Sample Part A Questions

(a) Paid rent ₱12,000 for 1 year in advance. Which financial statements are affected?

Statement of Financial Position (Prepaid Rent ↑, Cash ↓) + Statement of Cash Flows (Operating outflow)

(a) Collected ₱25,000 accounts receivable from customers. Which financial statements are affected?

Statement of Financial Position (Cash ↑, AR ↓) + Statement of Cash Flows (Operating inflow)

(a) Bought equipment ₱80,000 on account. Which financial statements are affected?

Statement of Financial Position (Equipment ↑, Accounts Payable ↑)

(a) Issued common stock ₱100,000 cash. Which financial statements are affected?

Statement of Financial Position (Cash ↑, Capital ↑) + Statement of Cash Flows (Financing inflow)

(b) Salaries Expense — permanent or temporary? Do we close it?

Temporary → Yes, close to Income Summary

(b) Accumulated Depreciation — permanent or temporary? Do we close it?

Permanent (contra-asset) → No

(b) Unearned Revenue — permanent or temporary? Do we close it?

Permanent (liability) → No

(b) Income Summary — permanent or temporary? Do we close it?

Temporary (clearing account) → Yes, close to Capital

(b) Supplies — permanent or temporary? Do we close it?

Permanent (asset) → No

(b) Dividends/Drawings — permanent or temporary? Do we close it?

Temporary (contra-capital) → Yes, close to Capital

(c) Provided services for ₱40,000, customer paid immediately. Journal entry?

Dr Cash 40,000, Cr Service Revenue 40,000

(c) Paid interest expense ₱5,000. Journal entry?

Dr Interest Expense 5,000, Cr Cash 5,000

(c) Bought supplies ₱7,000 on account. Journal entry?

Dr Supplies 7,000, Cr Accounts Payable 7,000

(c) Adjusting entry: Supplies used ₱2,000. Journal entry?

Dr Supplies Expense 2,000, Cr Supplies 2,000

(c) Adjusting entry: Expired insurance ₱10,000. Journal entry?

Dr Insurance Expense 10,000, Cr Prepaid Insurance 10,000

(c) Adjusting entry: Earned part of unearned revenue ₱6,000. Journal entry?

Dr Unearned Revenue 6,000, Cr Service Revenue 6,000

(c) Adjusting entry: Accrued salaries ₱8,000. Journal entry?

Dr Salaries Expense 8,000, Cr Salaries Payable 8,000

(c) Closing entry: Close Service Revenue ₱50,000. Journal entry?

Dr Service Revenue 50,000, Cr Income Summary 50,000

(c) Closing entry: Close Salaries Expense ₱30,000. Journal entry?

Dr Income Summary 30,000, Cr Salaries Expense 30,000

(c) Closing entry: Close Income Summary (Net Income ₱20,000) to Capital. Journal entry?

Dr Income Summary 20,000, Cr Owner’s Capital 20,000

(c) Closing entry: Close Drawings ₱5,000. Journal entry?

Dr Owner’s Capital 5,000, Cr Drawings 5,000