COMPREHENSIVE PROBLEM

Edgar Detoya, tax consultant, began his practice on Dec. 1, 2020.

The transactions of the firm are as follows:

Dec. 1 Detoya invested P150,000 in the firm.

2 Paid rent for December to Recoletos Realty, P8,000.
2 Purchased supplies on account, P7,200.
3 Acquired P75,000 of office equipment, paying P37,000
down with the balance due in 30 days.
8 Paid P7,200 on account for supplies purchased.
14 Paid assistant's salaries for two weeks, P6,000.
20 Performed consulting services for cash, P20,000.
28 Paid assistant's salaries for two weeks, P6,000.
30 Billed clients for December consulting services, P48,000.
31 Detoya withdrew P12,000 from the business.

Required:
1. Open the following general ledger accounts, using the account numbers shown:
Cash (110); Accounts Receivable (120); Fees Receivable (130); Supplies (140); Office
Equipment (150); Accumulated Depreciation (155); Accounts Payable (210); Salaries
Payable (220); Detoya, Capital (310); Detoya, Withdrawals (320); Income Summary
(330); Consulting Revenues (410); Salaries Expense (510); Supplies Expense (520);
Rent Expense (530); and Depreciation Expense (540).
2. Journalize the December transactions and post to the ledger.
3. Prepare and complete the worksheet using the following information:
a. Supplies on hand at Dec. 31 amounted to P4,700.
b. Salaries of P1,800 have accrued at month-end.
c. Depreciation is P800 for December.
d. Detoya has spent 20 hours on a tax fraud case during December. When
completed in January, his work will be billed at P500 per hour. Note: The firm
uses the account Fees Receivable to reflect the amounts earned but not yet
billed.
4. Prepare an income statement, a statement of changes in equity; a balance sheet
and a statement of cash flows.
5. Journalize and post adjusting and closing entries.
6. Prepare a post-closing trial balance.
7. Journalize and post the reversing entries.
General Ledger Accounts
T-accounts
Cash
Date Amount Date Amount
Dec. 1 150,000 Dec. 2 8,000
Dec. 20 20,000 Dec. 3 37,000
170,000 Dec. 8 7,200
dr. bal 93,800 Dec. 14 6,000
Dec. 28 6,000
Dec. 31 12,000
76,200

Accounts Receivable
Date Amount Date Amount
Dec. 30 48,000
48,000

Fees Receivable
Date Amount Date Amount
Dec. 31 10,000
10,000

Supplies
Date Amount Date Amount
Dec. 2 7,200 Dec. 31 2,500
dr. bal 4,700

Office Equipment
Date Amount Date Amount
Dec. 3 75,000
75,000

Accumulated Depreciation
Date Amount Date Amount
Dec. 31 800
 800

Accounts Payable
Date Amount Date Amount
Dec. 8 7,200 Dec. 2 7,200
Dec. 3 38,000
45,200
38,000 cr. Bal

Salaries Payable
Date Amount Date Amount
Dec. 31 1,800
1,800

Detoya, Capital
Date Amount Date Amount
Dec. 31 12,000 Dec. 1 150,000
Dec. 31 52,900
202,900
190,900 cr. Bal

Detoya, Withdrawals
closed Date Amount Date Amount
Dec. 31 12,000 Dec. 31 12,000
0

closed Income Summary

Date Amount Date Amount
Dec. 31 25,100 Dec. 31 78,000
Dec. 31 52,900
78,000
0

closed Consulting Revenues

Date Amount Date Amount
Dec. 31 78,000 Dec. 20 20,000
Dec. 30 48,000
68,000
Dec. 31 10,000
 78,000
0

closed Salaries Expense

Date Amount Date Amount
Dec. 14 6,000 Dec. 31 13,800
Dec. 28 6,000
12,000
Dec. 31 1,800
13,800
0
Journal Entries
Date Particulars Debit Credit
Dec. 1 Cash 150,000
Detoya, Capital 150,000

Dec. 2 Rent expense 8,000

Cash 8,000

Dec. 2 Supplies 7,200

Accounts payable 7,200

Dec. 3 Office Equipment 75,000

Cash 37,000
Accounts payable 38,000

Dec. 8 Accounts payable 7,200

Cash 7,200

Dec. 14 Salaries expense 6,000

Cash 6,000

Dec. 20 Cash 20,000

Consulting Revenues 20,000

Dec. 28 Salaries expense 6,000

Cash 6,000

Dec. 30 Accounts receivable 48,000

Consulting Revenues 48,000

Dec. 31 Detoya, Withdrawal 12,000

Cash 12,000

Adjusting Entries
Date Particulars Debit Credit
Dec. 31 Supplies expense 2,500
Supplies 2,500

Dec. 31 Salaries expense 1,800

Salaries Payable 1,800

Dec. 31 Depreciation Expense 800

 Accumulated Depreciation 800

Dec. 31 Fees Receivable 10,000

Consulting Revenues 10,000

Reversing Entries
Date Particulars Debit Credit
Dec. 31 Salaries Payable 1,800
Salaries expense 1,800

Dec. 31 Consulting Revenues 10,000

Fees Receivable 10,000

Closing entries
date Particulars debit credit
Dec. 31 Consulting Revenues 78,000
Income Summary 78,000

Dec. 31 Income Summary 25,100

Salaries expense 13,800
Rent expense 8,000
Supplies expense 2,500
Depreciation Expense 800

Dec. 31 Income Summary 52,900

Detoya, Capital 52,900

Dec. 31 Detoya, Capital 12,000

Detoya, Withdrawal 12,000
Worksheet
Edgar Detoya, Tax Consultant
Worksheet
For the period ended, December 31, 2020

UNADJUSTED ADJUSTED
TRIAL BALANCE ADJUSTMENT TRIAL BALANCE
Particulars DEBIT CREDIT DEBIT CREDIT DEBIT
Cash 93,800 93,800
Accounts receivable 48,000 48,000
Supplies 7,200 2,500 4,700
Office Equipment 75,000 75,000
Accounts payable 38,000
Detoya, Capital 150,000
Detoya, Withdrawal 12,000 12,000
Consulting Revenues 68,000 10,000
Salaries expense 12,000 1,800 13,800
Rent expense 8,000 8,000
Totals 256,000 256,000
Supplies expense 2,500 2,500
Salaries Payable 1,800
Depreciation Expense 800 800
Accumulated Depreciation 800
Fees Receivable 10,000 10,000
Totals 268,600
Net Income
Grand Totals

Income Statement Balance Sheet

Edgar Detoya, Tax Consultant

Income Statement
For the period ended, December 31, 2020

Consulting Revenues 78,000 ASSETS

Salaries expense 13,800 Cash
Rent expense 8,000 Accounts receivable
Supplies expense 2,500 Supplies
Depreciation Expense 800 (25,100) Fees Receivable
Net Income 52,900 Office Equipment
Less: Accumulated Depreciation
Total Assets
 LIABILITIES
Statement of Changes in Equity Accounts payable
Salaries Payable
Edgar Detoya, Tax Consultant Total Liabilities
Statement of Changes in Equity
As of December 31, 2020 CAPITAL
Detoya, Capital
Detoya, Capital, 12/1/2020 150,000 Less:
Less: Detoya, Withdrawal
Detoya, Withdrawal (12,000)
Add: 138,000 Add:
Net Income 52,900 Net Income
Total Capital, 12/31/2020 190,900 Total Capital
TLC

Statement of Cash Flow

Edgar Detoya, Tax Consultant

Statement of Cash Flows
For the period ended, December 31, 2020

Cash Flows from Operating Activities

Cash received from customers 20,000
Payments to suppliers (7,200)
Payments to employees (12,000)
Payments for office rent (8,000)
Net cash provided (used in) by operating activities (7,200)

Cash Flows from Investing Activities

Payments to acquire office equipment (37,000)
Net cash provided (used in) by investing activities (37,000)

Cash Flows from Financing Activities

Cash received as investments by owner 150,000
Payments for withdrawals by the owner (12,000)
Net cash provided (used in) by investting activities 138,000

Net increase (decrease) in cash 93,800

Cash balance at the beginning of the period
Cash balance at the end of the period 93,800
ber 31, 2020

INCOME BALANCE
RIAL BALANCE STATEMENT SHEET
CREDIT DEBIT CREDIT DEBIT CREDIT
93,800
48,000
4,700
75,000
38,000 38,000
150,000 150,000
12,000
78,000 78,000
13,800
8,000

2,500
1,800 1,800
800
800 800
10,000
268,600 25,100 78,000 243,500 190,600
52,900 52,900
78,000 78,000 243,500 243,500

alance Sheet Report Form Account Form

Edgar Detoya, Tax Consultant

Balance Sheet
As of December 31, 2020

ASSETS
93,800 Cash
ccounts receivable 48,000 Accounts receivable
4,700 Supplies
ees Receivable 10,000 Fees Receivable
ffice Equipment 75,000 Office Equipment
ss: Accumulated Depreciation (800) Less: Accumulated Depreciation
230,700 Total Assets
ccounts payable 38,000
alaries Payable 1,800
otal Liabilities 39,800

etoya, Capital 150,000

etoya, Withdrawal (12,000)

138,000

52,900
190,900
230,700

Post-closing Trial Balance

Edgar Detoya, Tax Consultant

Post-Closing Trial Balance
December 31, 2020

Cash 93,800
Accounts receivable 48,000
Supplies 4,700
Fees Receivable 10,000
Office Equipment 75,000
Accumulated Depreciation 800
Accounts payable 38,000
Salaries Payable 1,800
Detoya, Capital 190,900
231,500 231,500
Edgar Detoya, Tax Consultant
Balance Sheet
As of December 31, 2020

LIABILITIES
93,800 Accounts payable 38,000
48,000 Salaries Payable 1,800
4,700 Total Liabilities 39,800
10,000
75,000 CAPITAL
(800) Detoya, Capital P 150,000
230,700 Less:
Detoya, Withdrawal (12,000)
 138,000
Add:
Net Income 52,900
Total Capital 190,900
TLC 230,700