ACCOUNT1: FUNDAMENTALS OF ACCOUNTING PART 1

FINAL REQUIREMENT

PART 1:
After working for 20 years in a real estate company, Selina Rimando opened her own real estate consultancy firm called "Rima
Consultancy Services" using the personal savings she had while working. She was able to establish a good client portfolio cons
individuals and stable mid-sized companies which encouraged her to put up her own company.

The following were the transactions during March 2020, the firm's first month of business operations.

1-Mar
1-Mar
1-Mar

1-Mar
1-Mar
4-Mar
6-Mar
7-Mar
10-Mar
15-Mar
16-Mar
17-Mar
20-Mar
25-Mar
27-Mar

30-Mar
31-Mar

Month-end adjustments
[a]

[b]
[c]
[d]

REQUIREMENTS
1
2
3
4
PART 2:
Montana Trading is a retail business that is engaged in buying and selling common household and cooking items. It is solely ow
Katherine Montana. Since the business is still new and small-sized, it is still using periodic inventory system. The following are
opening balances, based on its July 31, 2019 post closing trial balance

Montana Trading
Post Closing Trial Balance
31 July 2019

The following are the transactions during August 2019:

1-Aug
3-Aug
3-Aug
7-Aug
8-Aug
10-Aug
11-Aug
12-Aug
13-Aug
15-Aug
18-Aug
20-Aug
21-Aug
 23-Aug
29-Aug
30-Aug
31-Aug

REQUIREMENTS
1

2
3
4

PART 3:
Vermont Trading is a VAT-registered retailer of beauty products. A 12% VAT is included in all its purchases and sales-related tr
The following transactions took place in September 2020

2-Sep
4-Sep
5-Sep
6-Sep
8-Sep
9-Sep
10-Sep
28-Sep
29-Sep
30-Sep

Requirement
1

PART 4:
Axion Trading is a merchandising business engaged in selling cleaning supplies and is using Periodic Inventory System. All purc
directly stored in the warehouse and all sales are directly transferred out from the warehouse.

On November 11, 2020, a flash flood caused damage to the merchandise stored in the warehouse of Axion Trading. You were
submit an estimate of the merchandise destroyed in the warehouse.
The following data were obtained:

After the flash flood, the Company immediately conducted a physical inspection of the cleaning supplies in the warehouse. Ba
count, total merchandise inventory that are still in good condition and can be sold is P580,000 which is still part of the ending

Requirement:
1
ACCOUNT1: FUNDAMENTALS OF ACCOUNTING PART 1
FINAL REQUIREMENT

ACCOUNTING FOR SERVICE BUSINESS

After working for 20 years in a real estate company, Selina Rimando opened her own real estate consultancy firm called "Rimando
Consultancy Services" using the personal savings she had while working. She was able to establish a good client portfolio consisting of fe
individuals and stable mid-sized companies which encouraged her to put up her own company.

The following were the transactions during March 2020, the firm's first month of business operations.

Selina Rimando invested P500,000 into the business, Rimando Consultancy Services
Paid monthly rent expense, P25,000
Bought office equipment worth P300,000 from Office Warehouse. Terms: 50% downpayment, balance n/30
Bought various office furniture worth P200,000. Terms: 50% downpayment. Issued a 12%, 90-day promissory note to Muebl
Asia for the remaining balance.
Bought a car worth P800,000 under the business name from Toyota. Terms: 25% downpayment, balance, n/60
Paid municipal licenses and business permits, P5,000.
Received P30,000 from Maggie del Mundo for consultancy services rendered
Billed Kristina Reyes, P50,000 for consultancy services rendered. Terms: EOM
Bought various office supplies from National Bookstore, P10,000. Terms: n/30
Paid the salaries of her two staff, P15,000
Received P30,000 from Wayne Santos for consultancy services rendered
Paid fuel expenses, P3,000
Billed Drew Vinzon, P50,000 for consultancy services rendered. Received 50% downpayment, balance n/10
Selina Rimando withdrew P10,000 for personal use
Quickworks billed Rimando Consultancy Services, P5,000 for the repairs and maintenance of the latter's office equipment.
Terms: n/15
Collected the remaining amount due from Drew Vinzon
Paid the salaries of her two staff, P15,000

Month-end adjustments
Depreciation has to be recorded (consider the date when the assets were purchased in computing for depreciation expense):
- Office equipment has an estimated useful life of 5 years with no salvage value
- Office furniture has an estimated useful of 5 years with no salvage value
- The vehicle has an annual depreciation of 10%.

Interest on the promissory note to Muebles Asia for 30 days has to be accrued
Utilities expense of P15,000 has to be accrued
Office supplies still unused, P7,000

REQUIREMENTS
Prepare the Adjusted Trial Balance of Rimando Consultancy Services as of March 31, 2020
Prepare the Income Statement of Rimando Consultancy Services for the month ended March 31, 2020
Prepare the Statement of Changes in Owner's Equity of Rimando Consultancy Services for the month ended March 31, 2020
Prepare the Statement of Financial Position of Rimando Consultancy Services as of March 31, 2020
 ACCOUNTING FOR MERCHANDISING BUSINESS
Montana Trading is a retail business that is engaged in buying and selling common household and cooking items. It is solely owned by
Katherine Montana. Since the business is still new and small-sized, it is still using periodic inventory system. The following are the
opening balances, based on its July 31, 2019 post closing trial balance

Montana Trading
Post Closing Trial Balance
31 July 2019

Account Titles
Cash
Accounts Receivable
Merchandise Inventory, July 31
Unused office supplies
Office Equipment
Furniture & Fixtures
Accounts payable
Notes payable (12%, 180-day note issued to Primark Inc.)
Katherine Montana Capital, July 31

TOTAL

Additional Information about the opening balances on 31 July 2019:

1. The notes payable pertains to 12%, 180-day promissory note issued to Primark Inc. for the purchase of furniture & fixtures
2. Katherine Montana Capital, July 31 consists of her original investment of P150,000 and net income from July 1 to 31 of
P42,000 which was closed to her capital account

The following are the transactions during August 2019:

Purchased various household items from Yorkshire General Merchandise, P50,000. Terms: 2/10, n/30
Sold goods to Ms. Mayette Ocampo, P30,000. Terms: 2/10, n/30
Paid freight-out to J&T Courier on its sale to Ms. Mayette Ocampo, P 2,500
Sold goods to Mervin Sy, P30,000. Terms 2/10, n/30
Mervin Sy returned goods to Montana Trading due to slight defects. Mervin Sy agreed to an allowance of P2,000
Various cash sales, P 120,000
Paid Yorkshire the amount due in full
Cash customer returned defective goods worth P1,000. Montana agreed to refund the customer
Collected the amount due from Mayette Ocampo in full
Paid office salaries, P8,000; salesmen salaries, P7,000; salesmen commission, P2,000
Full collection of the remaining balance due from Mervin Sy
Received a billing invoice from ACE Repair Shop for the repairs of office equipment, P3,000. Term, n/15
Paid the monthly rent, P15,000
 Purchased various household items from Vermont Merchandise, P30,000. Terms, 2/10, n/30
Katherine Montana withdrew P5,000 for personal use
Paid office salaries, P8,000; salesmen salaries, P7,000; salesmen commission, P2,000
The following adjustments have to be effected for the month
a) No depreciation has been taken up for 2 months. Depreciation expense - office equipment is P3,000 and depreciation
expense - furniture and fixtures is P 2,500
b) No interest has been accrued for 60 days pertaining to the notes payable to Primark
c) Utilities expense of P10,000 and communication expense of P5,000 have to be accrued
d) Office supplies still on hand is P3,000
e) Merchandise inventory on August 31, based on physical count is P 52,000

REQUIREMENTS
Prepare the Adjusted Trial Balance of Montana Trading as of August 31, 2019
Prepare the Income Statement (using function of expense method) of Montana Trading for the month ended August 31, 2019
Prepare the accompanying notes to Income Statement
Prepare the Statement of Changes in Owner's Equity of Montana Trading for the month ended August 31, 2019
Prepare the Statement of Financial Position of Montana Trading for the month ended August 31, 2019

ACCOUNTING FOR VAT

Vermont Trading is a VAT-registered retailer of beauty products. A 12% VAT is included in all its purchases and sales-related transaction
The following transactions took place in September 2020

Purchased merchandise from Beauty Plus Inc., P120,000. Terms: n/30

Various cash sales, P224,000
Returned goods to Beauty Plus Inc. P11,200
Various returns of goods from cash customers, P3,360
Sold merchandise to Jessie Tolentino, P22,400. Terms: n/30
Jessie Tolentino returned goods worth P1,680 due to wrong specification
Purchased merchandised from Woodmark Company, P100,800. Terms: n/30
Various cash sales, P95,200
Various sales returns from cash customers, P2,800
Returned goods to Woodmark Company worth, P3,360

Requirement
How much is the VAT payable to be remitted to the BIR on or before October 25?

ESTIMATED COST OF ENDING INVENTORY DESTROYED BY FLOOD

Axion Trading is a merchandising business engaged in selling cleaning supplies and is using Periodic Inventory System. All purchases are
directly stored in the warehouse and all sales are directly transferred out from the warehouse.

On November 11, 2020, a flash flood caused damage to the merchandise stored in the warehouse of Axion Trading. You were asked to
submit an estimate of the merchandise destroyed in the warehouse.
The following data were obtained:
Historical data
Cost of sales (as a percentage of net sales) is normally estimated at 50% for the past five years

Data during 2020 (current data):

Net sales (January 1 to November 11, 2020): P 3,200,000 (all coming from warehouse stocks)
Merchandise Inventory, January 1, 2020 was P 2,000,000 (all are stored in the warehouse stocks)
Purchases (all are immediately stored in the warehouse) from January 1 to November 11, 2020: P1,000,000
Transportation-in of purchases from January 1 to November 11 2020: P80,000
Various purchase returns from January 1, 2020 to November 11, 2020: P60,000

After the flash flood, the Company immediately conducted a physical inspection of the cleaning supplies in the warehouse. Based on the
count, total merchandise inventory that are still in good condition and can be sold is P580,000 which is still part of the ending inventory.

Requirement:
How much is the estimated cost of merchandise inventory destroyed by flash flood?
Debit Credit
50,000
30,000
67,000
5,000
100,000
80,000
60,000
80,000
192,000

332,000 332,000
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