COMPREHENSIVE PROBLEM:

Mr. Kaya Moto, a Certified Public Accountant, established MOTO ACCOUNTING AND AUDITING
SERVICES FIRM on December 1, 2018. Stated below are the transactions that took place during the
month.

DECEMBER (use asset method)

1. Transferred 250,000 from his personal account to his business account. He also invested a
computer set with printer with fair market value amounting to 50,000. The computer has an
outstanding liability of 10,000 which the Firm will assume.
2. Paid 5,600 to various government regulatory offices (DTI, LGU, BIR, etc.) for the registration of
his business.
3. Applied for internet connection amounting to 1,599/month.
4. Paid advertisement for 3 consecutive months until February 2019, 30,000.
5. Availed an insurance policy for 1 year, 12,000.
6. Paid 6-month rental amounting to 60,000. Mr. Moto also paid a security deposit amounting to
30,000 that is refundable after the rent contract.
7. Purchased office supplies from Cervantes, 10,000, 50% down and the balance on account.
8. Paid 40,000 for the repairs and repaint of the rented office.
9. Ordered Sala Set from BHF, paid 5,000 representing 25% of the total purchase price. The
balance was on account.
10. Purchased a 1.5HP Midea air conditioning unit for 15,000 cash. The business also paid 2,000 for
the installation of the unit.
11. Billed a client for services rendered, 10,000.
12. Paid the supplies purchased on December 7 from his personal money.
13. Hired an office assistant with monthly salary of 10,000.
14. Paid the remaining balance on the Sala Set purchased on December 9.
15. Received the following, 10,000 cash and 15,000, 12% per annum, notes for services rendered on
this day. Also, other than the 10,000 cash receipt, the business also collected the accounts on
December 11.
16. Purchased additional chairs and cabinets, 15,000 cash.
17. Rendered services, 20,000 cash.
18. Paid the liability on the computer set invested in December 1.
19. Paid the assistant 1 for 5 days of work, 2,500.
20. Billed a client, 5,000.
21. Hired another assistant (2) for 10,000 monthly salaries.
22. Transferred 20,000 from his business account to his personal account.
23. Paid 5,000 for his membership dues to the Philippine Institute of Certified Public Accountants.
24. Paid the assistant 1 for 5 days work, 2,500.
25. Hired a messenger for 5,000 monthly salaries.
26. Paid the assistant 2 for 5 days work, 2,500.
27. Paid 500 for the transportation of documents to clients.
28. Collected the accounts on December 20.
29. Rendered services to clients, 30,000 in cash and 20,000 on account.
30. Paid 10,000 for the Christmas baskets and bonus to employees.
Required:

1. Journalize the above transactions using the following accounts title;

a. Cash q. Moto, Capital

b. Accounts Receivable r. Moto, Withdrawal
c. Notes Receivable s. Service Income
d. Interest Receivable t. Interest Income
e. Prepaid Insurance u. Salaries Expense
f. Prepaid Rent v. Insurance Expense
g. Prepaid Supplies w. Rent Expense
h. Prepaid Advertisement x. Advertisement Expense
i. Security Deposit y. Supplies Expense
j. Office Equipment z. Employee Benefits Expense
k. Accumulated Depreciation- Office aa. Repairs and Maintenance Expense
Eqpt. bb. Depreciation Expense- Office Eqpt.
l. Furniture and Fixtures cc. Depreciation Expense- F&F
m. Accumulated Depreciation- F&F dd. Transportation Expense
n. Accounts payable ee. Taxes and Licenses Expense
o. Accrued Liability ff. Utilities Expense
p. Salaries Payable gg. Association Dues Expense

2. Post the entries in the Ledger.

3. Journalize the following adjustments at year-end.
a. The supplies have remaining inventory amounting to 5,000.
b. One month portion in the insurance, rent and advertisement had expired.
c. All equipment is depreciated with no salvage value and have estimated useful life of 5 years.
d. All furniture and fixtures are depreciated with no salvage value and have estimated useful
life of 3 years.
e. Received bill from the Internet provider.
f. Receive the bill from Electricity and Water provider, 6,000 and 2,000 respectively.
g. There is an accrued salaries to employees amounting to 7,000.
h. In computing for the interest, there are accrued 15 days. Use 360 days denominator.
4. Prepare the financial Statements for the year-end.
Date Accounts Title Debit Credit
12/01/18 Cash 250,000
Office Equipment 50,000
Accounts Payable 10,000
Moto, Capital 290,000
12/02/18 Taxes and License Expense 5,600
Cash 5,600
12/03/18 No Entry
12/04/18 Prepaid Advertisement 30,000
Cash 30,000
12/05/18 Prepaid Insurance 12,000
Cash 12,000
12/06/18 Prepaid Rent 60,000
Security Deposit 30,000
Cash 90,000
12/07/18 Prepaid Supplies 10,000
Cash 5,000
Accounts Payable 5,000
12/08/18 Repairs and Maintenance Expense 40,000
Cash 40,000
12/09/18 Furniture & Fixtures 20,000
Cash 5,000
Accounts Payable 15,000
12/10/18 Office Equipment 17,000
Cash 17,000
12/11/18 Accounts Receivable 10,000
Service Income 10,000
12/12/18 Accounts Payable 5,000
Moto, Capital 5,000
12/13/18 No Entry
12/14/18 Accounts Payable 15,000
Cash 15,000
12/15/18 Cash 10,000
Notes Receivable 15,000
Service Income 25,000
Cash 10,000
Accounts Receivable 10,000
12/16/18 Furniture & Fixtures 15,000
Cash 15,000
12/17/18 Cash 20,000
Service Income 20,000
12/18/18 Accounts Payable 10,000
Cash 10,000
12/19/18 Salaries Expense 2,500
Cash 2,500
12/20/18 Accounts Receivable 5,000
Service Income 5,000
12/21/18 No Entry
12/22/18 Moto, Withdrawal 20,000
Cash 20,000
12/23/18 Association Dues Expense 5,000
Cash 5,000
12/24/18 Salaries Expense 2,500
Cash 2,500
12/25/18 No Entry
12/26/18 Salaries Expense 2,500
Cash 2,500
12/27/18 Transportation Expense 500
Cash 500
12/28/18 Cash 5,000
Accounts Receivable 5,000
12/29/18 Cash 30,000
Accounts Receivable 20,000
Service Income 50,000
12/30/18 Employee Benefits Expense 10,000
Cash 10,000

(a) Supplies Expense 5,000

Prepaid Supplies 5,000
(b) Insurance Expense 1,000
Prepaid Insurance 1,000
Advertisement Expense 10,000
Prepaid Advertisement 10,000
Rent Expense 10,000
Prepaid Rent 10,000
(c) Depreciation Expense- Office Eqpt. 1,117
Accumulated Depreciation- Office Eqpt. 1,117
(d) Depreciation Expense- F&F 972
Accumulated Depreciation- F&F 972
(e) Utilities Expense 1,599
Accrued Liability 1,599
(f) Utilities Expense 8,000
Accrued Liability 8,000
(g) Salaries Expense 7,000
Salaries Payable 7,000
(h) Interest Receivable 75
Interest Income 75
 Cash Accounts Receivable
(01) 250,000 (02) 5,600 (11) 10,000 (15) 10,000
(15) 10,000 (04) 30,000 (20) 5,000 (28) 5,000
(15) 10,000 (05) 12,000 (29) 20,000 15,000
(17) 20,000 (06) 90,000 35,000
(28) 5,000 (07) 5,000
(29) 30,000 (08) 40,000 20,000
325,000 (09) 5,000
(10) 17,000
(14) 15,000 Notes Receivable
(16) 15,000 (15) 15,000
(18) 10,000
(19) 2,500
(22) 20,000 Prepaid Rent
(23) 5,000 (06) 60,000
(24) 2,500
(26) 2,500
(27) 500 Prepaid Insurance
(30) 10,000 (05) 12,000
287,600
37,400 Prepaid Supplies
(07) 10,000

Accounts Payable
(12) 5,000 (01) 10,000
(14) 15,000 (07) 5,000
(18) 10,000 (09) 15,000
30,000 30,000
0