Reference no: EM133004211
Question - a. Juan de la Cruz began professional practice as a system analyst on July 1. He plans to prepare monthly financial statement. During July, the owner completed these transactions (PHP = Philippine Peso, currency of Philippines):
July 1. Owner invested PHp 500,000 cash along with computer equipment that had a market value of php. 120,000 two years ago but was now worth Php. 100,000 only.
July 2. Paid php. 15,000 cash for the rent of office space for the month.
July 4. Purchased php. 12,000 of additional equipment on credit (due within 30 days).
July 8. Completed awork for a client and immediately collected the php. 32,000 cash.
July 10. Completed work for a client and sent a bill for php. 27,000 to be paid within 30 days.
July 12. Purchased additional equipment for php. 8,000 in cash.
July 15. Paid an assistant php. 6,200 cash as wages for 15 days.
July 18. Collected php. 15,000 on the amount owed by the client.
July 25. Paid php. 12,000 cash to settle the liability on the equipment purchased.
July 28. Owner withdrew php. 500 cash for personal use.
July 30. Completed work for another client who paid only php. 40,000 for 50% of the system design.
July 31. Paid salary of assistant php. 700.
July 31. Received PLDT bill, php. 1,800 and Meralco bill php. 3,800.
Required - Prepare the journal entries, T accounts and trial balance for this business.
b. Record the journal entries for the following:
1 - Business started with cash 8,000 and plant & machinery 3,000.
2 - Stock purchase for sale (cash purchase) = 3,000, credit purchase = 5,000
3 - Wages paid 120,000 (including 20,000 relating to a future year).
4 - Salaries paid 200,000 but due 110,000.
5 - Sales made for cash 600,000 and on credit 800,000.
6 - Depreciation 10 percent on plant & machinery.
7 - Goods costing 20,000 destroyed by fire.
8 - Payment made to creditors to the value of 200,000 at 10 percent discount
c. Security Services Inc. as of January 1, 2016 had the following normal balances:
Cash 74,210
Accounts receivable 13,500
Supplies 200
Prepaid rent 3,200
Merchandise inventory (24 @ $265; 1 @ $260) 6,620
Land 4000
Accounts payable 1,950
Unearned revenue 980
Salaries payable 1,000
Common stock 50,000
Retained earnings 47,800
The following transactions took place during 2016 for Palicio Security Services:
1. Paid the salaries payable from 2015.
2. On March 1, 2016, Palicio established a $100 petty cash fund to handle small expenditures.
3. Paid $4,800 on May 1, 2016, for one year's lease on the company van in advance.
4. Paid $7,200 on May 2,2016 for one year's office rent in advance.
5. Purchased $400 of supplies on account.
6. Purchased 100 alarm systems for $28,000 cash during the year.
7. Sold 102 alarm systems for $57,120. All sales were on account. (Compute cost of goods sold using the FIFO cost flow method)
8. Paid $2,100 on accounts payable during the year.
9. Replenished the petty cash fund on August 1. At this time, the petty cash fund had only $7 of currency left. It contained the following receipts: office supplies expense $23, cutting grass $55, and miscellaneous $14.
10. Billed $52,000 of monitoring services for the year.
11. Paid installers and other employees a total of $25,000 cash for salaries.
12. Collected $89,300 of accounts receivable during the year.
13. Paid $3,600 of advertising expense during the year.
14. Paid $2,500 of utilities expense for the year.
15. Paid a dividend of $10,000 to the shareholders.
Required -
1. Prepare the trial balance as at Dec 31, 2016 for Palicio Security Services Inc.
2. Prepare the income statement, statement of changes in equity and balance sheet for Palicio Security Services Inc.