Basis P1,057,500 ( 637,500) ( 126,000) ( 20,000) (104,000) P 170,000
Chapter 6 – Cash to Accrual/ Single Entry System Profit and Loss For the Year Ended December 31, 2014 Professional Fees Expenses Profit
P P
Professional Fees 2014 Collection Fees Receivable, January 1 Fees Receivable, December 31 Unearned Fees, January 1 Unearned Fees, December 31 Professional Fees, Accrual Basis
P1,250,000 ( 52,000) 47,000 26,200 ( 29,000) P 514,900
Expenses 2014 Payments Accrued expenses, January 1 Accrued expenses, December 31 Prepaid expenses, January 1 Prepaid expenses, December 31 Expenses, accrual basis 6-8.
1,242,200 727,300 514,900
P 722,400 ( 18,000) 21,500 6,400 ( 5,000) P 727,300
(JACK AND JILL COMPANY) Jack and Jill Company Statement of Comprehensive Income For the Year Ended December 31, 2014 Sales Cost of sales Gross Profit Other operating income Gain on sale of automobile Total income Operating expenses Depreciation Others Total expenses Profit before interest Interest expense Profit
P
Jack and Jill Company Statement of Changes in Partners’ Equity For the Year Ended December 31, 2014
P
7,440,000 4,670,000 2,770,000
P
20,000 2,790,000
P
298,667 1,003,600 1,302,667 1,487,733 104,000 1,383,733
Jack P1,750,000 (500,000) 691,867 P1,941,867
Equity, January 1 Withdrawals Share in profit Equity, December 31 Jack and Jill Company Statement of Financial Position December 31, 2014 Assets
32
Jill P1,815,000 (250,000) 691,866 P2,256,866
Chapter 6 – Cash to Accrual/ Single Entry System Current Assets Cash Accounts receivable Allowance for bad debts (60,000 – 17,500) Receivable from employees Deposit on merchandise purchases Merchandise inventory Prepaid insurance Total current assets Non-current Assets Property, plant and equipment Furniture and fixtures Accumulated depreciation – furniture and fixtures Automobiles Accumulated depreciation - automobiles Total property, plant and equipment Total Assets Liabilities Current Liabilities Accounts Payable Accrued Expenses Bank loan, including accrued interest Total current liabilities Equity Jack Jill Total partners’ equity Total liabilities and partners’ equity
P
P
P
P P
P
P P
P
736,000 1,782,500 (42,500) 30,000 75,000 3,750,000 8,000 6,339,000
220,000 (87,000) 940,000 (421,667) 651,333 6,990,333
1,875,000 16,600 900,000 2,791,600 1,941,867 2,256,866 4,198,733 6,990,333
Sales Collections in 2014 (6,500,000 -60,000) Accounts receivable, end (1,800,000 – 17,500) Write of Accounts receivable, January 1, 2014 Sales
P6,440,000 1,782,500 17,500 ( 800,000) P7,440,000
Purchases Payments to merchandise creditors Accounts payable, end Returned merchandise (to be applied to future purchases) Accounts payable, beginning Net purchases
P4,500,000 1,875,000 ( 75,000) (1,380,000) P4,920,000
Cost of sales Inventory, beginning Net purchases Inventory, end Cost of sales
P3,500,000 4,920,000 ( 3,750,000) P4,670,000
Depreciation expense On old furniture and fixtures (P220,000/10) On old automobiles (P780,000 – 280,000)/ 3 On new automobile 440,000 / 3 x 9/12
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P 22,000 166,667 110,000
Chapter 6 – Cash to Accrual/ Single Entry System Depreciation expense
P 298,667
Expenses other than depreciation Payments for selling and general expenses Prepaid insurance, beginning Prepaid insurance, end Accrued expenses, beginning Accrued expenses, end Expenses other than depreciation
P1,000,000 15,000 ( 8,000) ( 20,000) 16,600 P1,003,600
Interest Expense On bank loan obtained on 01/02/14 and paid 05/02/14 Accrued on bank loan obtained on 05/01/14 Total interest expense
P P
32,000 72,000 104,000
MULTIPLE CHOICE QUESTIONS
Theory MC1 D MC2 A
MC3 MC4
Problems MC11 D MC12 MC13 MC14 MC15 MC16 MC17 MC18 MC19 MC20 MC21 MC22 MC23 MC24
A D B A D D A A B D B C C
MC25
A
MC26 MC27
C B
MC28 MC30 MC31
C C B
MC32 MC33
B C
C A
MC5 MC6
D B
MC7 MC8
C A
MC9 MC10
A C
210,000 – 50,000 = 160,000 capital, end; 260,000 – 60,000 = 200,000 beg cap 160,000 – 200,000 = 40,000 dec in capital + 50,000 – 12,000 = 78,000 net loss. (80,000–4,000) + (120,000– 6,000+ 40,000 – 30,000) = 200,000 800,000 + 320,000 + 124,000 – 240,000 – 96,000 = 908,000 189,000 + 12,000 – 8,000 + 36,000 + 7,000 – 10,500 = 225,500 30,000 + 3,000 – 21,000 = 12,000 + 60,000 – 58,000 = 14,000 600,000 + 400,000 – 200,000 + 300,000 – 150,000 = 950,000 794,000 + 51,000 – 45,000 = 800,000 715,000 – 144,000 – 96,000 – 7,000 = 468,000 + 60,000 – 33,000 = 495,000 800,000 – (144,000/45%) = 480,000 890,000 – 270,000 – 600,000 – 60,000 + 130,000 = 90,000 310,000 + 85,000 + 4,000 + 66,000 = 465,000 280,000 + 67,000 + 5,000 = 352,000 352,000 – 5,000 – 21,700 = 325,300 45,000 + 3,500 + (200,000 x 2%) + (4,000/20% = 20,000 x 5%) = 53,500 45,000 + 280,000 + 140,000 – 110,000 = 355,000 + 10,000 + 50,000 – 60,000 = 355,000 800,000 – 96,000 + 124,000 + 320,000 – 908,000 = 240,000 2,000,000 + 960,000 + 100,000 + 800,000 + 120,000 + 320,000 – 400,000 – 1,600,000 + 1,200,000 + 2,000,000 = 5,500,000 7.5M – 5.8M = 1.7M – 1.5M + .28M = 480,000 320,000 – 650,000 – 400,000 = 730,000 Dr changes = 142,500+202,500+630,000+172,500 = 1,147,500 Cr changes = 30,000+375,000+300,000+45,000 = 750,000 1,147,500 – 750,000 = 397,500 + 82,500 = 480,000 400,000+3,000,000-485,000=2,915,000 + 200,000 = 3,115,000 60,000 – 5,000 + 7,500 +3,000 – 4,000 = 61,500
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