CHAPTER 6

CASH TO ACCRUAL ACCOUNTING/ SINGLE ENTRY SYSTEM

PROBLEMS
6-1.

(BRAIN COMPANY)
Capital, end
Assets
Less liabilities
Capital, beginning
Assets
Less liabilities
Increase in capital
Additional investments
Withdrawals
Profit

P609,000
138,000
P485,000
94,000

P471,000

391,000
P 80,000
(70,000)
120,000
P130,000

6-2.
a.
b.
c.
d.
6-3.

38,900 + 13,480 48,200 = 4,180

1,160,000 + 980,000 700,000 = 1,440,000 collections;
1,440,000 + 1,660,000 + 30,000 1,200,000 = 1,930,000
210,000 + 80,000 40,000 206,000 = 44,000
440,000 80,000 + 100,000 + 54,000 30,000 = 484,000

(GRAIN COMPANY)
Requirement 1
Capital, end
Assets
Less liabilities (including P8,000 unrecorded purchase)
Capital, beginning
Assets
Less liabilities
Increase in capital
Withdrawals
Profit

P352,800
123,500
P293,200
117,800

P229,300

175,400
P 53,900
20,000
P 73,900

Requirement 2
Grain Company
Statement of Comprehensive Income
For Year Ended December 31, 2014
Sales (net of P21,000 returns) Schedule 1
Cost of goods sold
Merchandise inventory, January 1
Purchases (net of P13,000 returns) Schedule 2
Merchandise inventory, December 31
Gross profit on sales
Other income
Operating expenses Schedule 3
Operating income
Interest expense
Profit
Schedule 1 Sales
Receipts from customers
Accounts receivable, beginning

P725,000
P 97,200
551,200
(105,800)

P697,500
( 59,400)
29

542,600
P182,400
8,000
(114,000)
P 76,400
2,500)
P 73,900

Chapter 6 Cash to Accrual/ Single Entry System

Accounts receivable, ending
Accounts written of
Sales returns
Gross sales

76,100
10,800
21,000
P746,000

Schedule 2 Purchases
Payments to trade creditors
Accounts payable, beginning
Accounts payable, ending
Unrecorded purchases
Purchase returns
Gross purchases

P536,600
( 63,300)
69,900
8,000
13,000
P564,200

Schedule 3 Operating expenses

Bad debts expense
Depreciation expense (85,000 + 20,000 95,500)
Other operating expenses:
Payments for operating expenses
Prepaid expenses, beginning
Prepaid expenses, ending
Accrued expenses, beginning
Accrued expenses, ending
Total operating expenses
6-4.

P 10,800
9,500
P94,100
6,000
( 7,500)
( 4,500)
5,600
P 114,000

(TRAIN FASTFOOD)
Train Fastfood
Statement of Comprehensive Income
For Six Months Ended December 31, 2014
P2,100,000

Sales
Cost of sales:
Purchases
Less Inventory, end
Gross profit
Depreciation expense
Other operating expenses
Net profit

P1,850,000
450,000

1,400,000
P 700,000
( 24,000)
( 556,000)
P 120,000

Train Fastfood
Statement of Financial Position
December 31, 2014
Assets
Liabilities and Capital
Current Assets
Current Liabilities
Cash
P 24,000
Accounts payable
Accounts receivable
200,000
Bank loan
Inventory
450,000
Total current liabilities
Total current Assets
P674,000
Non-current Assets
Tom Cruz, Capital
Equipment
P400,000
Initial investment
P500,000
Less accum. Depr 24,000
376,000
Add profit
120,000
Total assets
P1,050,000 Total liabilities and capital
Computation of cash balance:

30

P230,000
200,000
P430,000

620,000
P1,050,000

Chapter 6 Cash to Accrual/ Single Entry System

Cash receipts from
Initial investment by owner
Collections from sales
Bank loan
Less cash payments for
Purchases
Bank loan
Equipment
Cash operating expenses
Cash balance, end

6.5.

P 300,000
1,900,000
500,000
P1,620,000
300,000
200,000
556,000

P2,700,000

2,676,000
P
24,000

(HORN CORPORATION)
(Cash Basis)
Horn Corporation
Income Statement
For the Years Ended December 31, 2014 and 2013

Revenues
Expenses
Profit
2014
2013
2014
2013

6-6.

2014
P445,000
(255,000)
P190,000

2013
P485,000
(277,000)
P208,000

sales = 355,000 + 90,000 = 445,000

sales = 295,000 + 160,000 + 30,000 = 485,000
expenses = 40,000 + 160,000 + 55,000 = 255,000
expenses = 185,000 + 67,000 + 25,000 = 277,000

(BORN AND CORN)

Cash Basis
P750,000
( 892,500)
( 96,000)
( 60,000)
( 84,000 )
P(382,500)

Sales
Cost of Sales
Salaries Expense
Rent Expense
Other Operating Expenses
Profit
6-7.

2013
P295,000
(225,000)
P 70,000

sales = P160,000 + 355,000 = 515,000

sales = 295,000
expenses = 67,000 + 160,000 + 45,000 = 272,000
expenses = 185,000 + 40,000 = 225,000
(Accrual Basis)
Horn Corporation
Income Statement
For the Years Ended December 31, 2014 and 2013

Revenues
Expenses
Profit
2014
2013
2014
2013

2014
P 515,000
(272,000)
P 243,000

(ATTY. D. MACAPANALO)
Atty. D Macapanalo

31

Accrual Basis
P1,057,500
( 637,500)
( 126,000)
( 20,000)
(104,000)
P 170,000

Chapter 6 Cash to Accrual/ Single Entry System

Profit and Loss
For the Year Ended December 31, 2014
Professional Fees
Expenses
Profit

P
P

Professional Fees
2014 Collection
Fees Receivable, January 1
Fees Receivable, December 31
Unearned Fees, January 1
Unearned Fees, December 31
Professional Fees, Accrual Basis

P1,250,000
( 52,000)
47,000
26,200
( 29,000)
P 514,900

Expenses
2014 Payments
Accrued expenses, January 1
Accrued expenses, December 31
Prepaid expenses, January 1
Prepaid expenses, December 31
Expenses, accrual basis
6-8.

1,242,200
727,300
514,900

P 722,400
( 18,000)
21,500
6,400
( 5,000)
P 727,300

(JACK AND JILL COMPANY)

Jack and Jill Company
Statement of Comprehensive Income
For the Year Ended December 31, 2014
Sales
Cost of sales
Gross Profit
Other operating income
Gain on sale of automobile
Total income
Operating expenses
Depreciation
Others
Total expenses
Profit before interest
Interest expense
Profit

Jack and Jill Company

Statement of Changes in Partners Equity
For the Year Ended December 31, 2014

7,440,000
4,670,000
2,770,000

20,000
2,790,000

298,667
1,003,600
1,302,667
1,487,733
104,000
1,383,733

Jack
P1,750,000
(500,000)
691,867
P1,941,867

Equity, January 1
Withdrawals
Share in profit
Equity, December 31
Jack and Jill Company
Statement of Financial Position
December 31, 2014
Assets

32

Jill
P1,815,000
(250,000)
691,866
P2,256,866

Chapter 6 Cash to Accrual/ Single Entry System

Current Assets
Cash
Accounts receivable
Allowance for bad debts (60,000 17,500)
Receivable from employees
Deposit on merchandise purchases
Merchandise inventory
Prepaid insurance
Total current assets
Non-current Assets
Property, plant and equipment
Furniture and fixtures
Accumulated depreciation furniture and fixtures
Automobiles
Accumulated depreciation - automobiles
Total property, plant and equipment
Total Assets
Liabilities
Current Liabilities
Accounts Payable
Accrued Expenses
Bank loan, including accrued interest
Total current liabilities
Equity
Jack
Jill
Total partners equity
Total liabilities and partners equity

P
P

P
P

736,000
1,782,500
(42,500)
30,000
75,000
3,750,000
8,000
6,339,000

220,000
(87,000)
940,000
(421,667)
651,333
6,990,333

1,875,000
16,600
900,000
2,791,600
1,941,867
2,256,866
4,198,733
6,990,333

Sales
Collections in 2014 (6,500,000 -60,000)
Accounts receivable, end (1,800,000 17,500)
Write of
Accounts receivable, January 1, 2014
Sales

P6,440,000
1,782,500
17,500
( 800,000)
P7,440,000

Purchases
Payments to merchandise creditors
Accounts payable, end
Returned merchandise (to be applied to future purchases)
Accounts payable, beginning
Net purchases

P4,500,000
1,875,000
(
75,000)
(1,380,000)
P4,920,000

Cost of sales
Inventory, beginning
Net purchases
Inventory, end
Cost of sales

P3,500,000
4,920,000
( 3,750,000)
P4,670,000

Depreciation expense
On old furniture and fixtures (P220,000/10)
On old automobiles (P780,000 280,000)/ 3
On new automobile 440,000 / 3 x 9/12

33

P 22,000
166,667
110,000

Chapter 6 Cash to Accrual/ Single Entry System

Depreciation expense

P 298,667

Expenses other than depreciation

Payments for selling and general expenses
Prepaid insurance, beginning
Prepaid insurance, end
Accrued expenses, beginning
Accrued expenses, end
Expenses other than depreciation

P1,000,000
15,000
( 8,000)
( 20,000)
16,600
P1,003,600

Interest Expense
On bank loan obtained on 01/02/14 and paid 05/02/14
Accrued on bank loan obtained on 05/01/14
Total interest expense

P
P

32,000
72,000
104,000

MULTIPLE CHOICE QUESTIONS

Theory
MC1
D
MC2
A

MC3
MC4

Problems
MC11
D
MC12
MC13
MC14
MC15
MC16
MC17
MC18
MC19
MC20
MC21
MC22
MC23
MC24

A
D
B
A
D
D
A
A
B
D
B
C
C

MC25

MC26
MC27

C
B

MC28
MC30
MC31

C
C
B

MC32
MC33

B
C

C
A

MC5
MC6

D
B

MC7
MC8

C
A

MC9
MC10

A
C

210,000 50,000 = 160,000 capital, end; 260,000 60,000 = 200,000 beg cap
160,000 200,000 = 40,000 dec in capital + 50,000 12,000 = 78,000 net loss.
(80,0004,000) + (120,000 6,000+ 40,000 30,000) = 200,000
800,000 + 320,000 + 124,000 240,000 96,000 = 908,000
189,000 + 12,000 8,000 + 36,000 + 7,000 10,500 = 225,500
30,000 + 3,000 21,000 = 12,000 + 60,000 58,000 = 14,000
600,000 + 400,000 200,000 + 300,000 150,000 = 950,000
794,000 + 51,000 45,000 = 800,000
715,000 144,000 96,000 7,000 = 468,000 + 60,000 33,000 = 495,000
800,000 (144,000/45%) = 480,000
890,000 270,000 600,000 60,000 + 130,000 = 90,000
310,000 + 85,000 + 4,000 + 66,000 = 465,000
280,000 + 67,000 + 5,000 = 352,000
352,000 5,000 21,700 = 325,300
45,000 + 3,500 + (200,000 x 2%) + (4,000/20% = 20,000 x 5%) = 53,500
45,000 + 280,000 + 140,000 110,000 = 355,000 + 10,000 + 50,000 60,000 =
355,000
800,000 96,000 + 124,000 + 320,000 908,000 = 240,000
2,000,000 + 960,000 + 100,000 + 800,000 + 120,000 + 320,000 400,000
1,600,000 + 1,200,000 + 2,000,000 = 5,500,000
7.5M 5.8M = 1.7M 1.5M + .28M = 480,000
320,000 650,000 400,000 = 730,000
Dr changes = 142,500+202,500+630,000+172,500 = 1,147,500
Cr changes = 30,000+375,000+300,000+45,000 = 750,000
1,147,500 750,000 = 397,500 + 82,500 = 480,000
400,000+3,000,000-485,000=2,915,000 + 200,000 = 3,115,000
60,000 5,000 + 7,500 +3,000 4,000 = 61,500

34