FABM SAMPLE EXERCISES WITH ANSWER KEY

WEEK 1

CLASSIFYING ASSETS, LIABILITIES, AND EQUITY AS DEBIT OR CREDIT

Classify each of the following accounts either as asset (A), liability (L), equity (E), income (I), or expense (Ex) on the
column A and determine their normal balance side as debit (Dr) or credit (Cr) on the column B.

A B A B
L Cr 1. Accounts Payable A Dr 8. Equipment
A Dr 2. Accounts Receivable A Dr 9. Furniture
E Cr 3. Additional Paid-in Capital A Dr 10. Inventories
A Dr 4. Cash L Cr 11. Notes Payable
E Cr 5. Common Stock I Cr 12. Sales
Ex Dr 6. Tax Expense A Dr 13. Supplies
L Cr 7. Loans Payable I Cr 14. Interest Income

WEEK 2

JOURNAL ENTRIES
Prepare the journal entries and determine the outstanding balances each account using the T-account of the following
transactions of JJ Company owned by Jam was established in March 2021:

March 1 Jam established JJ Company and invested ₱740,000 cash and a laptop, ₱25,000
2 Jam applied for a business loan from TNB Bank amounting to ₱180,000 and signed a mortgage contract
having her personal vehicle as the collateral.
4 Bought various office supplies such as papers, pen, and ink for ₱3,100.
5 Registered her business in the city hall and barangay, and pad business permits and other fees
amounting ₱2,200.
6 Purchased a printer from Enigma Enterprise for ₱9,100 on account.
7 Purchased a land from Lumina Realty for ₱300,000 cash.
8 Purchased cabinets, tables, chairs, and other fixtures from G&W Trading for ₱72,200 with a 40% down
payment and the balance on account for 60-days.
10 Rendered services to Toyo Company for ₱63,000 cash
12 Made a partial payment of ₱5,000 Enigma Enterprise.
13 Rendered services to AOT Company for ₱84,000 receiving a 30% down payment and the balance on
account.
15 Paid ₱11,400 for the office space.
16 Paid ₱1,700 to the newspaper agency to advertise the company services.
17 Received ₱15,000 from AOT Company as partial settlement of the account.
19 Received ₱2,200 from Tori Marketing for the service rendered.
21 Paid light and water bills amounting ₱4,900.
22 Jam withdrew cash of ₱2,000, and ink and bond paper of ₱350 for her personal use.
25 Purchased additional furniture for ₱22,000.
27 Paid ₱3,400 for additional office equipment
30 Rendered services to Aiko Company for ₱29,700 with a down payment of ₱10,000 and the balance is on
account.
31 Paid the salary of the office assistant for ₱12,000.

Date Account Titles Debit (dr.) Credit (cr.)

March 2021
1 Cash ₱740,000
Office Equipment 25,000
Jam, Capital ₱765,000
2 Cash 180,000
 Mortgage Payable 180,000
4 Office Supplies 3,100
Cash 3,100
5 Miscellaneous Expense 2,200
Cash 2,200
6 Office Equipment 9,100
Accounts Payable 9,100
7 Land 300,000
Cash 300,000
8 Furniture and Fixtures 72,200
Cash 28,880
Accounts Payable 43,320
10 Cash 63,000
Service Income 63,000
12 Accounts Payable 5,000
Cash 5,000
13 Cash 25,200
Accounts Receivable 58,800
Service Income 84,000
15 Rent Expense 11,400
Cash 11,400
16 Advertising Expense 1,700
Cash 1,700
17 Cash 15,000
Accounts Receivable 15,000
19 Cash 2,200
Service Income 2,200
21 Utilities Expense 4,900
Cash 4,900
22 Jam, Withdrawals 2,350
Cash 2,000
Office Supplies 350
25 Furniture and Fixtures 22,000
Cash 22,000
27 Office Equipment 3,400
Cash 3,400
30 Cash 10,000
Accounts Receivable 19,700
Service Income 29,700
31 Salaries Expense 12,000
Cash 12,000

Outstanding Balances of Each Account:

Cash ₱638,820 Accounts Payable ₱47,420
Accounts Receivable 63,500 Mortgage Payable 180,000
Office Supplies 2,750 Jam, Capital 765,000
Land 300,000 Jam, Withdrawals 2,350
Office Equipment 37,500 Service Income 178,900
Furniture and Fixture 94,200 Miscellaneous Expense 2,200
Rent Expense 11,400 Advertising Expense 1,700
Utilities Expense 4,900 Salaries Expense 12,000
 WEEK 3
STATEMENT OF FINANCIAL POSITION
Prepare the Statement of Financial Position of M&B Services Agency using the report format.
Mary Palm opened her business called M&B Services Agency. It offers janitorial services to building owners. The
following transactions were made:

December 1 Miss Palm made a cash investment of ₱300,000.

2 Purchased furniture and fixture and paid ₱45,000
8 Purchased from Lazada office equipment on account, ₱22,500.
12 Borrowed from Rizal Commercial Banking Corporation ₱750,000 and signed a 120-day note.
15 Paid for salaries of clerks and janitors, ₱225,000 in cash.
18 Received a bill for printing of leaflets to promote her business, ₱4,500.
20 Received ₱300,000 in cash as payment for maintenance contracts.
21 Paid Lazada, fifty percent.
24 Billed SPUP and USL for janitorial services rendered, ₱225,000 of which ₱75,000 has not yet
collected.
30 Paid ₱26,250 for utilities and ₱200,000 for salaries.

M&B Services Agency

Statement of Financial Position
As of the Year Ended December 31, 2020
   
ASSETS
Current Assets  
Cash ₱992,500  
Accounts Receivable 75,000 ₱1,067,500
Noncurrent Assets  
Office Equipment ₱22,500  
Furniture and Fixture 45,000 67,500
Total Assets ₱1,135,000
   
LIABILITIES  
Current Liabilities  
Accounts Payable ₱15,750  
Notes Payable 750,000 ₱765,750
   
OWNER'S EQUITY  
Palm, Capital, 12/31/2020   369,250
Total Liabilities and Owner’s Equity   ₱1,135,000

WEEK 4
STATEMENT OF COMPREHENSIVE INCOME
Prepare for the Income Statement of the given problem using the nature of expense method.
During September, a mini grocery store had the following transactions involving revenue and expenses

 Paid ₱1,200 for rent.

 Provided services for ₱2,750 in cash.
 Paid ₱250 for telephone service.
 Provided services for ₱1,900 on credit.
 Paid salaries of ₱1,675 to employees.
 Paid ₱350 for office cleaning service.

Did the firm earn a net income or incur a net loss for the period? What was the amount?
 Mini Grocery Store
Income Statement
For the Month Ended September
   
Revenues  
Service Income ₱4,650
Expenses  
Rent Expense ₱1,200  
Utilities Expense 250  
Salaries Expense 1,675  
Cleaning Expense 350  
Total 3,475
Profit   ₱1,175

WEEK 5
STATEMENT OF COMPREHENSIVE INCOME (MULTI-STEP APPROACH)
Prepare the Income Statement and fill the missing elements of the given problem using the function of expense
method.
Missing Elements – Reconstruction
To test your knowledge of the relationships of these items, insert the missing figures in the following income statement.
Note that the gross profit is 40% of net sales and profit is 10% of net sales.

Net Sales        
₱1,610,00
Gross Sales 0
Less: Sales Returns & Allowances ₱45,00  
Sales Discounts 15,000 (60,000)
₱1,550,00
Net Sales 0
Cost of Sales  
Merchandise Inventory, 1/1/2016 ₱220,000  
Purchases ₱985,000  
Less: Purchases Returns & Allowances ₱31,000  
Purchases Discount 20,000 (51,000)  
Net Purchases ₱934,000  
Transportation In 36,000  
Net Cost of Purchases ₱970,000  
₱1,190,00
Goods Available for Sale 0  
Less: Merchandise Inventory. 12/31/2016 (260,000)  
Cost of Sales (930,000)
Gross Profit ₱620,000
Operating Expenses (465,000)
Profit       ₱155,000

WEEK 6
STATEMENT OF CHANGES IN EQUITY
Prepare the Statement of Changes in Equity of the given problem below
The following balances were retrieved from the records of Juan’s Janitorial Services for the year ended December 31,
2020:
 Capital, January 1, 2020 ₱500,000
 Withdrawals ₱100,000
  Additional Investments ₱50,000
 Net Loss ₱45,000

Juan's Janitorial Services

Statement of Changes in Equity
For the Year Ended December 31, 2020
   
Juan, Capital, 01/01/2020 ₱500,000.00
Add: Additional Investments by Owner ₱50,000.00  
Net Loss (45,000.00) 5,000.00
Total: 505,000.00
(100,000.00
Less: Withdrawals )
Juan, Capital, 12/31/2020   ₱405,000.00

WEEK 7
STATEMENT OF CASH FLOWS
Prepare the Statement of Cash Flows using the direct method of the following information.
A summary of the entries in the cash ledger account of Bulacan Gardens for the month of March 2021 showed the
following:

Cash from Accounts Receivable ₱400,000

Cash Sales 350,000
Cash from Issue of Shares 800,000
Payments for Accounts Payable 300,000
Payments of Wages 150,000
Purchase of Land 200,000
Payments of Dividends 200,000
Purchase of Service Vehicle 450,000
Payment of Taxes 150,000
Payment of Interest 50,000
Answer Here:

Bulacan Gardens
Statement of Cash Flows
For the Month Ended March 31, 2021
   
Cash Flows from Operating Activities:  
Cash from Clients ₱750,000  
(300,000
Payments to Suppliers )  
(150,000
Payments to Employees )  
(150,000
Payments for Taxes )  
Payments for Interest (50,000)  
Net Cash Provided by Operating Activities ₱100,000
Cash Flows from Investing Activities  
(450,000
Payments to Acquire Service Vehicle )  
(200,000
Payments to Acquire Land )  
Net Cash Used in Investing Activities (650,000)
 Cash Flows from Financing Activities:  
Proceeds from Issuing Shares 800,000  
(200,000
Dividends Paid )  
Net Cash Provided by Financing Activities 600,000
Net Increase in Cash and Cash Equivalents ₱50,000
Cash and Cash Equivalents, Beginning 0
Cash and Cash Equivalents, End   ₱50,000
WEEK 8
STATEMENT OF CASH FLOWS
Determine net cash flows from operating activities using the indirect method.
During 2020, Cagayan Coffee had profit of ₱8,200,000. Included on its income statement were depreciation
expense of ₱460,000. During the year, Accounts Receivable increased by ₱680,000, Inventories decreased by ₱380,000,
Prepaid Expenses decreased by ₱40,000, Accounts Payable increased by ₱1,000,000, and Accrued Liabilities decreased
by ₱90,000.

Answer Here:
Bulacan Gardens
Statement of Cash Flows
For the Month Ended March 31, 2021
   
Cash Flows from Operating Activities:  
₱8,200,00
Profit 0  
Adjustments for:  
Non-Cash Expenses (e.g., Depreciation) 460,000  
Increases in Current Asset Account (680,000)  
Decreases in Current Asset Accounts 420,000  
Increases in Current Liability Account 1,000,000  
Decreases in Current Liability Account (90,000)  
₱9,310,00
Net Cash Provided by Operating Activities   0

WEEK 9
HORIZONTAL ANALYSIS AND VERTICAL ANALYSIS
Prepare the horizontal analysis and vertical analysis of JC Trading Company

JC Trading Company
Comparative Statement of Financial Position
As of the Years Ended December 31
   
  2020 2019
Cash ₱470,310 ₱519,860
Accounts Receivable 660,110 565,170
Inventory 653,060 555,480
Prepaid Expenses 173,740 228,810
Total Current Assets 1,957,220 1,869,320
Property, Plant, and Equipment - Net 5,910,530 5,501,660
Intangible Assets 745,200 721,910
₱8,612,95 ₱8,092,89
Total Assets 0 0
   
 ₱1,273,05 ₱1,123,70
Current Liabilities 0 0
Long-term Liabilities 577,580 541,540
Total Liabilities 1,850,630 1,665,240
JC, Capital 6,762,320 6,427,650
₱8,612,95 ₱8,092,89
Total Liabilities and Owner’s Equity 0 0

JC Trading Company
Comparative Statement of Comprehensive
For the Years Ended December 31
   
  2020 2019
Net Sales ₱5,385,860 ₱4,921,850
Cost of Goods Sold 1,374,790 1,254,860
Gross Profit 4,011,070 3,666,990
Operating Expenses 3,406,460 3,127,150
Operating Income 604,610 539,840
Interest Expense 11,820 23,040
Net Income ₱592,790 ₱592,790