Fundamentals of Accountancy, Business, and Management 1

Comprehensive Problem (Sample)

Mirmo Eli, tax consultant, began his practice on December 1, 2019. The transactions of the firm are as
follows:

Dec. 01 Eli invested P 150, 000 in the firm.

02 Paid rent for December to Abra Realty, P 8, 000.
02 Purchased supplies on account, P 7, 200.
03 Acquired P 75, 000 of office equipment, paying P 37, 000 down with the balance
due in 30 days.
08 Paid P 7, 200 on account for supplies purchased.
14 Paid assistant’s salaries for two weeks, P 6, 000.
20 Performed consulting services for cash, P 20, 000.
28 Paid assistant’s salaries for two weeks, P 6, 000.
30 Billed clients for December consulting services, P 48, 000.
31 Eli withdrew P 12, 000 from the business.

Required:
1. Open the following general ledger accounts using the account numbers shown: Cash (110);
Accounts Receivable (120); Supplies (140); Office Equipment (150); Accumulated Depreciation
(155); Accounts Payable (210); Salaries Payable (220); Eli, Capital (310); Eli, 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 P 4, 700.
b. Salaries of P 1, 800 have accrued at month-end.
c. Depreciation is P 800 for December.
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.

Accounting Cycle of a Service Business

Step 1
Analyzing business transactions from source documents

Step 2
Journalizing business transactions
General Journal
General Journal J-1
Date Accounts Title and Explanation Ref Debit Credit
2019
01-Dec Cash 110 ₱ 150,000
Eli, Capital 310 ₱ 150,000
to record owner's investment of cash in the business

02-Dec Rent Expense 530 8,000

Cash 110 8,000
to record payment of December rent

02-Dec Supplies 140 7,200

Accounts Payable 210 7,200
to record purchased of supplies on account

03-Dec Office Equipment 150 75,000

Cash 110 37,000
Accounts Payable 210 38,000
to record acquired equipment, balance due in 30 days

08-Dec Accounts Payable 210 7,200

Cash 110 7,200
to record payment for supplies purchased on account

14-Dec Salaries Expense 510 6,000

Cash 110 6,000
to record payment of salaries for two weeks

20-Dec Cash 110 20,000

Consulting Revenues 410 20,000
to record performed consulting services

28-Dec Salaries Expense 510 6,000

Cash 110 6,000
to record payment of salaries for two weeks

30-Dec Accounts Receivable 120 48,000

Consulting Revenues 410 48,000
to record performed consulting services on account

31-Dec Eli, Withdrawals 320 12,000

Cash 110 12,000
to record Eli cash withdrawal from the business.
Step 3
Posting to the ledger

General Ledger
Cash 110
Date Explanation Ref Debit Credit Balance
01-Dec Initial Investment J-1 ₱ 150,000 ₱ 150,000
02-Dec payment of December rent J-1 ₱ 8,000 142,000
03-Dec Acquired Equipment in cash and credit basis J-1 37,000 105,000
08-Dec Paid supplies on account J-1 7,200 97,800
14-Dec Paid salaries for two weeks J-1 6,000 91,800
20-Dec Received cash for service rendered J-1 20,000 111,800
28-Dec Paid salaries for two weeks J-1 6,000 105,800
31-Dec Withdrew from the business J-1 12,000 93,800

Accounts Receivable 120

Date Explanation Ref Debit Credit Balance
30-Dec Rendered service on account J-1 ₱ 48,000 ₱ 48,000

Supplies 140
Date Explanation Ref Debit Credit Balance
02-Dec purchased of supplies on account J-1 ₱7,200 ₱7,200
31-Dec Used supplies for the year J-2 2,500 4,700

Office Equipment 150

Date Explanation Ref Debit Credit Balance
03-Dec Acquired Equipment in cash and credit basis J-1 ₱75,000 ₱75,000

Accumulated Depreciation 155

Date Explanation Ref Debit Credit Balance
31-Dec Accumulated depreciation J-2 800 ₱800

Accounts Payable 210

Date Explanation Ref Debit Credit Balance
02-Dec Purchased of supplies on account J-1 ₱ 7,200 ₱7,200
03-Dec Acquired Equipment in cash and credit basis J-1 38,000 45,200
08-Dec Paid supplies on account J-1 ₱ 7,200 38,000

Salaries Payable 220

Date Explanation Ref Debit Credit Balance
31-Dec Accrued salaries for the year J-2 1,800 ₱1,800

Eli, Capital 310

Date Explanation Ref Debit Credit Balance
01-Dec Initial Investment J-1 150,000 ₱150,000
31-Dec closing income summary J-3 42,900 ₱192,900
31-Dec closing drawings J-3 12,000 ₱180,900
 Eli, Withdrawals 320
Date Explanation Ref Debit Credit Balance
31-Dec Withdrew from the business J-1 ₱12,000 ₱12,000
31-Dec closing to capital account J-3 ₱12,000 0

Income Summary 330

Date Explanation Ref Debit Credit Balance
31-Dec Closing of revenue account J-3 ₱68,000 ₱68,000
31-Dec Closing of expense accounts J-3 25,100 42,900
31-Dec Closing to capital account J-3 42,900 0

Consulting Revenues 410

Date Explanation Ref Debit Credit Balance
20-Dec Received cash for service rendered J-1 20,000 ₱20,000
30-Dec Rendered service on account J-1 48,000 68,000
31-Dec Closing of revenue account J-3 68,000 0

Salaries Expense 510

Date Explanation Ref Debit Credit Balance
14-Dec Paid salaries for two weeks J-1 ₱6,000 ₱6,000
28-Dec Paid salaries for two weeks J-1 ₱6,000 ₱12,000
31-Dec Accrued salaries for the year J-2 1,800 13,800
31-Dec Closing of expense accounts J-3 13,800 0

Supplies Expense 520

Date Explanation Ref Debit Credit Balance
31-Dec Used supplies for the year J-1 ₱2,500 ₱2,500
31-Dec Closing of expense accounts J-3 2,500 0

Rent Expense 530

Date Explanation Ref Debit Credit Balance
02-Dec to record payment of December rent J-1 ₱8,000 ₱8,000
31-Dec Closing of expense accounts J-3 8,000 0

Depreciation Expense 540

Date Explanation Ref Debit Credit Balance
31-Dec Accumulated depreciation J-1 ₱800 ₱800
31-Dec Closing of expense accounts J-3 800 0
Step 4
Preparing the trial balance

Unadjusted Trial Balance

Mirmo Eli Tax Firm

Trial Balance
December 31, 2019

Cash ₱ 93,800
Accounts Receivable 48,000
Supplies 7,200
Office Equipment 75,000
Accumulated Depreciation
Accounts Payable ₱ 38,000
Eli, Capital 150,000
Eli, Withdrawals 12,000
Consulting Revenues 68,000
Salaries Expense 12,000
Rent Expense 8,000
₱ 256,000 ₱ 256,000

Step 5
Worksheet (See worksheet at the last page)

Step 6
Journalizing and posting adjusting journal entries

Adjusting Entries
General Journal J-2
Date Accounts Title and Explanation Ref Debit Credit
2019
31-Dec Supplies Expense 520 2,500
Supplies 140 2,500
to record used supplies for the year

31-Dec Salaries Expense 510 1,800

Salaries Payable 220 1,800
to record accrued salaries

31-Dec Depreciation Expense 540 800

Accumulated Depreciation 155 800
to record depreciation for the year
Step 7
Preparing the adjusted trial balance and financial statements

Adjusted Trial Balance

Mirmo Eli Tax Firm

Adjusted Trial Balance
December 31, 2019

Cash ₱ 93,800
Accounts Receivable 48,000
Supplies 4,700
Office Equipment 75,000
Accumulated Depreciation ₱ 800
Accounts Payable 38,000
Salaries Payable 1,800
Eli, Capital 150,000
Eli, Withdrawals 12,000
Consulting Revenues 68,000
Salaries Expense 13,800
Supplies Expense 2,500
Rent Expense 8,000
Depreciation Expense 800
₱258,600 ₱258,600

Income Statement

Mirmo Eli Tax Firm

Income Statement
For the Month Ended December 31, 2019

Revenues
Consulting Revenues ₱ 68,000
Expenses
Salaries Expense ₱ 13,800
Supplies Expense 2,500
Rent Expense 8,000
Depreciation Expense 800 (25,100)
Profit ₱ 42,900
Statement of Changes in Equity
Mirmo Eli Tax Firm
Statement of Changes in Equity
For the Month Ended December 31, 2019

Eli, Capital 12/01/19 ₱ 150,000

Add: Profits 42,900
Total ₱ 192,900
Less: Withdrawals 12,000
Eli, Capital 12/31/19 ₱ 180,900

Balance Sheet
Mirmo Eli Tax Firm
Balance Sheet
As of December 31, 2019

Assets Liabilities
Current Assets Current Liabilities
Cash ₱ 93,800 Accounts Payable ₱ 38,000
Accounts Receivable 48,000 Salaries Payable 1,800
Supplies 4,700 Total Liabilities ₱ 39,800
Total Current Assets ₱ 146,500
Non-Current Assets Owner's Equity
Office Equipment ₱ 75,000 Eli, Capital 12/31/19 ₱ 180,900
Accumulated Depreciation (800)
Total Non-Current Assets ₱ 74,200
Total Assets ₱ 220,700 Total Liabilities and Owner's Equity ₱ 220,700
Step 8
Journalizing and posting closing entries

Closing Entries

General Journal J-3

Date Accounts Title and Explanation Ref Debit Credit
2019
31-Dec Consulting Revenues 68,000
Income Summary 68,000
to close the revenue accounts

31-Dec Income Summary 25,100

Salaries Expense 13,800
Supplies Expence 2,500
Rent Expense 8,000
Depreciation Expense 800
to close the expense accounts

31-Dec Income Summary 42,900

Eli, Capital 42,900
to close the income summary account

31-Dec Eli, Capital 12,000

Eli, Withdrawals 12,000
to close drawing with capital account

Step 9
Preparing post-closing trial balance

Mirmo Eli Tax Firm

Post-closing Trial Balance
For the Month Ended Dec 31, 2019

Cash ₱ 93,800
Accounts Receivable 48,000
Supplies 4,700
Office Equipment 75,000
Accumulated Depreciation (800)
Accounts Payable 38,000
Salaries Payable 1,800
Eli, Capital 12/31/19 180,900
₱ 221,500 ₱ 221,500

Step 10
Journalizing and posting reversing journal entries
 FUNDAMENTALS OF ACCOUNTANCY, BUSINESS AND MANAGEMENT 1
Quarter 3 Module 6-10
Teacher: Jesska SR. So

Name of Learner: _____________________________________ Grade Level: _______________________

Section: _____________________________________________ Date: ___________________________

ACTIVITY SHEET
Problem 1
Comprehensive Problem

Challoner Matero opened a plumbing service, Matero Plumbing. Operations began on April 01, 2019, and
the following transactions were completed during the month:

April 01 Withdrew P 67, 000 from a personal savings account and used it to open a new account in
the name of Matero Plumbing.
02 Acquired a service vehicle costing P 81, 000. A payment of P 17, 500 in cash was made and a
note payable given for the remainder.
03 Paid rent for the month, P 7, 150.
06 Acquired plumbing supplies on account P 15, 700.
07 Paid for three months of advertising and recorded Prepaid Advertising in the amount of
P 6, 000.
08 Cash in the amount of P 18, 350 was received for plumbing services rendered.
09 Acquired additional plumbing supplies for cash, P 8, 050.
11 Paid salaries, P 11, 600.
15 Rendered plumbing services and billed the customers, P 42, 200.
16 Paid P 5, 700 of the amount owed from the transaction of Apr. 06.
19 Paid miscellaneous expense, P 4, 300.
20 Collected P 21, 000 from the customer on the April 15 transaction.
21 Withdrew P 14, 500 from the business.
22 Paid salaries, P 14, 100.
24 Paid the first installment of the note payable, P 3, 850.
25 Paid telephone expense, P 1, 250.
27 Billed the Bel Company for plumbing services rendered, P 14, 150.
Required:
1. Record transactions in the general journal. Use the following account titles: Cash; Account Receivable;
Plumbing Supplies; Prepaid Advertising; Service Vehicle; Accounts Payable; Notes Payable; Matero,
Capital; Matero, Withdrawals; Plumbing Revenues; Plumbing Supplies Expense, Advertising Expense;
Salaries Expense; Rent Expense; Telephone Expense; Depreciation Expense; and Miscellaneous
Expense
2. Post all the journal entries to a ledger.
3. Prepare and complete the worksheet using the following information:
a. Supplies used for the month, P 10, 000.
b. Depreciation is P 2, 000 for Arpil.
c. One month of the advertising has been used.
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.