ABM Accounting Firm, who is owned by, Mr.

Akala Mo, just opened its office in January 1, 2020 and has t
Date Business Transactions
1-Jan-20 Mr. Akala Mo invested Php 500,000.00 cash to the business and hired staff.
2-Jan-20 Secured business permits to operate and paid Php 10,000.00 as fees.
3-Jan-20 Paid 3 months advanced rental for the office for Php 75,000.00 (use asset method)
Purchased furniture for Php 28,000.00 and air-conditioning unit for Php 20,000.00 cash
Purchased supplies for Php 6,000.00 ( use asset method)
4-Jan-20 Billed JAD Co. for audit conducted which is due on January 15, 2020 for Php 25,000.00
Purchased computer units for Php 50,000.00 and printer for Php 8,000.00
5-Jan-20 Provided accounting services to Equate Company for Php 15,000.00
6-Jan-20 Paid one year fore insurance premium for Php 7,000.00 (use asset method)
7-Jan-20 Purchased service vehicle costing Php 120,000.00 issuing a 2-year promissory note with in
8-Jan-20 Provided accounting services to Chase Company for Php 60,000.00 receiving 50% downpa
9-Jan-20 Purchased motorcycle as service vehicle messenger for Php 80,000.00
10-Jan-20 The proprietor incurred official gasoline expenses for Php 4,000.00 and was reimbursed by
11-Jan-20 Rendered accounting services to client for Php 50,000.00. The client issued a 30-day prom
13-Jan-20 Collected amount due from JAD Co.
14-Jan-20 The staff incurred transportation expenses for Php 1,500.00
15-Jan-20 Collected the balance from Chase Company.
Paid salaries to staff for the period January 1-31, 2020 for Php 40,000.00
18-Jan-20 The messenger advanced Php 1,000.00 for personal use and promised to pay on February.
20-Jan-20 Rendered accounting sevices to another client for Php 30,000.00 payable on February 20, 2
21-Jan-20 The proprietor was reimbursed for representation expenses made with a possible client fo
28-Jan-20 Received telephone bills and recorded it as liability for Php 6,500.00
Received electricity bill and paid Php 9,200.00 in cash
29-Jan-20 Paid salaries to staff for the period January 16-31, 2020 as follows:

Gross Salary 25,000.00

Deductions:
Witholding Tax 5,000.00
SSS Payable 900.00
Philhealth Paya 300.00
HDMF Payable 100.00
Net Cash Payment 18,700.00

31-Jan-20 The proprietor withdraws cash for Php 10,000.00

Additional information:
1 Supplies consumed for the month is Php 1,500.00
2 The advance payment for rental, payment for insurance premium and purchase of supplie
are initially recorded using the asset method.
3 An advertising expense was incurred in January 31, 2020 but payment was made to suppl
on February 5 for Php 6,000.00
4 An accounting service was made to a customer in January 31, 2020 for Php 25,000.00 but o
billed by the staff to the customer on February 6, 2020.
5 The depreciation of assets purchased are as follows:

Purchased Date Asset Cost Salvaged Value

3-Jan-20 Furniture & Fixtures 28,000.00 500.00
3-Jan-20 Aircon 20,000.00 800.00
4-Jan-20 Computers 50,000.00 1,500.00
4-Jan-20 Printers 8,000.00 300.00
8-Jan-20 Vehicle 120,000.00 15,000.00
9-Jan-20 Motor 80,000.00 5,000.00

6 Compute interest expense on promissory note issued in January 7, 2020 for the purchase o
at 10% per annum, Php 120,000.00 90-day note.
7 Compute interest receivable issued by a customer in January 11, 2020 at 10% per annum, P

Requirements:
1 Record the transactions to General Journal.
2 Post the journal entries to the general ledger.
3 Prepare the unadjusted Trial Balance.
4 Prepare the adjusting entries.
5 Post the adjusting entries to ledger.
6 Prepared the adjusted Trial Balance
7 Prepare the Financial Statements and Closing Entries.
Balance Sheet / SFP
Income Statement
Statement of Changes in Equity
Statement of Cash Flow
8 Closed the nominal accounts
Expense Account
 Revenue Account
Withdrawal Account
9 Prepare the Post Closing Trial Balance
Asset Account
Liabilities
Capital Account
uary 1, 2020 and has the the ff transactions during the month.
Transactions

sset method)
Php 20,000.00 cash

for Php 25,000.00

omissory note with interest at 10% per annum.

eceiving 50% downpayment and the balance payable on January 20, 2020.

nd was reimbursed by the staff.

ssued a 30-day promissory note with interest of 10% per annum. until here

d to pay on February.
ble on February 20, 2020.
th a possible client for Php 2,000.00
d purchase of supplies

nt was made to supplier

or Php 25,000.00 but only

Cost - Salvaged 1 yr 1 Month

Life Value Depreciation Depreciation
5 yrs 27,500.00 5,500.00 458.33 458.33
5 yrs 19,200.00 3,840.00 320.00
5 yrs 48,500.00 9,700.00 808.33
5 yrs 7,700.00 1,540.00 128.33 1,256.67
5 yrs 105,000.00 21,000.00 1,750.00
5 yrs 75,000.00 15,000.00 1,250.00 3,000.00
4,715.00
020 for the purchase of service vehicle

0 at 10% per annum, Php 50,000.00 30-da note.

DATE ACCOUNT TITLE / EXPLANATION
1-Jan-20 Cash
Mr. Akala Mo, Capital

To record the initial of envestment of Mr. Akala Mo.

2-Jan-20 Taxes & Licenses

Cash

To record payment of business permits.

3-Jan-20 Prepaid Rent

Cash

To record payment of 3 months advanced payment rental of office.

Furniture & Fixtures

Office Equipment
Cash

To record payment of furniture and air-condition unit

Office Supplies
Cash

To record purchase of office supplies.

4-Jan-20 Accounts Receivable

Service Revenue

To record the service rendered to JAD Co. on account.

Office Equipment
Cash

To record purchase of computers & printers.

5-Jan-20 Cash
Service Revenue
 To record the service rendered to Equate Company.

6-Jan-20 Prepaid Insurance

Cash

To record payment insurance policy.

7-Jan-20 Service Vehicle

Notes Payables

To record purchase of service vehicle by issuing written promissory for 2yrs at 10% interest per an

8-Jan-20 Cash
Accounts Receivable
Service Revenue

To record service to Chase Company 50% cash and balance payable on January 20, 2020

9-Jan-20 Service Vehicle

Cash

To record purchase of service vehicle.

10-Jan-20 Gasoline Expense

Cash

To record reimbursement of gasoline expense.

11-Jan-20 Notes Receivable

Service Revenue

To record revenue on account by customer issuing promissory note at 10% interest per annum.

13-Jan-20 Cash
Accounts Receivable

14-Jan-20 Transportation Expenses

Cash

15-Jan-20 Cash
 Accounts Receivable

Salaries, Wages & Benefits

Cash

18-Jan-20 Advances to Employees

Cash

20-Jan-20 Accounts Receivable

Service Revenue

21-Jan-20 Representation Expenses

Cash

28-Jan-20 Communication Expenses

Accrued Expense Payable

Light & Water

Cash

29-Jan-20 Salaries, Wages & Benefits

Cash
Witholding Tax Payable
SSS Payable
Philhealth Payable
HDMF Payable

31-Jan-20 Mr. Akala Mo, Withdrawal

Cash

ADJUSTING ENTRIES:
1 Office Supplies Expense
Office Supplies

2 Rent Expense
Prepaid Rent

(75,000.00 /3 DP= 25,000.00)

Insurance Expense
 Prepaid Insurance

( 7,000.00 / 12 = 583.33 )

3 Advertising Expense
Accrued Expense Payable

4 Accounts Receivable
Service Revenue

5 Depreciation Expense
Accumulated Depreciation - F & F
Accumulated Depreciation - OE
Accumulated Depreciation - SV

6 Interest Expense
Accrued Expense Payable

Computation:
( 120,000.00 x 10% = 12,000.00 / 365 days = 32.88 per day x 24 days = 789.12 )
( January 7 - 31 = 24days)

7 Interest Receivable
Interest Income

Computation:
( 50,000.00 x 10% = 5,000.00 / 365 days = 13.70 per day x 20 days = 274.00 )
( January 11 - 31 = 20days)
 DR CR
500,000.00
500,000.00

10,000.00
10,000.00

75,000.00
75,000.00

tal of office.

28,000.00
20,000.00
48,000.00

6,000.00
6,000.00

25,000.00
25,000.00

58,000.00
58,000.00

15,000.00
15,000.00
 7,000.00
7,000.00

120,000.00
120,000.00

n promissory for 2yrs at 10% interest per annum.

30,000.00
30,000.00
60,000.00
.
ance payable on January 20, 2020

80,000.00
80,000.00

4,000.00
4,000.00

50,000.00
50,000.00

missory note at 10% interest per annum.

25,000.00
25,000.00

1,500.00
1,500.00

30,000.00
 30,000.00

40,000.00
40,000.00

1,000.00
1,000.00

30,000.00
30,000.00

2,000.00
2,000.00

6,500.00
6,500.00

9,200.00
9,200.00

25,000.00
18,700.00
5,000.00
900.00
300.00
100.00

10,000.00
10,000.00

1,500.00
1,500.00

25,000.00
25,000.00

583.33
 583.33

6,000.00
6,000.00

25,000.00
25,000.00

4,715.00
458.33
1,256.67
3,000.00

789.12
789.12

88 per day x 24 days = 789.12 )

274.00
274.00

per day x 20 days = 274.00 )

 CASH
CAPITAL OF THE OWNER 500,000.00 10,000.00
EQUATE COMPANY 15,000.00 75,000.00
CHASE CO 30,000.00 48,000.00
JAD CO 25,000.00 6,000.00
CHASE CO 30,000.00 58,000.00
7,000.00
80,000.00
4,000.00
1,500.00
40,000.00
1,000.00
2,000.00
9,200.00
18,700.00
10,000.00
600,000.00 370,400.00
229,600.00

PREPAID RENT
75,000.00 25,000.00
50,000.00

OFFICE SUPPLIES
6,000.00 1,500.00
4,500.00

SERVICE REVENUE
 25,000.00
15,000.00
60,000.00
50,000.00
30,000.00
25,000.00
205,000.00

NOTES RECEIVABLE
50,000.00

SALARIES, WAGES & BENEFITS

40,000.00
25,000.00
65,000.00

COMMUNICATION EXPENSES
6,500.00

WITHOLDING TAX PAYABLE

5,000.00

HDMF PAYABLE
100.00

RENT EXPENSE
25,000.00
ACCUMULATED DEPRECIATION - F& F
458.33

INTEREST EXPENSE
789.12
 MR. AKALA MO, CAPITAL
TAXES & LICENSES 500,000.00
PREPAID RENT
F & F / OE
OFF SUPPLIES
OE
PREPAID INSURANCE
SERVICE VEHICLE
GASOLINE EXPENSE
TRANSPORTATION EXPENSE
SALARIES, WAGES & BENEFITS
ADVANCES TO EMPLYEES
REPRESENTATION EXPENSE
LIGHT & WATER
SALARIES, WAGES & BENEFITS
WITHDRAWAL

FURNITURE & FIXTURES

28,000.00

ACCOUNTS RECEIVABLE
25,000.00 25,000.00
30,000.00 30,000.00
30,000.00
25,000.00
110,000.00 55,000.00
55,000.00

SERVICE VEHICLE
 120,000.00
80,000.00
200,000.00

GASOLINE EXPENSES
4,000.00

ADVANCES TO EMPLOYEES
1,000.00

LIGHT & WATER EXPENSES

9,200.00

SSS PREMIUM PAYABLE

900.00

ADVERTISING EXPENSES
6,000.00

INSURANCE EXPENSE
583.33
ACCUMULATED DEPRECIATION - OE
1,256.67

INTEREST RECEIVABLE
274.00
 TAXES & LICENSES
10,000.00

OFFICE EQUIPMENT
20,000.00

58,000.00
78,000.00

PREPAID INSURANCE
7,000.00 583.33
6,416.67

NOTES PAYABLE
 120,000.00

ACCRUED EXPENSES PAYABLE

6,500.00
6,000.00
789.12
13,289.12

TRANSPORTATION EXPENSES
1,500.00

REPRESENTATION EXPENSES
2,000.00

MR. AKALA MO, WITHDRAWAL

10,000.00

PHILHEALTH PAYABLE
300.00

OFFICE SUPPLIES EXPENSES

1,500.00

DEPRECIATION EXPENSE
4,715.00
ACCUMULATED DEPRECIATION - SV
3,000.00

INTEREST INCOME
274.00
 ABM ACCOUNTING FIRM
Unadjuasted Trial Blance
January 31, 2020
ACCOUNT TITLE DR
CASH 229,600.00
ACCOUNT RECEIVABLES 110,000.00
ADVANCES TO EMPLOYEES 1,000.00
NOTES RECEIVABLE 50,000.00
PREPAID INSURANCE 7,000.00
PREPAID RENT 75,000.00
OFFICE SUPPLIES 6,000.00
OFFICE EQUIPMENT 78,000.00
FURNITURE & FIXTURES 28,000.00
SERVICE VEHICLE 200,000.00
NOTES PAYABLE
ACCRUED EXPENSE PAYABLE
WITHOLDING TAX PAYABLE
SSS PAYABLE
PHILHEALTH PAYABLE
HDMF PAYABLE
MR. AKALA MO, CAPITAL
MR. AKALA MO, WITHDRAWAL 10,000.00
SERVICE REVENUE
GASOLINE EXPENSES 4,000.00
TAXES & LICENSES 10,000.00
TRANSPORTATION EXPENSES 1,500.00
SALARIES, WAGES & BENEFITS 65,000.00
LIGHT & WATER EXPENSES 9,200.00
COMMUNICATION EXPENSES 6,500.00
REPRESENTATION EXPENSES 2,000.00
892,800.00
48,210.88
CR

120,000.00
13,289.12
5,000.00
900.00
300.00
100.00
500,000.00

205,000.00

844,589.12
 ABM ACCOUNTING FIRM
Adjusted Trial Blance
January 31, 2020
ACCOUNT TITLE DR
CASH 229,600.00
ACCOUNT RECEIVABLES 55,000.00
ADVANCES TO EMPLOYEES 1,000.00
NOTES RECEIVABLE 50,000.00
INTEREST RECEIVABLE 274.00
PREPAID INSURANCE 6,416.67
PREPAID RENT 50,000.00
OFFICE SUPPLIES 4,500.00
OFFICE EQUIPMENT 78,000.00
ACCUMULATED DEPRECIATION - OE
FURNITURE & FIXTURES 28,000.00
ACCUMULATED DEPRECIATION - F & F
SERVICE VEHICLE 200,000.00
ACCUMULATED DEPRECIATION - SV
NOTES PAYABLE
ACCRUED EXPENSE PAYABLE
WITHOLDING TAX PAYABLE
SSS PAYABLE
PHILHEALTH PAYABLE
HDMF PAYABLE
MR. AKALA MO, CAPITAL
MR. AKALA MO, WITHDRAWAL 10,000.00
SERVICE REVENUE
INTEREST INCOME
GASOLINE EXPENSES 4,000.00
TAXES & LICENSES 10,000.00
TRANSPORTATION EXPENSES 1,500.00
SALARIES, WAGES & BENEFITS 65,000.00
LIGHT & WATER EXPENSES 9,200.00
COMMUNICATION EXPENSES 6,500.00
REPRESENTATION EXPENSES 2,000.00
ADVERTISING EXPENSE 6,000.00
OFFICE SUPPLIES EXPENSE 1,500.00
RENT EXPENSE 25,000.00
INSURANCE EXPENSE 583.33
INTEREST EXPENSE 789.12
DEPRECIATION EXPENSE 4,715.00
849,578.12
CR

1,256.67

458.33

3,000.00
120,000.00
13,289.12
5,000.00
900.00
300.00
100.00
500,000.00

205,000.00
274.00
849,578.12
 ABM ACCOUNTING FIRM
INCOME STATEMENT
For the Month Ended January 31, 2020

SERVICE REVENUE
LESS: EXPENSES
GASOLINE EXPENSES 4,000.00
TAXES & LICENSES 10,000.00
TRANSPORTATION EXPENSES 1,500.00
SALARIES, WAGES & BENEFITS 65,000.00
LIGHT & WATER EXPENSES 9,200.00
COMMUNICATION EXPENSES 6,500.00
REPRESENTATION EXPENSES 2,000.00
ADVERTISING EXPENSE 6,000.00
OFFICE SUPPLIES EXPENSE 1,500.00
RENT EXPENSE 25,000.00
INSURANCE EXPENSE 583.33
DEPRECIATION EXPENSE 4,715.00
GROSS INCOME
ADD (DEDUCT) : OTHER INCOME / EXPENSES
INTEREST INCOME 274.00
INTEREST EXPENSE (789.12)
NET INCOME
0

205,000.00

135,998.33
69,001.67

(515.12)
68,486.55
 ABM ACCOUNTING FIRM
BALANCE SHEET
as of January 31, 2020
CURRENT ASSETS
CASH 229,600.00
ACCOUNT RECEIVABLES 55,000.00
ADVANCES TO EMPLOYEES 1,000.00
NOTES RECEIVABLE 50,000.00
INTEREST RECEIVABLE 274.00
PREPAID INSURANCE 6,416.67
PREPAID RENT 50,000.00
OFFICE SUPPLIES 4,500.00
NON-CURRENT ASSETS
OFFICE EQUIPMENT 78,000.00
ACCUMULATED DEPRECIATION - OE (1,256.67)
FURNITURE & FIXTURES 28,000.00
ACCUMULATED DEPRECIATION - F & F (458.33)
SERVICE VEHICLE 200,000.00
ACCUMULATED DEPRECIATION - SV (3,000.00)
TOTAL ASSETS
CURRENT LIABILITIES
ACCRUED EXPENSE PAYABLE 13,289.12
WITHOLDING TAX PAYABLE 5,000.00
SSS PAYABLE 900.00
PHILHEALTH PAYABLE 300.00
HDMF PAYABLE 100.00
NON-CURRENT LIABILITIES
NOTES PAYABLE
TOTAL LIABILITIES

CAPITAL

TOTAL LIABILITIES & CAPITAL

 396,790.67

301,285.00
698,075.67

19,589.12

120,000.00
139,589.12

558,486.55

698,075.67
 ABM ACCOUNTING FIRM
STATEMENT OF CHANGES IN EQUITY
For the Month Ended January 31, 2020

ORIGINAL CAPITAL
ADD/DEDUCT:
NET INCOME 68,486.55
WITHDRAWAL (10,000.00)
NET INCREASE (DECREASE) IN CAPITAL

TOTAL CAPITAL, JANUARY 31, 2020

TY
0

500,000.00

58,486.55
558,486.55
 ABM ACCOUNTING FIRM
STATEMENT OF CASH FLOW
For the Month Ended January 31, 2020

CASH FLOW FROM OPERATING ACTIVITIES:

CASH RECEIVED FROM CUSTOMERS
CASH PAID FOR ADVANCES OF EMPLOYEE
CASH PAID FOR RENTAL
CASH PAID FOR INSURANCE
CASH PAID FOR LICENSES
CASH PAID FOR OFFICE SUPPLIES
CASH PAID FOR TRANSPORTATION
CASH PAID FOR GASOLINE
CASH PAID FOR REPRESENTATION
CASH PAID FOR LIGHT & WATER
CASH PAID FOR SALARIES
NET CASH FLOW FOR OPERATING ACTIVITIES

CASH FLOW FROM INVESTING ACTIVITIES:

CASH PAID FOR PURCHASE OF OFFICE ASSETS
CASH PAID FOR PURCHASE OF VEHICLE
NET CASH FLOW FOR INVESTING ACTIVITIES

CASH FLOW FROM FINANCING ACTIVITIES:

CASH INVESTMENT OF OWNER
CASH WITHDRAWAL BY OWNER
NET CASH FLOW FROM FINANCING ACTIVITIES

NET INCREASE(DECREASE) IN CASH

CASH BALANCE, BEGINNING
CASH BALANCE, ENDING JANUARY 31, 2020
 100,000.00
(1,000.00)
(75,000.00)
(7,000.00)
(10,000.00)
(6,000.00)
(1,500.00)
(4,000.00)
(2,000.00)
(9,200.00)
(58,700.00)
(74,400.00)

(106,000.00)
(80,000.00)
(186,000.00)

500,000.00
(10,000.00)
490,000.00

229,600.00
 CLOSING OF ENTRIES ( NOMINAL / TEMPORARY ACCOUNTS)

31-Jan-20 SERVICE REVENUE

INTEREST INCOME
GASOLINE EXPENSES
TAXES & LICENSES
TRANSPORTATION EXPENSES
SALARIES, WAGES & BENEFITS
LIGHT & WATER EXPENSES
COMMUNICATION EXPENSES
REPRESENTATION EXPENSES
ADVERTISING EXPENSE
OFFICE SUPPLIES EXPENSE
RENT EXPENSE
INSURANCE EXPENSE
DEPRECIATION EXPENSE
INTEREST EXPENSE
INCOME SUMMARY

To close the revenue & expenses to income summary.

31-Jan-20 INCOME SUMMARY

MR. AKALA MO, CAPITAL

To close income summary to capital account.

31-Jan-20 MR. AKALA MO, CAPITAL

MR. AKALA MO, WITHDRAWAL

To close withdrawal to capital account.

TEMPORARY ACCOUNTS)
DR CR
205,000.00
274.00
4,000.00
10,000.00
1,500.00
65,000.00
9,200.00
6,500.00
2,000.00
6,000.00
1,500.00
25,000.00
583.33
4,715.00
789.12
68,486.55

68,486.55
68,486.55

10,000.00
10,000.00
 ABM ACCOUNTING FIRM
POST-CLOSING TRIAL BALANCE
For the Month Ended January 31, 2020
DR
CASH 229,600.00
ACCOUNT RECEIVABLES 55,000.00
ADVANCES TO EMPLOYEES 1,000.00
NOTES RECEIVABLE 50,000.00
INTEREST RECEIVABLE 274.00
PREPAID INSURANCE 6,416.67
PREPAID RENT 50,000.00
OFFICE SUPPLIES 4,500.00
OFFICE EQUIPMENT 78,000.00
ACCUMULATED DEPRECIATION - OE
FURNITURE & FIXTURES 28,000.00
ACCUMULATED DEPRECIATION - F & F
SERVICE VEHICLE 200,000.00
ACCUMULATED DEPRECIATION - SV
ACCRUED EXPENSE PAYABLE
WITHOLDING TAX PAYABLE
SSS PAYABLE
PHILHEALTH PAYABLE
HDMF PAYABLE
NOTES PAYABLE
CAPITAL
702,790.67
0
CR

1,256.67

458.33

3,000.00
13,289.12
5,000.00
900.00
300.00
100.00
120,000.00
558,486.55
702,790.67