The Gloria Dimen Co.

presented the following information pertaing to accounts Listed below is information pertaining to activities of the Bienvenida Alvaro
that will need adjustments for its Nov.30, 2014 year-end financial statements. Company that required adjustments for the May 31, 2014 year-end financial
a. On Oct. 1, 2014, Gloria Dimen Co. paid P10,800 for 6-month’s insurance statements.
premiums. a. Bienvenida Alvaro Co. entered into a lease space agreement with
b. The balance in the ledger account Office Supplies amounted to P32,000. Evangelista Corp. on Nov. 1, 2013 for rental of office space for the
A count of the office supplies on Noc. 30, 2014 tatoled P12,800. next 24 mos. For P156,000. A second lease was signed on Feb. 1,
c. Gloria Dimen Co. received P22,800 on Nov. 1, 2014 from a customer for 2014 for storage space for 6 mos., with P56,000 paid in advance.
service to be rendered during the months of November, December, b. On June 1, 2013, the Office Supplies account had a debit balance of
January, and February.
P42,600. Office Supplies in the amount of P165,200 were acquired
d. Gloria Dimen acquired Office Equipment costing P352,800 on Apr. 1,
during the year. A physical count of office supplies on May 31, 2014
2014. The equipment is expected to last 5 years after which it will be
worthless.
totaled P31,700.
e. Assume that Nov. 30, 2014 is a Friday and that Gloria Dimen pays its c. Bienvenida Alvaro Company sells magazines by subscription for P15
employees a total of P87,500 on Saturday. per copy. During the year, P47,200 two-year subscription were sold.
As at June 1, 2013, the Unearned Magazine Revenues account had a
balance of P315,000. At year-end, it is determined that the liability
Prepare the adjusting entry for Christine Gamba Company under each of the to provide subscribers’ future magazines amounted to P613,000.
following for the year ending December 31, 2014. d. On Dec. 1, 2013, Bienvenida Alvaro Company acquired a new
a. Paid P24,000 for a 1-year fire insurance policy to commence on computer for P131,400. It is anticipated that the computer will be
Sept. 1. The amount of premium was debited to Prepaid Insurance. used for 4 years with no salvage value.
b. Borrowed P100,000 by issuing a 1-year note with 7% annual interest e. Bienvenida Alvaro Company pays its employees every 8th and 22nd
to Century Savings Bank on Oct. 1, 2014. day of the month. There are five workdays within a workweek. The
c. Paid P160,000 cash to purchase a delivery ban (surplus) on Jan. 1. last payday was on May 22, 2014 (assume it’s a Tuesday). By
The van was expected to have a 3-year life and a P10,000 salvage month-end, there are already seven days of accrued salaries. The
value. Depreciation is computed on a straight-line basis. pay scale at Bienvenida Alvaro is as follows:
d. Received an P18,000 cash advance for a contract to provide services Employee Category No. in Category Date Rate per Employee
in the future. The contract required a 1-year commitment, starting Executives 3 1,000
Apr. 1. Managers 6 750
e. Purchased P6,400 of supplies on account. At year’s end, P750 of Staff 36 400
supplies remained on hand. f. Bienvenida Alvaro Company borrowed P1,000,000 from the Dayrit
f. Invested P90,000 cash in a certificate of deposit that paid 4% annual Development Bank on Mar. 1, 2014 and issued a 24% one-year note
interest. The certificate was acquired on May 1 and carried a 1-year payable.
term of maturity.
g. Paid P78,000 cash in advance on Sept. 1 for a 1-year lease on office Florenda Quino Forwarders borrowed P600,000 from the bank on Sept. 1, 2014.
space. The note carried an 8% annual interest and was set to mature on Feb. 28, 2015.
Interest and principal were paid in cash on the maturity date.
Required:
Trade and Cash Discounts Calculations
1. What was the amount of interest expense in 2014 paid in cash on Feb
On June 1, 2014, Marites De Chaves Forest Products sold merchandise with a 28, 2015?
P120,000 list price. 2. What was the amount of interest expense recognized on the 2014
income statement?
Trade Discount Credit Terms Date Paid
3. What was the amount of total liabilities shown on the 2014 balance
a. 30% 2/10, n/30 June 8 sheet?
b. 40% 1/10, n/30 June 15 4. What was the total amount of cash that was paid to the bank on Feb.
c. - 2/10, n/30 June 11 28, 2015 for principal and interest?
d. 20% 1/15, n/30 June 14 5. What was the amount of interest expense shown on the 2015 income
e. 40% n/30 June 28 statement?
Required:
For each of the sales terms, determine the following: Trade and Cash Discounts Calculations
1. the amount recorded as a sale
2. the amount of cash received On May 15, 2014, the Guzon Book Distribution acquired for resale books on
account with a list price of P108,000. Butuan Publishing, the supplier, allowed a
Cash Discount and Remittance Calculations 15% trade discount as well as credit terms of 2/10, n/30. Guzon paid the invoice in
full on May 20, 2014.
For each of the following Mary Paz Abad Company purchases, assume that credit
terms are 2/10, n/30 and that any credit memorandum was issued and known Required:
before Mary Paz Abad Company made the payments.
Prepare the journal entries for Guzon Book Distributors.
Purchases Shipping Terms Prepaid Freight Credit Memo
(by seller)
a. P 12,000 FOB shipping point P 1,000 P 3,000
b. 24,000 FOB destination 2,400 2,000
c. 28,000 FOB shipping point 4,000
d. 40,000 FOB shipping point 3,000

Required:
1. Determine the cash discount available.
2. Determine the cash remitted if the payment is made within the discount
period.