Question

1. Yellow Mango Company had the following transactions during 2016:
• Sales of Php 4,500 on account
• Collected Php 2,000 for services to be performed in 2017
• Paid Php 1,625 cash in salaries
• Paid Php 5,000 for insurance effective 2017.
What is Yellow Mango’s 2016 net income/net loss using accrual accounting?

2. On January 1, 2016, Ms. Scarlet set up a sole proprietorship. She contributed cash of Php 1,500,000 and secured a loan of Php 220,000 . During the year, total revenues were Php 204,000 and total costs and expenses were Php 128,000. Ms. Scarlet withdrew Php 10,000 on December 15. There were no additional activities affecting owner’s equity. By December 31, 2016, liabilities had increased to Php 240,000. What is the amount of total assets that should be reported on the December 31, 2016 balance sheet?

3. Colonel Mustard is the owner of the Mustard Appliance Repair Shop. On January 1, 2016, the assets, liabilities and owner’s capital in the business were: Cash, Php 2,000; Accounts Receivable, Php 400; Supplies, Php 500; Equipment, Php 6,000; Accounts Payable, Php 900; Mustard, Capital, Php 8,000. The business transactions for the month of January were as follows:
a) Paid Php 300 of outstanding accounts payable.
b) Received Php 100 from customers for balance on account.
c) Purchased Php 250 worth of supplies on account.
d) Returned a defective piece of equipment that was purchased last month and received a cash refund of Php 1,200.
e) Borrowed Php 10,000, through a promissory note, from a bank payable in 6 months.
f) Paid supplier Php 200 balance on account.
g) Purchased equipment for Php 800, giving Php 200 cash and promising to pay the balance in 60 days.
h) Bought supplies paying Php 650 cash
i) Collected a Php 250 check from customer on balance due.
j) Rendered services worth Php 2,000 and was paid in cash.
What is the balance of Accounts Payable as of January 31, 2016?

4.At the end of October, the first month of operations, the following selected data were taken from the financial statements of ABC Company:
Net Income for October 102,500
Total Assets at October 31 228,750
Total Liabilities at October 31 60,500
Total Owner’s Capital at October 31 168,250
The following adjusting entries were omitted at the end of the month when the balances above were arrived at:
a) Supplies used during October $800
b) Depreciation of equipment for October $3,000
c) Unbilled fees earned at October 31 $1,200
d) Accrued wages at October 31 $500

What is the correct Net Income?
What is the correct Total Assets?

5. DEF Co. bought supplies from GHI bookstore for P1,000 cash on Jan. 1 2017. He used P600 of supplies throughout the year. DEF Co. was paid by JKL Inc. for P6,000 on August 1, 2017 for services to be rendered monthly throughout the year for 12 months. DEF Co. prepares adjusting entries for these transactions under the method that initially records prepaid expenses as expenses and records unearned revenues as revenues. Also, the company follows the calendar year in preparing its adjusting entries. What is the net profit or loss for the year from these transactions? (Indicate if profit or loss.)

Answer 1

1) Sale    4500

Salaries -1625

Net income 2875

Insurance paid and service fee collected willn't be included as they are accrued income and expense and those would be reflected in 2017 financial statements.

2) Asset = capital + liability and,

Capital = 1566000 [1500000+(204000-128000)-10000]

Liability = 240000

Asset = 1806000 [240000+1566000]

3) Opening balance 900

Paid outstanding payable -300

Purchased supplies 250

Borrowings from bank 10000

Paid to supplier -200

Bought equipment 600

Balance on account payable 11250

4) Aseet = Capital + Liability

Asset = 31225750 [31228750-3000]

Liability = 3162200 [3160500+1200+500]

Capital = 31266050  [ 31168,250+102500-3000-1200-500]

Net income =97800 [102500-3000-1200-500]

5) Profit = 1500 [(6000*5/12)-1000]