Practice Set

EJ Manufacturing Corp is a retailer of Softdrinks with a sales price of P30 and uses perpetual system of
inventory. It started its operations on January 1, 2O16. The company's unadjusted trial balance as of
December 31,2O19 is as follows:

Unadjusted Trial Balance

ACCOUNT TITLES Debit Credit EJ Co. started a promotio
Cash and Cash Equivalents 4,950,000.00 returned, customers recei
80% of the cans reaching
Trade and Other Receivables 2,575,000.00 distributed 50% of the ex
Merchandise Inventory 2,745,000.00
Premiums - glass 450,000.00 On April 1, 2019, EJ Co.
Prepayments 565,300.00 Interest is payable semian
Property and Equipment 6,236,834.00 12 years effective interest rate of 1
Accumulated Depreciation 344,000.00 3 years
Right of Use Asset 1,352,000.00 3.0373
Accumulated Depreciation 135,200.00
Trade and Other Payables 1,205,000.00 On January 1, 2018, EJ C
Notes Payable 4,000,000.00 2500000 P1,250,000 down and sig
Discount on Note Payable 811,136.00 0.7118 12% on January 1, 2021. The
PVF with 4 decimal plac
Lease Liability 1,067,200.00
Bonds Payable 2,000,000.00 5 years 10% 200,000
Premium on Bonds Payable 86,596.00 On January 1, 2018, EJ C
Share Capital, 10o par 6,000,000.00 useful life of the asser is
Share Premium 500,000.00 P200,000 and are due on
Retained Earnings 1,800,000.00 value on January 1, 2016
Sales 12,000,000.00 implicit interest rate of 1
title to the lessee upon ex
Cost of Sales 5,200,000.00
Salaries and Wages 1,552,000.00
Depreciation Expense 350,000.00
Light and Water 228,500.00
Insurance Expense 200,000.00 The following equity tran
Repairs and Mainenance 340,550.00 reflected in the books of
Taxes and Licenses 144,500.00
Representation Expense 344,400.00 a. On January 26, the ent
Office Supplies Expense 234,700.00 share.
SSS, PHIC, HDMF Premiums Expense 403,000.00
Advertising Expense 230,000.00 b. On April 4, the entity so
Premium Expense 120,000.00 share.
Interest Expense 105,076.00 ###
TOTAL 29,137,996.00 29,137,996.00
c. On June 1, the entity d
payable July 5, to shareh

d. On November 1, the e
value from P100 to P50.
share split.

e. On December 5, 4000
hand equipment. The equ
the preevious owner at a
valued at P260,000
. started a promotional program in the current year. For every 20 empty cans
ed, customers receive a glass with a cost of P15 The entity estimated that only
f the cans reaching the market will be redeemed and the entity already
uted 50% of the expected number of premiums to be distributed.

ril 1, 2019, EJ Co. issued 3-year 12% bonds with face amount of P2,000,000.
st is payable semiannually April 1 and October 1 and it is said to have an
ve interest rate of 10%.. The bonds were issued for 2,101,520.

nuary 1, 2018, EJ Co. acquired a tract of land for P5,250,000. The entity paid
0,000 down and signed a noninterest bearing note for the balance which is due
uary 1, 2021. The prevailing interest rate for this type of nore was 12%. Use
with 4 decimal places.

nuary 1, 2018, EJ Co. leased machinery from My Co. for a 10-year period. The
life of the asser is 20 years. Equal annual payments under the lease are
000 and are due on January 1 of each year started January 1, 2018. The present
on January 1, 2016 of the lease payments over the lease term discounted at
it interest rate of 10% was P1,352,000. The lease provides for a transfer of
the lessee upon expiration of the lease term.

llowing equity transactions were incurred during the current year but not
ed in the books of EJ Co.:

January 26, the entity reacquired for cash 5,000 shares for P110 per

April 4, the entity sold for cash 3,000 shares of treasury for P140 per

une 1, the entity declared a cash dividend of P20 per share,

e July 5, to shareholders of record on July 1.

November 1, the entity declared a 2 for 1 split and changed the par
from P100 to P50. On November 20, shares were issued for the
split.

December 5, 4000 shares were issued in exchange for a second

quipment. The equipment originally cost P400,000 was carried by
eevious owner at a carrying amount of P200,000 and was fairly
d at P260,000
 Unadjusted Trial Balance Adjustments
ACCOUNT TITLES Debit Credit Debit Credit
Cash and Cash Equivalents 4,950,000.00 420,000.00 1,910,000.00
Trade and Other Receivables 2,575,000.00
Merchandise Inventory 2,745,000.00
Premiums - glass 450,000.00
Prepayments 565,300.00
Property and Equipment 6,236,834.00 260,000.00
Accumulated Depreciation 344,000.00
Right of Use Asset 1,352,000.00
Accumulated Depreciation 135,200.00
Trade and Other Payables 1,205,000.00 172,165.00
Cash Dividend Payable 1,160,000.00 1,160,000.00
Notes Payable 4,000,000.00
Discount on Note Payable 811,136.00 382,664.00
Lease Liability 1,067,200.00 93,280.00
Bonds Payable 2,000,000.00
Premium on Bonds Payable 86,596.00
Share Capital, 100 par 6,000,000.00 200,000.00
Share Premium 500,000.00 60,000.00
Treasury Shares 550,000.00 330,000.00
Share Premium-Treasury Shares 90,000.00
Retained Earnings 1,800,000.00 1,160,000.00
Sales 12,000,000.00
Cost of Sales 5,200,000.00
Salaries and Wages 1,552,000.00
Depreciation Expense 350,000.00
Light and Water 228,500.00
Insurance Expense 200,000.00
Repairs and Mainenance 340,550.00
Taxes and Licenses 144,500.00
Representation Expense 344,400.00
Office Supplies Expense 234,700.00
SSS, PHIC, HDMF Premiums Expense 403,000.00
Advertising Expense 230,000.00
Premium Expense 120,000.00 120,000.00
Interest Expense 105,076.00 541,549.00

TOTAL 29,137,996.00 29,137,996.00 4,304,829.00 4,304,829.00

 Adjusted Trial Balance Income Statement Balance Sheet
Debit Credit Debit Credit Debit Credit
3,460,000.00 3,460,000.00
2,575,000.00 2,575,000.00
2,745,000.00 2,745,000.00
450,000.00 450,000.00
565,300.00 565,300.00
6,496,834.00 6,496,834.00
344,000.00 344,000.00
1,352,000.00 1,352,000.00
135,200.00 135,200.00
1,377,165.00 1,377,165.00

4,000,000.00 4,000,000.00
428,472.00 428,472.00
973,920.00 973,920.00
2,000,000.00 2,000,000.00
86,596.00 86,596.00
6,200,000.00 6,200,000.00
560,000.00 560,000.00
220,000.00 220,000.00
90,000.00 90,000.00
640,000.00 640,000.00
12,000,000.00 12,000,000.00
5,200,000.00 5,200,000.00
1,552,000.00 1,552,000.00
350,000.00 350,000.00
228,500.00 228,500.00
200,000.00 200,000.00
340,550.00 340,550.00
144,500.00 144,500.00
344,400.00 344,400.00
234,700.00 234,700.00
403,000.00 403,000.00
230,000.00 230,000.00
240,000.00 240,000.00
646,625.00 646,625.00

28,406,881.00 28,406,881.00 10,114,275.00 12,000,000.00 18,292,606.00 16,406,881.00

1,885,725.00
18,292,606.00 18,292,606.00
Adjusting Entry
1 Premium Expense 120,000.00
Est. Premium Liability 120,000.00

2 Interest Expense 52,165.00

Interest Payable 52,165.00

3 Interest Expense 382,664.00

Discount on Notes Pyable 382,664.00

4 Interest Expense 106,720.00

Lease Liability 93,280.00
Cash 200,000.00

5
a Treasury Shares 550,000.00
Cash 550,000.00

b Cash 420,000.00
Treasury Shares 330,000.00
S/P-Treasury 90,000.00

c Retained Earnings 1,160,000.00

Cash Dividend payable 1,160,000.00

Cash Dividend Payable 1,160,000.00

Cash 1,160,000.00

d Issued 116,000 new shares with par value of P50, as a result of 2-for-1 split of 58,000 old sh

e. Equipment 260,000.00
Share Capital 200,000.00
Share Premium 60,000.00

f R/E-Unappropriated 220,000.00
R/E-Appropriated for TS 220,000.00
2-for-1 split of 58,000 old shares with par value of P100.
HAHAHAHAHAHAHAHA! GOD BLESS GUYS. PAKABAIT KAYO