JPIA 2011-2012 I Page 1 of 3 I

JUNIOR PHILIPPINE INSTITUTE OF ACCOUNTANTS

University of Negros Occidental – Recoletos Chapter

Qualifying Exam Review 2011

ACCOUNTING CYCLE

Macapasar Company was organized on January 1, 2010 with an authorized ordinary and
preference share capital of 550,000 and 150,000 shares respectively. The ordinary
share has a par value of P20 while the preference share has P5. Below are the accounts
and its respective balances that were taken from the company’s ledger:
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During December, the last month of the calendar year, the following transaction
were completed:
Dec. 1 Received subscription for 25,000 ordinary shares and 25,000
preferences share at P50 per share and P15 per share, respectively.
There was a down payment of 60% of the subscription price.
1 Paid rent for December by issuing Check No. 10100, P150,000.
1 Purchased office equipment for P200,000, 30% of which was paid in
cash and the company issued a one year promissory note for the
remaining balance with a stated interest rate of 12% per annum. The
note has a market interest of 10% per annum.
3 Purchased merchandise on account from Failing Company, terms 2/10
EOM, n/60 FOB shipping point, P400,000.
4 Paid transportation charges on purchase of December 3, P30,000.
5 Sold merchandise on account to Mr. Carlos Hidalgo, terms: 2/10, n/30
FOB destination, P870,000.
8 Received P250,000 from customers on account.
9 Returned P80,000 of damaged merchandise purchased from Failing
Company on Dec. 3, receiving credit from the seller.
Sold merchandise for cash, P466,000.
10
Issued Check No. 10101 for merchandise purchased on December 3
14 from Failing Company.
Received merchandise returned from Mr. Carlos Hidalgo on sale of
14 Dec. 5 for P70,000.
Issued Check No. 10102 for advertising expense for last half of
15 December, P45,000
Received the balance due on the subscription on Dec. 1 and shares
15 were issued to subscribers.
Deposit P2,341,000 to Metro Bank.
15
Received cash from Mr. Carlos Hidalgo from sale of December 5.
16
Issued Check No, 10103 merchandise for cash, P450,000.
19
Issued Check No. 10104 to suppliers on account, P475,000.
20
Purchased merchandise on account from Ms. Tam Batchoy. The
21 company availed a trade discount of 10%, 15%, and 20%, terms 5/10,
n/30 FOB Shipping Point, P900,000.
Paid freight, shipment and handling on purchased made on December
22 21, P100,000.
Issued Check Nos. 10105 and 10106 on sales salaries P250,000 and
28 office salaries P152,500, respectively.
Sold merchandise on account to Mr. Kina Mote for P377,000, terms:
29 2/10, n/30 FOB destination.
Paid for merchandise purchased on December 21 from Ms. Tam
31 Batchoy by issuing Check No. 10107.
Sold merchandise for cash, P455,000.
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31
Issued Check No. 10108 for utilities expense of P49,400 and from cash
31 on hand paid miscellaneous administrative expenses of P15,000.
Declared cash dividends of P0.5 per share to ordinary shareholders
31 and P0.60 to preference shareholders of record January 31, 2011 and
payable on February 15, 2011.
Treasury shares represent 20,000 ordinary shares reacquired at P25
31 per share, 65% of these shares were reissued at P28 on this date.
It was agreed by the board of director that the cash on hand must be
31 20% of the total cash any excess thereof will be deposited to Metro
Bank. If there is a deficiency such deficiency will be eliminated by
withdrawing sufficient cash to Metrobank to maintain the proportion.

Adjustment data:

a. Physical count was made and the actual merchandise on hand at year end
is P1,250,000.
b. Supplies used: Office – P60,000; Store – P100,000.
c. Insurance account represents the cost of a 2-year insurance policy dated
March 31, 2010.
d. The company pays their employees on a weekly basis, 6-days a week with
a wage rate of P345 daily. Salaries are given every Tuesday and the last
payment was made on the said day. December 31 is a Thursday.
e. The note payable balance on November 30, 2010 represents a 6-month,
10% note issued on October 1, 2010. The interest is payable upon
maturity of the note.
f. The note receivable account is a 3-month, 12% note received on
November 1, 2010. The interest on the note is collectible upon due date.
g. Estimated uncollectible accounts at the end of the year are 3% of the
accounts receivable balance at December 31, 2010. It is also estimated
that the bad debts will be 4% of net sales but the aging of accounts
receivable revealed that the balance of allowance for bad debts accounts
must be P194,580.
h. Depreciation on store and office equipment, 10% per year.

Instructions:

1. Prepare the journal entries for the December transactions. Add accounts
as needed.
2. Post the entries to the T accounts.
3. Prepare the ten (10) column worksheet.
4. Journalize and post the adjusting entries. Add accounts as needed.
5. Prepare in good form a complete set of financial statement.
6. Journalize and post the closing entries.
7. Prepare the post closing trial balance.
8. Journalize the reversing entries.