Problem 1. ASHTA Company has the following transactions.

Feb 2 The company purchased goods from Happy Corp. for P150,000 subject to cash discount
germs of 2/10, n/30. The company records purchases and accounts payable at net amounts
after cash discounts. The invoice was paid on February 25.
April 1 The company purchased a truck for P120,000 from Broom Motors Corp., paying P12,000 in
cash and signing a one-year, 12% note for the balance of the purchase price.
May 1 The company borrowed P240,000 from Manila Bank by signing a P276,000 noninterest-
bearing note due one year form May 1
Aug 1 The company’s board of directors declared a P900,000 cash dividend that was payable on
September 10 to shareholders of record on August 31.
Requirements:
1. Prepare all journal entries necessary to record the transactions described about.
2. Assume that ASHTA’s financial statement ends on December 31 and that no adjusting entries
relative to the transactions above been recorded. Prepare any adjusting journal entries concerning
interest that are necessary to present fair financial statements at December 31.

Problem 2. In conjunction with your firm’s examination of the financial statements of BATUR as of
December 31, 2017, you obtained the information from the company’s voucher register shown in the
work paper below.

No Date Ref Description Amount Charged

1 12.18 200 Supplies, shipped FOB destination P 15,000 Supplies
12.15.17; received 12.17.17
2 12.18 203 Auto insurance, 12.15.17 - 12.15.18 22,000 Prepaid Ins
3 12.21 209 Repairs services; received 12.20.17 19,000 Repairs
4 12.26 212 Merchandise, shipped FOB shipping 123,000 Inventory
point, 12.20.17; received 12.24.17
5 12.21 210 Payroll, 12.07.17 – 12.21.17 (12 days) 69,000 Salaries
6 12.21 234 Subscription to magazine for 2018 5,000 Subs. Exp
7 12.28 236 Utilities for December 2017 24,000 Utilities Exp
8 12.28 241 Merchandise, shipped FOB 111,500 Inventory
destination, 12.24.17; received 1.2.18
9 12.28 242 Merchandise, shipped FOB 84,000 Inventory
destination, 12.24.17; received 1.2.18
10 1.2 1 Legal services; received 12.28.17 46,000 Legal Exp
11 1.2 2 Medical services for employees for 25,000 Medical Exp
December 2017
12 1.5 3 Merchandise shipped FOB shipping 55,000 Inventory
point, 12.29.17 received 1.4.18
13 1.10 4 Payroll 12.21.17-1.5.13 (12 days total, 72,000 Salaries
4 days in January 2018)
14 1.10 6 Merchandise, shipped FOB shipping 64,000 Inventory
point 1.2.18 received 1.6.18
15 1.12 8 Merchandise, shipped FOB 38,000 Inventory
destination 1.3.18 received 1.10.18
16 1.13 9 Maintenance services received 1.9.18 9,000 Repairs
17 1.14 10 Interest on bank loan, 10.10.17- 30,000 Interest Exp
1.10.18
18 1.15 11 Manufacturing equipment, installed 254,000 Machinery &
12.29.17 Equip
19 1.15 12 Dividend declared 1.15.18 160,000 Div Payable
Accrued liabilities as of December 31, 2017 were as follows:
Accrued payroll P 48,000
Accrued interest payable 26,666
Dividends payable 160,000
The accrued payroll and accrued interest payable were reversed effective 1.1.8.

Requirements:
Review the data given above and prepare journal entries to adjust the accounts on December 31, 2017.
Assume that the company follows FOB terms for recording inventory purchases.

Problem 3. The shareholder’s equity section of RAIN Company’s statement of financial position as of
December 31, 2016 is as follows:

Ordinary share capital (P5 par, 250,000 shares

Authorized, 17,500 issued and outstandingP 687,500
Share premium 275,000
Total Paid-in Capital P962,500
Unappropriated retained earnings P 667,500
Appropriated retained earnings 250,000
Total retained earnings 917,500
Total shareholders’ equity P 1,880,000

Rain had the following equity transactions in 2017:

Jan 15 Completed the building renovation for which P250,000 of retained earnings had been
restricted. Paid the contractor P242,500 all of which is capitalized.
Mar 3 Issued 50,000 additional ordinary shares for P8 per share.
May 18 Declared a dividend of P1,50 per share to be paid on July 31, 2017 to shareholders of record
on June 30, 2017.
June 19 Approved additional building renovation to be funded internally. The estimated cost of the
project is P200,000 and retained earnings are to be restricted for that amount.
July 31 Paid the dividend.
Dec 31 Declared a property dividend to be paid on January 10, 2018, to shareholders of record on
Jan 5, 2018. The dividend is to consist of equipment with a carrying value of P150,000. The
equipment’s fair value at December 31, 2017 is P157,500.
Dec 31 Reported P442,500 of net income on December 31, 2017 income statement.

Requirements: What is the balance of the following account at December 31, 2017?
1. Ordinary Share Capital
2. Share Premium
3. Unappropriated Retained Earnings
4. Shareholder’s Equity