COMPREHENSIVE REVIEWER - PROBLEMS

ACT1101 - Financial Accounting and Reporting

Problem 1 - Accounting Process

Set 1:
The steps in the accounting cycle are listed in random order below. List the steps in proper sequence, assuming
no worksheet is prepared, by placing numbers 1 to 9 in the blank spaces.

4 a. Prepare a trial balance

2 b. Journalize the transactions.
8 c. Journalize and post-closing entries.
7 d. Prepare financial statements.
5 e. Journalize and post adjusting entries.
3 f. Post to ledger accounts.
9 g. Prepare a post-closing trial balance.
6 h. Prepare an adjusted trial balance.
1 i. Analyze business transactions.

Set 2:
The steps in the accounting cycle are listed in random order below. List the steps in proper sequence, assuming
no worksheet is prepared, by placing numbers 1 to 9 in the blank spaces.

2 a. Post to ledger accounts.

9 b. Journalize and post reversing entries.
6 c. Prepare financial statements.
3 d. Prepare a trial balance
1 e. Journalize the transactions.
7 f. Journalize and post-closing entries.
4 g. Journalize and post adjusting entries.
8 h. Prepare a post-closing trial balance.
5 i. Prepare a worksheet for financial statements

Supplementary Question:
Put an "X" mark in the blank spaces if the given step or process is optional.

a. Post to ledger accounts.

X b. Journalize and post reversing entries.
c. Prepare financial statements.
d. Prepare a trial balance
e. Journalize the transactions.
f. Journalize and post-closing entries.
g. Journalize and post adjusting entries.
X h. Prepare a post-closing trial balance.
X i. Prepare a worksheet for financial statements
Problem 2 - Anayzing the Errors in the Trial Balance
Answer the following questions for each of the errors listed below, considered individually.
a) Did the error cause the trial balance to be out of balance? Indicate equal or unequal.
b) What is the amount of the difference between the trial balance totals (where applicable)?
c) Which of the trial balance totals, debit or credit, is the larger (where applicable)?

Total Difference Larger Total

No. Errors (a) (b) (c)
1. A withdrawal of P 1,000 cash by the owner was recorded by a debit
of P 1,000 to Salary Expense and a credit of P 1,000 to cash. equal None None
2. A P 950 purchase of supplies on accoun t was recorded as a debit
of P 1,950 to Equipment and a credit of P 1,950 to Accounts
Payable. equal None None
3. A purchase of equipment for P 4,5000 on account was not
recorded. equal None None
4. A P 630 receipt on account was recorded as P 630 debit to Cash
and a P 360 credit to Accounts Receivable. unequal 270 Debit
5. A payment of P 1,030 cash on account was recorded only as a
credit to Cash. unequal 1,030 Credit
6. Cash sales of P 9,500 were recorded as a credit of P 9,500 to Cash
and acredit of P 9,500 to Fees Earned. unequal 19,000 Credit
7. The debit to record a P 5,000 cash receipt on account was posted
twice; the credit was posted once. unequal 5,000 Debit
8. The credit to record a P 800 cash payment on account was posted
twice; the debit was posted once. unequal 800 Credit
9. The debit balance of P 9,400 in Accounts Receivable was recorded
in the trial balance as a debit of P 9,300. unequal 100 Credit
10. The advance payment of P 120,000 for rent recorded using a real
account was recorded as P 210,000. equal None None

Problem 3 - Adjusting Process

Set 1:
A premium of P 16,200 was paid for a three-year property insurance policy effective May 1, 2022. Determine the
following for the company whose accounting period ends on September 30:

ANSWER
1. The amount of premium that expired during the year ended
September 30, 2022. 2,250
2. The amount of unexpired premium as at September 30, 2022. 13,950
3. The amount of premium that expired during the year ended
September 30, 2023. 5,400
4. The amount of unexpired premium as at September 30, 2024. 8,550

Set 2:
A company has the following property and equipment accounts on December 31, 2022 before adjustments:

Building 800,000
Accumulated Depreciation - Building 18,126
Office Equipment 53,400
Accumulated Depreciation - Office Equipment 40,050
Furniture and Fixtures 127,800
Accumulated Depreciation - Furniture and Fixtures 31,900
The building is estimated to have a useful life of 25 years at the end of which it could be sold for an estimated P
200,000. The office equipment is estimated to be useful for 5 years but any residual value is insignificant. The
furniture is estimatd to have a life of 8 years with a scrap value of P 35,000.

Determine the following:

ANSWER
1. Depreciation expense for 2022 for building 24,000
2. Accumulated depreciation at December 31, 2022 for building 42,126
3. Depreciation expense for 2022 for office equipment 10,680
4. Accumulated depreciation at December 31, 2022 for office equipment 50,730
5. Depreciation expense for 2022 for furniture and fixtures 11,600
6. Accumulated depreciation at December 31, 2022 for furniture and fixtures 43,500

Set 3:
The amount of accrued salaries if the salaries of store clerks of a shop amount to P 4,000 per day and were last
paid on Friday, December 28. The store was closed on a Sunday.

Determine the following:

ANSWER
1. Salaries Payable at December 31, 2022 8,000
2. Overstatement of expenses in 2022 if accrued salaries are not recorded 0
3. Overstatement of net income for 2022 is accrued salaries are not recorded 8,000

Set 4:
The amount of adjusting entry at June 30, the end of the fiscal year, based on a prepaid insurance account
balance before adjustment, P 15,500, and unexpired amounts per analysis of policies, P 4,500?

ANSWER: 11,000
Problem 4 - Worksheet Preparation
Frisco opened an accounting firm on January 1, 2022. Presented below is the trial balance of the accouning firm
after its first year of operations:

FRISCO ACCOUNTING FIRM

Tria Balance
As at January 1, 2022

Debit Credit
Cash 450,000
Accunts Receivable 1,500,000
Notes Receivable 400,000
Interest Receivable
Office Supplies 50,000
Prepaid Insurance
Prepaid Rent
Office Equipment 600,000
Accumulated Depreciation - Office Equipment
Office Furniture 400,000
Accumulated Depreciation - Office Furniture
Accounts Payable 400,000
Notes Payable 750,000
Interest Payable
Salaries Payable
Utilities Payable
Unearned Accounting Fees 150,000
Frisco, Capital 1,500,000
Frisco, Drawing 50,000
Accounting Fees 1,500,000
Interest Revenue
Salaries Expense 400,000
Office Supplies Expense
Depreciation Expense - Office Equipment
Depreciation Expense - Office Furniture
Insurance Expense 10,000
Rent Expense 350,000
Utilities Expense 50,000
Taxes and Licenses Expense 5,000
Interest Expense
Miscellaneous Expense 35,000
TOTAL 4,300,000 4,300,000

Additional data:
1) Office equipment worth P 500,000 was purchased on October 1, 2022. Another acquisition was made on
December 1, 2022 worth P 100,000. All office equipment has a useful life of 5 years with no salvage value.
2) Office Furniture was purchased on May 1, 2022. It has a useful life of 6 years with a salvage value of P
40,000.
3) Supplies on hand remaining at year-end amounted to P 10,000.
4) P 150,000 advance collection was made from a customer on September 1, 2022 for services to be rendered
for 6 consecutive months commencing on that date.
5) Salaries amounting to P 25,000 have accrued at year-end.
6) The promissory note was issued on October 1, 2022 at a 24% interest per annum. The note, along with
interest, will mature 2 years from issuance date.
7) Utilities incurred during December but will be paid during the second week of January of the following year
amounted t P 10,000.
8) Insurance coverage for 4-months was paid on November 1, 2022.
9) A one-year promissory note was received on December 1, 2022 bearing a 12% interest per annum.
10) Advance rental payments were made on June 1, 2022 representing 14-months rental.

QUESTIONS:
(Round off your answers to whole number or nearest peso.)
1. The adjusted balance of Interest Receivable is _______________.
2. The adjusted balance of Prepaid Insurance is _______________.
3. The adjusted balance of Prepaid Rent is _________________.
4. The amount of Depreciation expense - Office Equipment is ______________.
5. The amount of Depreciation expense - Office Furniture is ______________.
6. The adjusted balance of Interest Payable is ________________.
7. The total of the debit and credit side of the adjustment column of the worksheet is _____________.
8.
The total of the debit and credit side of the adjusted trial balance column of the worksheet is _____________.
9. The profit (loss) for its first year of operations is _________________.
10. The total of the debit side of the income statement column of the worksheet before any adjustment for profit
(loss) is _______________.
11. The total of the credit side of the income statement column of the worksheet before any adjustment for profit
(loss) is _______________.
12. The total of the debit side of the statement of financial position column of the worksheet before any
adjustment for profit (loss) is _______________.
13. The total of the credit side of the statement of financial position column of the worksheet before any
adjustment for profit (loss) is _______________.
14. The carrying amount of office equipment is ________________.
15. The carrying amount of office furniture is ________________.
16. The total assets are ___________________.
17. Thee total liabilities are __________________.
18. The total equity (after considering profit or loss, withdrawals and investments) is ______________.
19. The total revenues are ________________.
20 The total expenses are ________________.