Chapter 23 Problem Assume the following transaction for a National Government Agency: (000,000's omitted) ‘Transactions National Government Agency Books [Dr c 1. Receipt of Allotment Memorandum erty ee += for: RAOCO, Personal Services| P2,460| RAOMO (P5).. RAQPS Maintenance and RAOFE Other Operating 2,400 Expenses (MOOE)| 10,260 7 ‘440 Capital outlay (Co) Financial Expenses (FE) PIS 600 2. Receipt of Notice of ‘Cash - National Treasury ~ Modified Cash Allocation Disbursement, 15,600 (NCA) from DBM- P15,600 | system.. . Subsidy Income from National 15,600 Government... Personal Services 3. Obligation for Memorandum entry RAOPS Personal Services, 3,000 4. Established a payroll Payrol 2460 fund which is, Fund. 7 ‘composed of : Cash National Treasury — 2,460 Regular | 2,880 Modified Disbursement PAY -rrsenteee SYStEM sees Personal Relief 720 Allowance (PERA) P3500. Less: Deductions: Withholding ‘B40 tax. IS Life and Retirement 360 Premium, Pineal 180 premiums. Pagibig 120 premiums, Nel P2460 ‘Accordingly, an amount of P2,460 was advanced by the agency's disbursing officer. Scanned with CamScanner5.70 record liquidation Salaries & Wages - Regular 2,680 MDS. ‘of cash advances oF 720 salaries ~ a payment of salaries. 340 180 BIR eon bere 120 DUE 1” GEIS nen 2,460 ‘Due to PhilHeatth Due to Pag-ibig Payroll ©. Remittance of selary Due B40 deductions (no. tax BIR 360 femittance advice) | P12,600 | Due iso : 120 PhitHealth 1,500 Pag-tbig Gah = our MOS. 7-Oaigation Tor Memorandum entry RAOPS ‘government share representing Life and retirement TMSUPANCE nme | P 360 180 Phithealt.... 20 Pag- ibig P_660 3. Recording the Tie and Retirement tnsurance | 360, incurrenee of Contribution 180 government share for PhilHealth Contribution} 120 applicable salary Expense. - 360 deduction. Pag-ibig. Contribution 180 Expense... 20 Due to GSIS.. " Bie "to Page Ii to PhilHealth _ i 3. Remittance of Due Te) 380 government share sis 180 for Due to Pag big 120 applicable calary Due 660 deduction. PhilHeotth Maintenance and Other 0} erating Expenses 10. Obligation of rent for two years... Piso Memorandum entry RAOMO Scanned with CamScanner1] 59 rayment of WO 21. Payment years Piso « rent. MDS = andr entry RAOMO ‘Obligation for: Memoren a 3 Electricity P360 bill 60 ‘Telephone il 2 P420 360 Ta Recanoa ie 60 following bil: oo - 420 ect 7360 expenses Becteely 60 | landline. Pcphone ‘Accounts payable.. Bile PAID Ta, Payment of Accounts payable. ie a0 420 electricity asl - - ‘and telephone bil Mos. 15. Obigation for Wiemorandum entry RAOHO traveling (local ‘expenses of Mr MiandBrvcnnnnnnn | PB 6. Grant of cash Advances to Offcers Si 2 advance to Mr. Alex Employees. 24 Miranda for cash = NT traveling expense Mos, . TT, Liquidation of cash Travel expenses. Toca Ea ‘advance for travel sue 2 ot p22 Rdvances to Officers & Nr. Alex Miranda, Employees, TE Adustment of ‘Memorandums entry RAOMO cbligation for refund of excess odvance for traveling | 2.4 expense 15. Collection of rotund Tash = colecting | 2a for excess. advance officers. 24 from the. foregoing Advances” to Officers & cain, Revance for Employees. 20. Deposit of ‘Subsidy Income from National collection from ¥ fiom National 24 excess Government rn 24 advance to Bureau Cash - caliecting 2 oh eeasuy OTM COTS ccc issuance oF Mermoran purchase order anidien erly RAOMO, fopigation) “Yor! e240 office suze 22 Poic the purchase order hase Irvsatory ‘Supplies 240 withholding tax of P24 ” 24 ain. ue to 21s casi - MDS... ash NT Scanned with CamScanner75. issuance of the] P168| Office ‘Supplies Tee following office Expense.. supplies. ss 168 “Otfice Supplies a Inventory. 72a, Remittance of Due to 2 withholding tax thru BIR.... TRA (tax remittance ‘Subsidy Income from National 24 advice) Government... oe 75. To record obligation ‘Memorandum entry RAOMO for the establishment of Petty Cash Fund (PCF) for office supplies (pens and pencils - not available inthe stockroom) 26. Establishment oF Petty Cash a Petty Cash Fund Fund. “ . (PCF) for) Paz Cash NT MOOE. MDS. atte 27. Purchase of sian No entry pens, ball pens, white board pens, pencils thu} P36 PCF 2B.To record obligation Memorandum entry RAOMO for request of replenishment of the PCF for P36. 25. To record replenishment of PCF, before the end ofthe year. 42 ‘Supplies EG 36 Cash - NT - Capital Outlay 30. Tssuance of Memorandum entry RAOCO purchase ‘order (obligation) | P120 for office ‘equipment. ‘31. Receipt of office ‘Oifice equipment based on . ss invoice/delivery ‘Accounts payable receipt. ‘BZ. Payment of office ‘equipment, with 2 tax Piz of. 120 120 120 2 108 "33, To record obligation ‘Memorandum entry RAOCO for construction of ‘new building upon e840 signing of contract... Scanned with CamScanner34, Payment of 15% of ‘Ravances to Contractors. 126 contract for Casi Nt 126 ‘mobilization fee MDS senso (advances to contractors) amounting to (Pa40 x 15%)| —P126 35. Receipt of fist Construction In Progress _—~ 420 progress billing for Buildings, 126 construction of new Advances to 294 building: Contractors... . 50% of| P20) — Accounts payable. edo, 126 Less:| P24 Recoupment... Net Amount. “36. Payment of first ACCOUNTS PAYADIC 234 progress billings, Due to BIR | 30 withholding P30 . 264 tax. Cash - NT mos, iad 37. Presentation of final Consiruction In Progress ——— 420 billing: 50% of | P420 | Bulldings. 420 BAO... counts payable. i ‘38. Final payment for TFCCOUNES PAyAdIe.n. nnn 420 building, Due to Bia... 42 withholding pa . 378 tax cash - NT of. MDS... o 35. To close the Buildings. - ‘B40 Construction In 840 Progress Account to Construction In progress ~ Buildings upon tum- Bulldings.. over and acceptance 0. To record obligation Wemorandum entry RAOCO for construction of roads upon sighing of 2,400 ‘contract amounting — I. To record the receipt Cash = Collecting 12 of performance pil 2 bond from {cash or Performance Bonds certified check) contractor. Poi If the performance bond is in the form of surety bond, the following entry is required: To record the recoipt Guarantee Deposits. . 12 of performance Performance Bonds Payable. 12 bond from (cash or certified check) contractor p12 2. To record Due from National Government Agency — remittance/deposit er 2 of 2 performance bond Cash Scanned with CamScanner‘cash to Bureau of Treasury (B17) thru AGDB (Authorized Government Depository Bank) Officer. 43. Payment of 15% of contract for ‘mobilization fee (advances to contractors) amounting to (2,400 x 15%) P360 ‘Ravances Contracto MDS...... . Te 360 360 Cash-NT- “4a. Receipt of progress billing for construction of roads, 50% of P2,400. Less: Recoupment.... Net amount... 1,200 360 P B40 Construction In Roads. Advances to Contractors...cnen ‘Accounts payable. Progress 7,200 360 B40 @B. Payment of billfor the construction of roads: ‘Acts. Payable. Less: Withholding tax. % Retention (1,200x10%)... Net Amount... P 840 84 120 P 636 ‘Recounts payable... Due to BIR... Guarantee deposits payable, MDS... a0 8a 120 636 6. Presentation of final billing for roads 50% of 2,400. se Less: Liquidated Damages..nu — Net Amount 1,200 60 P 1,140 Construction In Roads. “Accounts payable.. Progress 140 1.140 47. Final payment for, the construction of roads: ‘Acts. Payable. Less: Withholding tax(P1,140x10%) Net Amount P1140 14 P 1,026 Recounts payable... Due ‘to Bi 7140 4 1,026 Cash-NT- 8, Agjustment of RAOCO to reduce original amount of gbligation P50, Temorandum entry RAOCO 49, To close the Public Infrastructures. 2,340 Scanned with CamScannerConstruction in Construction In Progress - Roads, etc 2.340 Progress Account to Public Infrastructures upon turnover and acceptance of the road project: Contract | P2,400 amount Less: Liquidated 60 demages.. 2,340 Net Cost. : 30. To record refund Guarantee, Deposits 120 ‘of retention fee for Payabie.. 120 the construction of| P 120 - MT roads. BI. To record receipt 12 ‘of NCA for release of 2 performance bond.....| P12 32 Te record refund Performance bond payable, TZ of performance bond.| P12 cash NT 2 Mp: If the performance bond is in the form of surety bond, the following entry 1s required (instead of No. 51 and 52) To record the Performance Bonds Iz release of Payables. 12 performance Guaranty Loong P12 | Deposits. sss 53. record ‘Memorandum entry RAOCO ‘obligation for purchase of land and building upon signing | P1,800 of contract. Ba. The _ assessed Tand.. 1x05 value "of tne tana | 1,200 | Buling. 00 dimoveted ts : 2,800 Accounts payable. " 35 —eracor he Tzounts payables 1800 permet of land and Due to BIR. " 180 biting win” tox | P 280 1.620 Bea remittance of 8 withholding tax % wnat Ta, ra wo) 3 2 2 No, P 36. 84 wo 2 Gr to record | I 5 ue. tol 378, Scanned with CamScannerremittance of BR withholding tex. thru Subsidy Income from National TRA: P ga Government... No. 114}. 180 No. P 378 378 45. 47. No. 55, Total... 38__To record for Wemorandum entry RAOCO obligation for the general repair of the building P Bao acquired, 39. To record the Construction Materials 480 receipt of Inventory... construction Accounts payabh materials with the] P 480 charge invoic 60, To record “Accounts payable.. ~ 480 payment. of materials, with atax| P 48] BIR. of. Mps. essen a. To record Construction in. Progress 460 Issuance of BUIIGING. es sosne materials for the] P 480 Construction Materials construction. Inventory... ©. To record ‘Memorandum entry RAOCO ‘obligation of payroll In ‘elation to the| P 360 general repair, 480 48 432 480 63.1 record cash Cash Disbursing Officer. aaa advance granted to disbursing officer cash = NT {net of P30] P 324 | MDS... withholding tax). Si. To record Construction in Progress (CIP)_— 360 liquidation of cash 36 advance by Due to 324. Disbursing Officer 324 Cast" Bisbursing 5. To record the B40 transfer of CIP Construction In Progress ~ 840 account to Bulkdings account ‘upon completion of the general repair. 66. ‘To record remittance of withholding tax for materials and labor, assuming that the Notice of Cash Allocation — received was already reduced a4 84 Scanned with CamScannerby TRA: 60. 64. Total. P48 36 P 84 ‘Adjusting Entries: Telephone (#13) ‘Travel expense (#17) Office Supslies expense (#23 & #29)... Public Infrastructures. Depr ‘Equipment (#66) Depr Exp - Bldgs (#66) ‘66. Depreciation ofthe Depreciation expense - 6 following 18 Equipment. expense - 6 Buildings... P 24) Accumulated depreciation- equipment Accumulated depreciation- Total... bulldings... 67, Rent expense for Rent Expense... 30 the year, P150/2 P90| Prepaid rent. 90 years. Closing Entries 68, Reversion of the Subsidy Income from National Unused Subsidy Government... 4,386 Income from o 4,386 National cash = NT Government MDS... ss representing NCA 69, Close SING to Subsidy Income from National Income and Government, - 8,698, Expense Summary . 8.698, Income and Expense ‘Summary. 70. Close expenses to income and Expense | 7,360 Income and Summary. 2,880 Expense Summary Salaries and Wages (#5) 720 . . 360 PERA (#5) 180 ss . 120 Life “and Retirement (#8) 360 i 60 PhIHEALTH Contr. Exp. (#8) 22 204 Pag-ibig Cont Exp. (#6) 2.340 6 Electricity expense (#13) 18 . 90 Scanned with CamScannerRent expense (#67) Ti._ Close income and Income ‘and Expense | 2,036 Expense Summary SUMMARY. sneesee 2,036 to Retained Retained — operating Operating Surplus, surplus. 72. Close Retained Retained ‘Operating | 2,036 Operating Surplus to Surplus. 2,036 Government Equity it Government Equity... Multiple Choice Problems 1b | 6&|d]i.Ja ]i6];a yar ya [sys [36)d 4] Z[a | 7Ja [azo [apa | 22 27a [32] |37.)b | 42]a 3]b | 8d] ise ]ie.|a | 2s 2b] 33 ,¢ |38pa | 43fe afc | 3/4 |ia]o fas. pa) 2a, 79. [b |34.;b )39.]6 | 44] S]e [0b | 15,e | 20.;e | 2 30. fa | 35, [6 | 45.]4 46. d - P58,800,000 = P7,000,000 + P14,000,000 + P25,200,000 + 9,800,000 + 2,800,000 47. No answer available - 121,800,000 Assets: Current assets P 14,000,000 Investments and fixed assets 126,000,00 0 Other assets 1000.00 o Total assets P147,000,0 | 00 Tess: Liabilities —25.200.00 o ‘Government Equity (B121.800.0° 00 48. a Income P20,000,00 0 Tess: Expenses Personal services 7,000,000. MOOE 3,000,000, Financlal expenses. 5,000,000. Depreciation 800.000 EXCGSS of income over expenses z 4.200.000 49. b Tneome: Subsidy income from National Goverment P Scanned with CamScanner50, 4,000,000. Tess: Reversion of unused cash allocation —s00.000 P 3,500,000 Sales P15,000,00 0 Less: Cost of qoods sold 2.000.000 | “17,000,000 Rent 1,000,000 interest income, 500,000. Gain on sale of assets 7,000,000, Income from government services 8.000.000] “Total Income 26,000,00 oO 2 Expenses, Interest expense P 100,000 Depreciation expenses 800,000, Salaries and wages 70,000,000. PERA 200,000 Representation allowances: 300,000 “Transportation allowances 100,000 Grants and donations 400,000 Rent expense 500,000 Electricity 7,000,000) “Telephone charges ‘800,000 Bank charges — 400.000 —Sanaag | Excess of income over expenses ez 10,400,000 c Government equity, beginning F10,000,00 Retained Operating Surplus: Current operations PI6.000,00 ‘Adjustment of prior years 2000-00 | 18,000,000 Property, plant and equipment - public infrastructures ‘son009 Government equity, ending E 25,000,000) Scanned with CamScanner