HOLY CHILD ACADEMY

Poblacion, Bustos, Bulacan

JOURNAL ENTRY, ADJUSTING ENTRY AND FINANCIAL STATEMENT PREPARATION

Prepare the necessary journal entries for the following transactions of Avengers Corporation
and prepare a Statement of Financial Performance, Cash Flows and Statement of Financial
Position.

1. On January 1, 2018, owners of the company invested a total capital of Php4,500,000.00 to

be used in the company’s operation. The investment consist of a land valued at
Php1,500,000.00, Building with a fair market value of Php1,500,000.00 (useful life of 25
years and salvage value of 10%) and cash of Php1,500,000.00.
2. They purchased an equipment costing Php50,000.00 with a salvage value of Php5,000.00
and a useful life of 10 years to produced the company’s products on February 20, 2018.
3. On March 15, 2018, the company purchased Php50,000.00 worth of office supplies.
4. On May 25, 2018, the company purchased 1000 Units of inventory at Php400.00 each on
account.
5. They paid office rent for one year amounting to Php100,000.00 in cash on February 1, 2018
using expense method.
6. On April 30, 2018, the company paid salaries to their employees in cash amounting to
Php45,000.00.
7. On May 23, 2018, the company sold 800 units of inventory at Php1,500.00 each. 400 units
were sold in cash and the rest were sold on account.
8. On June 1, 2018, the company collected 80% of their on account sales and gave a sales
discount of 10%.
9. On July 30, 2018, the company paid utilities expense in cash amounting to Php50,000.00.
10. On December 15, 2018, the company paid 60% of their on account in inventories and paid
70% of their on account equipment.
11. On December 23, 2018, the owners of the company withdrew Php100,000.00 in the
company’s account.
12. On December 31, the company purchased 100 units of XYZ shares amounting to
Php300,000.00.

Year-End Adjustments:

1. Depreciation expense was recognized at the end of the year for the building and newly
purchased equipment of the company.
2. 80% of their office supplies were used in during the year and the company uses asset
method to record the initial purchase of the office supplies.
3. The company uses expense method to record the payment of rent for one year.
4. The company estimated that 8% of their total accounts receivable on December 31, 2018 will
be uncollectible.
5. The company’s bank account also reflected an interest income amounting Php25,000.00 at
the end of the year.