Problem 1

For each of the following independent items, make the required calculations:
a. Prepaid insurance beginning P_______
Prepaid insurance, end P13,480
Insurance expense for the period P38,900
Insurance premiums pair during the period P48,200

b. Sales revenue P_______

Cash, beginning P700,000
Cash, end P980,000
Total cash disbursed during the period P1,160,000
All cash receipts were from customers
Accounts receivable, beginning P1,200,000
Accounts receivable, end P1,660,000
Accounts written off during the period P30,000

c. Depreciation expense P_______

Equipment (net), beginning P210,000
Cost of equipment acquired during the year P80,000
Equipment (net), end P206,000
Equipment with an original cost of P60,000 was sold
at a loss of P4,000 during the period for P36,000

d. Collections of rent P_______

Rent collected in advance, beginning P80,000
Rent collected in advance, end P100,000
Rent earned but not yet collected, beginning P54,000
Rent earned but not yet collected, end P30,000
Rent earned during the period P440,000

Problem 2
Atty. D. Macapanalo maintains the accounting records of its law firm on a cash basis. During
2012, Atty. D. Macapanalo collected P1,250,000 from his clients and paid P722,400 in
expenses.
At December 31, 2011 and December 31, 2012, he had fees receivable, unearned fees
revenue, accrued expenses, and prepaid expenses as follows:

Dec. 31, 2011 Dec. 31, 2012

Fees receivable P52,000 P47,000
Unearned fees revenue 26,200 29,000
Accrued expenses 18,000 21,500
Prepaid expenses 6,400 5,000
Required: Prepare the profit or loss section of the statement of comprehensive income for the
year ended December 31, 2012 using the accrual basis.
Problem 3
The Jack and Jill Company is a partnership that has not maintained adequate accounting
records because it has been unable to employ a competent bookkeeper. The company sells
hardware items to the retail trade, and also sells wholesale to builders and contractors. The
company has asked its CPA to prepare the financial statements for the year ended December
31, 2012.
Working papers provide the following post-closing trial balance at December 31, 2011.
Jack and Jill Company
Post-closing Trial Balance
December 31, 2011
Debit Credit
Cash P1,000,000
Accounts Receivable 800,000
Allowance for Bad Debts P60,000
Merchandise Inventory 3,500,000
Prepaid insurance 15,000
Automobiles 780,000
Acc. Depreciation-Automobiles 425,000
Furniture and Fixtures 220,000
Acc. Depreciation-F&F 65,000
Accounts payable 1,380,000
Bank loan payable 800,000
Accrued expenses 20,000
Jack, Capital 1,750,000
Jill Capital 1,815,000
Total 6,315,000 6,315,000

The following information was collected at December 31, 2012:

a. An analysis of cash transactions derived from the company's bank statements and
checkbook stubs, is as follows:

Deposits:
Cash receipts from customers (P4,000,000 of this amount
represents collections on receivables, including
redeposited protested checks totaling P60,000) P6,500,000
Bank loan, 1/2/12 (12% due May 2, 2012, P800,000 face
value) 768,000
Bank loan, 5/1/12 (12% due January 2, 2013, P900,000
face value) 828,000
Sale of old automobile 20,000
Total deposits P8,116,000
 Disbursements:
Payments to merchandise creditors P4,500,000
Selling and general expenses 1,000,000
Bank loan, 01/02/12 800,000
Bank loan, 05/02/ 12 800,000
Payment for new automobile 440,000
Protested checks 90,000
Jack, withdrawals 500,000
Jill, withdrawals 250,000
Total disbursements 8,380,000

b. The protested checks include customers' checks totaling P60,000 that were redeposited,
and a P30,000 check from an employee that is still on hand.
c. Accounts receivable from customers for merchandise sales amounted to P1,800,000
and include accounts totaling P80,000 that have been placed with an attorney for
collection. Correspondence with the client's attorney reveals that one of the accounts for
P17,500 is uncollectible.
d. On April 1, 2012, a new automobile was purchased. The list price of the automobile was
P470,000 and P30,000 was allowed for the trade-in of an old automobile, even though
the dealer did not want it due to its poor condition. The client sold the automobile, which
cost P280,000 and was fully depreciated at December 31, 2011 to an auto wrecker for
P20,000. The automobile was in use up to the date of its sale.
e. Depreciation is recorded by using the straight-line method and is computed on
acquisition to the nearest full month. The estimated life for furniture and fixtures is ten
years, and for automobiles is three years. Salvage value is to be ignored in computing
depreciation. No asset other than the car in item (d) was fully depreciated prior to
December 31, 2012.
f. Other data as of December 31, 2012 includes the following:
Merchandise inventory per count P3,750,000
Prepaid insurance 8,000
Accrued expenses 16,600
g. Accounts payable to merchandise vendors total P1,875,000. There is on hand a
P75,000 credit for returned merchandise. The company will apply the credit to January
2013 merchandise purchases. The merchandise return has not yet been recorded in the
books.
h. Profits and losses are divided equally between the partners.
Required: Prepare a statement of comprehensive income for the year ended December 31,
2012 and a statement of financial position as of the end of 2012, using the accrual basis.