ACC111_Review Materials_11:00-12:00

Accounting Equation and the Double Entry System

Item 1 through 3 are based on the following:
Accounts payable P 52,500 Machinery P 55,000
Notes receivable 14,500 Accrued expenses 7,000
Office Equipment 12,500 Unearned income 5,000
Access, capital ? Cash 21,000
Accrued income 30,000
1. How much is the total assets?
a. 116,000 b. 138,000 c. 133,000 d. 64,500
2. How much is the total liabilities?
a. 116,000 b. 138,000 c. 133,000 d. 64,500
3. How much is the total owners equity?
a. 116,000 b. 68,500 c. 108,000 d. 64,500

Adjusting the Accounts

The following are selected account balances of SayonRaKaayo Company
Debit (Credit)
Prepaid insurance P 15,000
Building 50,000
Accumulated depreciation – building (10,000)
Accounts receivable 80,000
Allowance for bad debts (10,000)
Unearned interest income (5,000)
Notes receivable 10,000
Notes payable (15,000)
SayonRaKaayo, capital (100,000)
SayonRaKaayo, drawing 10,000
4. If the end of the period, the expired portion of the prepaid insurance is P5,000, what is the adjusting
entry?
DEBIT CREDIT
a. Expired insurance 5,000 Cash 5,000
b. Insurance expense 5,000 Prepaid insurance 5,000
c. Prepaid insurance 10,000 Insurance expense 10,000
d. Insurance expense 10,000 Prepaid insurance 10,000
5. Referring to SayonRaKaayo Co., if the accounts receivable is estimated to be 80% realizable, the entry for
bad debts is:
DEBIT CREDIT
a. Allow. for bad debts 6,000 Accounts receivable 6,000
b. Bad debts 6,000 Allow. for bad debts 6,000
c. Bad debts 16,000 Allow. for bad debts 16,000
d. Bad debts 10,000 Allow. for bad debts 16,000
6. Referring to SayonRaKaayo Co., if the end of the period, 40% of the unearned interest is realized, what is
the entry?
DEBIT CREDIT
a. Interest income 3,000 Unearned interest income 3,000
b. Unearned interest income 3,000 Interest income 3,000
c. Unearned interest income 2,000 Interest income 2,000
d. Interest income 2,000 Unearned interest income 2,000
7. Referring to SayonRaKaayo Co., if the building is depreciated 12.5% every year, what is the entry for
expense?
DEBIT CREDIT
a. Depreciation expense 16,250 Accumulated depreciation 16,250
b. Building expense 6,250 Accumulated depreciation 6,250
c. Depreciation expense 6,250 Accumulated depreciation 6,250
d. Depreciation expense 8,250 Accumulated depreciation 8,250

Worksheet and Financial Statements

31-33 CJ Realty Company had the following balance sheet accounts and balances:

Accounts payable P60,000 Equipment P70,000

Accounts receivable 10,000 CJ, Capital ?
Building ? Land 70,000
Cash 30,000
8. If the balance of CJ, Capital account was P210,000, what would be the balance of the Building account?
a. P250,000 b. P90,000 c. P 40,000 d. P210,000

9. If the balance of the Building account was P150,000 and the equipment was sold for P70,000, what would
be the total of owner’s equity?
a. P150,000 b. P270,000 c. b. P160,000 d. P330,000

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Completing the Accounting Cycle
The following is the adjusted trial balance of Kalog:

Dr Cr
Cash P 5,000
Accounts receivable 60,000
Rent deposit 3,000
Accounts payable P 20,000
Accrued salaries payable 3,000
Kalog, Capital 25,000
Kalog, Drawing 2,000
Salaries expense 60,000
Supplies expense 1,000
Rent expense 9,000
Professional fee 91,250
Interest income 750
10. How much should be debited to income summary account as part of closing entries?
a. P92,000 b. P72,000 c. P73,000 d. P70,000
11. How much should be credited to income summary account as part of closing entries?
a. P92,000 b. P72,000 c. P73,000 d. P70,000
12. What is the post-closing balance of Kalog Capital?
a. P45,000 b. P20,000 c. P25,000 d. P 5,000
Merchandising Operations
The following data was taken from the ledger of Pakyaw Trading
Purchases 85,000
Net Sales 250,000
Selling Expenses 35,000
Merchandise Inventory, beg. 78,000
Purchase Returns & Allowances 70,000
Sales Returns & Allowances 12,500
Merchandise Inventory, end 16,200
Sales 272,500
Purchase Discounts 3,500
Sales Discount 10,000
Administrative Expense 33,200

13. The gross profit on sales

a. P156, 200 b. P112, 600 c. P162, 500 d. P126, 500
14. The net income
a. P53, 800 b. P58, 500 c. P55, 800 d. P58, 300
15. The cost of sales
a. P113, 500 b. P123, 500 c. P132, 500 d. P133, 500

Partnership: Basic Considerations and Formation

16. Maria and Nora entered into a partnership on March 1, 2008 by investing the following assets:
Maria Nora
Cash P30,000 P -
Merchandise inventory - 90,000
Computer equipment - 160,000
Furniture and fixtures 200,000
The agreement between Maria and Nora provides that profits and losses are to be divided into 40% to Maria and
60% to Nora, and that the partnership is to assume a liability on the computer equipment of P60,000. the partners
further agree that Nora is to receive a capital credit equal to her profit and loss ratio. How much cash is to be
invested by Nora?
a. P135,000 b. P145,000 c. P155,000 d. P130,000
Partnership: Operations and Financial Reporting
17. The partners of RJ and AG, share profits 3:2. However, RJ is to receive a yearly bonus of 20% of the net
profits after deducting said bonus, in addition to his profit share. The partnership made a net income for
the year of P24,000 before the bonus. How much profit share will RJ receive?
a. 16,000 b. 10,000 c. 15,200 d. 14,400

18. LT and AM have capital account balances at the beginning of the year of P40,000 and P45,000,
respectively. They share net income and losses as follows:
1. 8% interest on beginning capital balances
2. salary allowance of P15,000 to LT and P7,500 to AM
3. remainder in 3:2 ratio
The partnership reported net income of P10,000 for the year, before interest and salary allowances to
partners. What are the profit share of LT and AM, respectively?
a. 6,620 and 3,380 b. 6,630 and 3,380 c. 6,500 and 3,500 d. 6,000 and 4,000

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 19. JR and his very close friend AJ forned a partnership on Jan. 1, 2008 with JR contributing 16,000 cash and
AJ contributing equipment with a book value of 6,400 and a fair value of 4,800 and inventory items with a
book value of 2,400 and fair value of 3,200. During 2008, JR made additional investment of 1,600 on April
1 and 1,600 on June 1, and on Sep. 1, he withdrew 4,000. AJ had no additional investment nor
withdrawals during the year. The average capital balances at the end of 2008 for JR is:
a. 16,000 b. 8,000 c. 16,800 d, 7,200

Corporations: Basic Considerations

20. If the total capitalization is authorized for 20,000 shares of common stock at P5 par, then the required cash
in bank of the corporation to be registered should be
a. P18,750 b. P6,250 c. P5,000 d. P4,687.5
21. If the total capitalization is authorized for 15,000 shares of common stock at P5 par, then the required cash
in bank of the corporation to be registered should be
a. P18,750 b. P6,250 c. P5,000 d. P4,687.5

Corporations: Share Capital, Retained Earnings and Financial Reporting

22. In 200A, Y issued 5,000 shares of 10 par value common stock for P100 per share. In 200D, Y reacquired
2,000 of its shares at P150 per share from the estate of one of its deceased officers and immediately
cancelled these 2,000 shares. Y uses the cost method in accounting for its treasury stock transactions. In
connection with the retirement of these 2,000 shares, Y should debit
Additional paid in capital retained earnings
a. P20,000 P280,000
b. P100,000 P180,000
c. P180,000 P100,000
d. P280,000 P–0–

23. Jazel Corporation was organized on January 1, 2013, with an authorization of 1,200,000 shares of common
stock with a par value of 6 per share. During 2013, the corporation had the following capital transactions:
January 5 issued 675,000 shares @ 10 per share
July 28 purchased 90,000 shares @ 11 per share
December 31 sold the 90,000 shares held in treasury @ 18 per share
Trent used the cost method to record the purchase and reissuance of the treasury shares. What is the total amount
of additional paid-in capital as of December 31, 2013?
a. -0-. b. 2,070,000. c. 2,700,000. d. 3,330,000.

Presented below is information related to Aljohn Corporation:

Common Stock, 1 par 4,300,000
Paid-in Capital in Excess of Par—Common Stock 550,000
Preferred 8 1/2% Stock, 50 par 2,000,000
Paid-in Capital in Excess of Par—Preferred Stock 400,000
Retained Earnings 1,500,000
Treasury Common Stock (at cost) 150,000
24. The total stockholders' equity of Aljohn Corporation is
a. 8,600,000. b. 8,750,000. c. 7,100,000. d. 7,250,000.
25. The total paid-in capital (cash collected) related to the common stock is
a. 4,300,000. b.4,850,000. c. 5,250,000. d. 4,700,000.

26. On January 1, 2013, Jazel Corporation had 110,000 shares of its P5 par value ordinary shares outstanding.
On June 1, the corporation acquired 10,000 shares of stock to be held in the treasury. On December 1,
when the market price of the stock was P8, the corporation declared a 10% stock dividend to be issued to
stockholders of record on December 16, 2013. What was the impact of the 10% stock dividend on the
balance of the retained earnings account?
a. P50,000 decrease b. P80,000 decrease c. P88,000 decrease d. No effect

27. Alfie Company has 350,000 shares of P10 par value ordinary shares outstanding. During the year,
Alfiedeclared a 10% stock dividend when the market price of the stock was P30 per share. Four months
later Alfie declared a P0.50 per share cash dividend. As a result of the dividends declared during the year,
retained earnings decreased by
a. P1,242,500. b. P525,000 c. P192,500. d. P 175,000.

-end of review-
Jovit 😊

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