Intermediate Accounting I

Second Semester – AY 2024-2025

Bring Home Activity

Basic Principles

Instruction: Own a notebook in 112. Solve the problems below with your acquired knowledge.

1. The following information were taken from the accounting records of ABC Company for the year ended
December 31, 2025:
Decrease in finished goods inventory P 700, 000
Increase in raw materials inventory 300, 000
Freight-out 900, 000
Factory overhead 6, 000, 000
Direct labor 4, 000, 000
Raw materials purchased 8, 600, 000
There was no work in process inventory at the beginning or at the end of the year. The cost of goods sold is

2. The net sales of ABC Manufacturing Company in 2025 is P580,000. The cost of goods manufactured is
P480,000. The beginning inventories of goods in process and finished goods are P82, 000 and P65, 000,
respectively. The ending inventories are: goods in process – P75, 000, Finished Goods – P55, 000. The selling
expenses and General and Administrative expenses are 5% and 2.5% of cost of sales, respectively. How
much would be the net profit before tax in the year 2025?

3. The financial records of ABC, Inc., were destroyed by fire at the end of 2025. Fortunately, the controller had
kept certain statistical data related to the income statement as presented below:
• The beginning merchandise inventory was P92, 000 and decreased by 20% during the current year.
• Sales discounts amount of P17, 000.
• 20, 000 ordinary shares were outstanding for the entire year.
• Interest expense was P20, 000.
• The income tax rate is 32%.
• Cost of goods sold amounts to P500, 000.
• Administrative expenses are 20% of cost of goods sold but only 8% of gross sales.
• Four-fifths (4/5) of the operating expenses relate to sales activities.
How much is the net profit in the year 2025?

4. The records for ABC Inc. showed the following for 2022:
Jan. 1 Dec. 31
Accrued expenses P1,800 P2,150
Prepaid expenses 720 870
Cash paid during the year for expenses, P42,500. The total amount of expense is

5. The records for ABC Company showed the following for 2022:
Jan. 1 Dec. 31
Unearned revenue P1,600 P2,160
Accrued revenue 1,260 920
Cash collected during the year for revenue, P70,000. The total amount of revenue is

6. Prepare the necessary journal entries to record the following transactions, assuming Moran Company uses a
perpetual inventory system.
(a) Moran sells P50,000 of merchandise, terms 1/10, n/30. The merchandise cost P30,000.
(b) The customer in (a) returned P5,000 of merchandise to Moran. The merchandise returned cost
P3,000.
(c) Moran received the balance due within the discount period.
To record transaction (b), which of the following is not found in the entry/ies? Support your answer with
complete entries.
A. Cr. Cost of Goods Sold, 3,000 C. Dr. Sales Returns and Allowances, 5,000
 B. Dr. Merchandise Inventory, 5,000 D. Cr. Accounts Receivable, 5,000

(USE THE FF: INFORMATION TO ANSWER THE NEXT 2 ITEMS:)

Three items are missing in each of the following columns and are identified by letter.
Sales revenue P (a) P820,000
Sales returns and allowances 25,000 20,000
Sales discounts 10,000 15,000
Net sales 440,000 (d)
Beginning inventory (b) 300,000
Cost of goods purchased 220,000 (e)
Ending inventory 170,000 303,000
Cost of goods sold 290,000 555,000
Gross profit (c) (f)
st
7. Determine the amount of (a) under the 1 column
8. Determine the amount of (e) under the 2nd column

9. ABC Garment Company purchased equipment on June 1 for P108,000, paying P24,000 cash and signing a
6%, 2-month note for the remaining balance. The equipment is expected to depreciate P24,000 each year.
ABC Garment Company prepares monthly financial statements. On June 30, determine the total increase to
ABC’s expenses given the information provided.

(USE THE FF: INFORMATION TO ANSWER THE NEXT 3 ITEMS:) The PAW Mammal Happenstances
operates a drive through tourist attraction. The company adjusts its accounts at the end of each month. The
selected accounts appearing below reflect balances after adjusting entries were prepared on April 30. The
adjusted trial balance shows the following:
Prepaid Rent P18,000
Equipment 30,000
Accumulated Depreciation—Equipment 5,500
Unearned Ticket Revenue 400
Other data:
1. Three months' rent had been prepaid on April 1.
2. The equipment is being depreciated at P6,000 per year.
3. The unearned ticket revenue represents tickets sold for future visits. The tickets were sold at P4.00
each on April 1. During April, twenty of the tickets were used by customers.

10. The age of the equipment in months.

11. Total expenses for the month based on the given data.
12. How much is the net increase (decrease) in equity during the month.

(USE THE FF: INFORMATION TO ANSWER THE NEXT 2 ITEMS: )

ABC Company has an accounting fiscal year which ends on June 30. The company also has a policy of paying
the weekly payroll on Friday. Payroll records indicate the following salary costs were incurred.
Date Amount
Monday June 28 P3,000
Tuesday June 29 3,800
Wednesday June 30 3,500
Thursday July 1 3,000
Friday July 2 2,400
13. Assuming ABC doesn’t adopt reversing entry, which of the following entries on July 2 is correct?
A. Dr. Salaries payable Cr. Cash P10,300
B. Dr. Salaries expense Cr. Cash P15,700
C. Dr. Salaries payable Cr. Cash P15,700
D. Dr. Salaries expense 10,300 Dr. Salaries payable 5,400 Cr. Cash P15,700
E. Dr. Salaries payable 10,300 Dr. Salaries expense 5,400 Cr. Cash P15,700

14. Assuming ABC prepares reversing entry on July 1, which of the following entries shall be made on July
2?
A. Dr. Salaries payable Cr. Cash P10,300
B. Dr. Salaries expense Cr. Cash P15,700
 C. Dr. Salaries payable Cr. Cash P15,700
D. Dr. Salaries expense 10,300 Dr. Salaries payable 5,400 Cr. Cash P15,700
E. Dr. Salaries payable 10,300 Dr. Salaries expense 5,400 Cr. Cash P15,700

15. The trainee accountant has forgotten to make an accrual for December rent in the financial statements
for the year ended December 31, 20x2. Rent is charged to arrears at the end of Feb., May, August and
November, each year. The bill payable in Feb., is expected to be P300,000. Draft income statement shows a
profit of P250,000 and draft balance sheet shows net assets of P2,750,000. What is the profit or loss for the
year and what is the net asset position after the accrual has been included in the financial statements?
A. Profit for the year P150,000; Net assets, P2,650,000
B. Profit for the year P150,000; Net assets, P2,850,000
C. Profit for the year P350,000; Net assets, P2,650,000
D. Profit for the year P350,000; Net assets, P2,850,000

16. ABC receives rent for subletting part of its office block. The rent, receivable quarterly in advance, follows:
Date of receipt Period covered Amount
October 1, 20x1 3 months to December 31, 20x1 P75,000
December 30, 20x1 3 months to March 31, 20x2 75,000
April 4, 20x2 3 months to June 30, 20x2 90,000
July 1, 20x2 3 months to September 30, 20x2 90,000
October 1, 20x2 3 months to December 31, 20x2 90,000
What figures, based on these receipts, should appear on the entity’s financial statements for the year ended
November 30, 20x2?
A. Income statement, P340,000 debit Balance sheet, Dr. Rent in arrears P30,000
B. Income statement, P345,000 credit Balance sheet, Cr. Unearned rent P60,000
C. Income statement, P340,000 credit Balance sheet, Cr. Unearned rent P30,000
D. Income statement, P340,000 credit Balance sheet, Dr. Rent in arrears P30,000

17. The income statement for the month of June, 2025 of Delgado Enterprises contains the following
information:
Revenues P7,000
Expenses:
Wages Expense P2,000
Rent Expense 1,000
Supplies Expense 300
Advertising Expense 200
Insurance Expense 100
The entry to close Income Summary to Delgado, Capital includes
A. a debit to Revenue for P7,000.
B. credits to Expenses totaling P3,600.
C. a credit to Income Summary for P3,400
D. a credit to Delgado, Capital for P3,400.

(USE THE FF: INFORMATION TO ANSWER THE NEXT 3 ITEMS: )

ABC Insurance Agency prepares monthly financial statements. Presented below is an income statement for the
month of June that is correct on the basis of information considered.
ABC INSURANCE AGENCY
Income Statement
For the Month Ended June 30
———————————————————————————————————————————
Revenues
Service Revenue............................................................................. P35,000
Expenses
Salaries and wages expense .......................................................... P6,000
Rent expense .................................................................................. 4,200
Depreciation expense ..................................................................... 2,800
Advertising expense........................................................................ 800
Total expenses ................................................................................ 13,800
Net income ............................................................................................... P21,200
Additional Data: When the income statement was prepared, the company accountant neglected to take into
consideration the following information:
1. A utility bill for P2,000 was received on the last day of the month for electric and gas service for the month of
June.
2. A company insurance salesman sold a life insurance policy to a client for a premium of P20,000. The agency
billed the client for the policy and is entitled to a commission of 20%.
3. Supplies on hand at the beginning of the month were P4,000. The agency purchased additional supplies
during the month for P3,500 in cash and P1,200 of supplies were on hand at June 30.
4. The agency purchased a new car at the beginning of the month for P24,000 cash. The car will depreciate
P6,000 per year.
5. Salaries owed to employees at the end of the month total P5,300. The salaries will be paid on July 5.

Compute the correct amount of

18. Total revenue
19. Total expenses
20. Net income is