CERTIFIED ACCOUNTING TECHNICIAL LEVEL 1

MODULE 1: REVIEW OF BOOKKEEPING SKILLS

KEY TO CORRECTIONS
E1:

1. Sole Proprietor
2. Shares of stocks
3. Government Accounting
4. Financial Accounting
5. Manufacturing
6. Sole Proprietorship

E2:

E3:
A L OE
1. 0 0 0
2. + 0 +
3. + + 0
4. - 0 -
5. + 0 +
6. - 0 -
7. + + 0
8. + 0 +
9. 0 0 0
10. - 0 -
E4:

Date Account Titles and Explanation PR Debit Credit

Dec 2 Cash 92,500
Modesto, Capital 92,500
Investment of cash

3 Office Equipment 36,800

Accounts Payable 36,800
Purchase equipment on account

4 Office Supplies 17,100

Accounts Payable 17,100
Purchase office supplies on account

6 Accounts Receivable 29,200

Accounting Revenues 29,200
Performed accounting services on account

7 Accounting Library 19,500

Cash 19,500
Paid accounting and tax books

8 Accounts Payable 4,100

Cash 4,100
Paid the supplies purchase on account

10 Office Condominium 265,000

Cash 38,000
Notes Payable 227,000
Acquired office condominium terms: down P38,000, issued notes for the balance

12 Salaries Expense 14,200

Cash 14,200
Paid salaries

13 Cash 9,750
Accounts Receivable 9,750
Collected receivables

16 Telephone Expense 650

Cash 650
 Date Account Titles and Explanation PR Debit Credit
Paid telephone expenses

19 Cash 14,600
Accounting Revenues 14,600
Rendered services for cash

22 Office Supplies 4,650

Accounts Payable 4,650
Purchase office supplies on account

23 Modesto, Withdrawals 8,150

Cash 8,150
Withdraw cash for personal use

25 Salaries Expense 10,300

Cash 10,300
Paid salaries

26 Accounts Receivable 31,600

Accounting Revenues 31,600
Rendered services on account

27 Professional Dues Expense 5,500

Cash 5,500
Paid professional dues

28 Rent Expense 3,250

Cash 3,250
Paid rent

E5:

Owner
Liabiliti s’ Expense
Errors (what should have done) Assets Income
es Equity s

Understa No No No
1. Debit to Accounts Receivable, P4,000 No Effect
ted Effect Effect Effect
2. Reclassification dr; Prepaid Insurance. cr: Understa No No No Overstat
Insurance Expense; P7,500 ted Effect Effect Effect ed
3. Debit: Service Revenue; Credit: Accts. Overstat No No Overstat
No Effect
Receivable, P1,000 ed Effect Effect ed
No Overstat No No
4. Debit Taxes Payable, P3,000 No Effect
Effect ed Effect Effect
 No No No No
5. Dr: Supplies Cr: Cash, P2,250 No Effect
Effect Effect Effect Effect
No No No No Understa
6. Dr: Advertising Expense, P360
Effect Effect Effect Effect ted

E6:

DATE ACCOUNT TITLE DR CR

January 1 Cash 230,000
Sales 230,000

4 Accounts Receivable 450,000

Sales 450,000

10 Purchases 150,000

Cash 150,000

15 Purchases 620,000

Accounts Payable 620,000

22 Cash 230,000

Accounts Receivable 230,000

28 Accounts Payable 150,000

Cash 150,000

E7:
1) B 6. J
2) C 7. H
3) F 8. D
4) E 9. G
5) A 10. I
E8:

1. D 6. A
2. A 7. B
3. B 8. C
4. C 9. C
5. C 10. A

E9:

1. True
2. True
3. False – 10 days from the invoice date
4. True
5. True
6. False – within 10 days
7. False – should be debit
8. True
9. False – accounts receivable will not be affected by the discount. Amount is still P4,000
10. False – no sales discount should be recorded if the payment is beyond the discount period

E10:

June 2 Purchases 600,000

Accounts Payable 600,000

4 Freight in 8,000
Cash 2,000

5 Purchases 36,000
Accounts Payable 36,000

6 Freight in 5,000
Cash 5,000

7 Accounts Payable 90,000

Purchase Returns and Allow 90,000

11 Accounts Payable 510,000

Cash 504,900
Purchase Discounts 5,100

13 Accounts Receivable 630,000

Sales 630,000

22 Cash 623,700
Sales Discount 6,300
Accounts Receivable 630,000

30 Accounts Payable 360,000

Cash 360,000
E11:
1. True
2. False – still needed for confirmation of balances
3. True
4. False
5. True
6. False – Cost of Goods Sold account is being used in perpetual inventory system each sale
transaction
7. True
8. True
9. False
10. False – high-priced, low volume

E12:

Net Sales
Gross Sales 1,610,000
Less: Sales returns 45,000
Sales Discount 15,000 (60,000)
Net Sales 1,550,000

Cost of Goods Sold

Inventory, Jan. 220,000
Purchases 985,000
Less: Purchase returns 31,000
Purchase discount 20,000 (51,000)
Net Purchases 934,000
Transportation in 36,000
Net cost of purchases 970,000
Cost of goods available for sale 1,190,000
Less: Inventory, Dec. 31 260,000
Cost of goods sold 930,000
Gross margin from sales 620,000
Operating expenses 465,000
Net Profit 155,000

Gross sales and Net Profit was computed as follows:

Gross Margin from Sale P 620,000
Divided by: Gross Profit 40%
Gross Sales P1,550,000

Net Sales P1,550,000

Multiplied by % of Profit 10%
Profit P 155,000
Adjusting Entries:

DATE ACCOUNT TITLE AND EXPLANATION DR CR

31-Dec Income Summary 220,000

Merchandise Inventory, beg 220,000

Merchandise Inventory, ending 260,000

Income Summary 260,000

E13:
DATE ACCOUNT TITLE AND EXPLANATION DR CR

June 13 Purchases 500,000

Input Tax 60,000

Accounts Payable 560,000

June 25 Cash 1,120,000

Sales 1,000,000

Output Tax 120,000

June 31 Output Tax 120,000

Input Tax 60,000

VAT Payable 60,000

June 31 VAT Payable 60,000

Cash in Bank 60,000