P1 The following are the transactions of the hardware business of

Mr. Juan Santos:

March
1 Juan Santos invested P560,000 in cash, merchandise worth P67,200, store equipment
valued at P10,982, and accounts owed by T.R. Jacob P6,600 and by C.F. Mesa P4,200.
Mr. Santos had the business assume the following obligations: Notes payable for
P30,000 and open accounts owing to L.G. Pobre P4,660 and H.L. Rama for P7,270.
2 Paid P16,500 rent for March to Mr. Torres. Barrowed P180,000 from the Philippine
National Bank and gave a 60-day non-interest bearing note for P200,000. (Debit the
difference to Interest Expense).
3 Received a bill for P3,700 from T.V. Short for stationery and office supplies.
4 Purchased merchandise from Golden Hardware for P89,600 payable in 10-days.
6 Sold merchandise amounting to P13,776 to N. Tator for cash. Received P16,800
commission for selling a piece of land to A.B. Solis.
7 Sold merchandise amounting to P72,800 to M.A. Wong. Terms were: cash of P20,000,
a 60-day 6% interest bearing note for P22,500, and the remainder on open account.
7 N. Tator returned P2,800 worth of merchandise for which he was refunded.
9 Purchase merchandise from T. A Wee’s Hardware for P33,040. Terms, net 30-days
12 Unrecorded cash sales to date, P26,880.
13 Returned P1,344 worth of merchandise to T.A. Wee’s hardware and received a credit
memo.
14 Paid Golden Hardware for the purchase of March 4.
15 The business donated to the Community Chest P1,500. Paid one of the notes
originally assumed by the business. The amount of the note was P10,000.

REQUIRED:
1. Journalize the above transactions.
2. Post to the ledger accounts
Take a trial balance as of March 15, 2012.

P2 Required: From the information presented below, prepare the adjusting journal
entries for the year ended December 31, 2012.

1. The salaries expense account had total debits of P150,000 in Year 2012. On December 31, salaries
paid in advance amounted to P24,000.
2. On July 31, 2012, a three-year insurance was purchased for P36,000. When purchased, it was
debited to Prepaid insurance.
3. On January 1, 2012, the store supplies inventory had a balance of P45,500. During 2012,
additional supplies of P18,600 were purchased. On December 31, 2012, supplies on hand
amounted to P15,280.
4. The commission income account had total credits of P85,000 for Year 2010. On December 31,
2012, commissions earned were computed to be P78,000.
5. On January 1, 2012, a delivery truck was purchased for P800,000; the estimated life is 7 years and
the estimated scrap value is P50,000. On July 1, 2012, another truck was purchased for
P1,000,000; the estimated life of the second truck is 10 years and the estimated scrap value is
P100,000
6. Among the notes receivable is a note received from a customer for P50,000, 10%, 90-day dated
November 1, 2012.
7. A 30-day, 6% note was issued to ABC Co. on December 16, 2012 for merchandise purchased in the
amount of P450,000.
8. Rent expense had a debit balance of P180,000 which represents a one-year rental starting March
1, 2012.
9. Bad debts is estimated at 10% of outstanding accounts receivable. The balances shown in the
December 31, 2012 trial balance are: Accounts receivable, P365,000 and Allowance for doubtful
accounts, P18,000 (credit balance).
10. Unpaid salesmen’s commission amounted to P13,000 on December 31, 2012.

P3 The following information is taken from the ledger of ACE Trading Co. as of
December 31, 2012, after its first year of operations:

Cash 520,100
Accounts receivable 690,000
Notes receivable 170,500
Prepaid insurance 80,000
Store supplies 100,750
Office supplies 150,210
Furniture and Fixtures 830,500
Accounts payable 450,000
Notes payable 500,000
J. King, capital ?
J. King, drawing (debit) 380,000
Sales 3,800,000
Sales returns & allowances 130,050
Purchases 2,840,500
Purchase discount 230,000
Transportation-in 180,600
Store salaries 360,400
Advertising 140,500
Transportation –out 80,700
Office salaries 240,800
Rent expense 360,000
Other office expenses 50,540
Interest income 1,800

Adjusting information on December 31, 2012 is given below:

1. Merchandise on hand per physical count, P565,000
2. Accrued interest on notes receivable, P2,900
3. Unexpired insurance, P35,000
4. Rent expense includes P55,000 paid in advance
5. Accrued office salaries, P12,500
6. Unpaid telephone bill for the month, P4,500.
7. Inventory of office supplies, P34,500
8. Depreciation of furniture and fixtures is 10% per annum
9. Estimated uncollectible accounts is 5% of outstanding accounts receivable.
10. Accrued interest in notes payable, P4,500.

Required:
1. Prepare a 10-column worksheet using the direct extension method.
2. Prepare a statement of comprehensive income and statement of financial position.
3. Prepare closing journal entries.