CHAPTER 6

EXERCISES
1. June 1 Cash In Bank 150,000
Cash On Hand 50,000
Ahmad, Capital 200,000
2 Equipment 55,000
Accounts Payable 25,000
Ahmad, Capital 30,000
5 Furniture & Fixtures 10,000
Ahmad, Capital 10,000
Dec. 5 Ahmad, Drawings 2,250
Accumulated Depreciation 250
Equipment 2,500
2. a) P375,000
b) P375,000 – P250,000 = P125,000 loss from sales

c) Equipment 200,000
Raw Materials 25,000
Franchise 100,000
Furniture & Fixtures 50,000
Pena, Capital 375,000

d) Cash 250,000
Loss on Rev(610-375) 235,000
Loss from Sales (375-250) 125.000
Accumulated Depn-Equipment 25,000
Accum Depn-Furniture & Fixtures 5,000
Equipment 375,000
Raw Materials 35,000
Franchise 150,000
Furniture & Fixtures 80,000

3. Gross Price P750,000

Less Discount ( 15,000)
735,000
Assembly 150,000
Platform 25,000
Total P910,000
4. Machine 750,000
Accounts Payable 750,000
Accounts Payable 750,000
Equipment 15,000
Cash In Bank 735,000
Equipment 175,000
Repair Expense 1,500
Cash in Bank 176,500
5. Land 1,500,000
Mortgage Payable 500,000
Cash in Bank 1,000,000

Land 20,000
Cash in Bank 20,000

6. a) Machine (30,000x44) 1,320,000

Cash In Bank 440,000
Accounts Payable 880,000
b) Machine 105,000
Cash On Hand 105,000
7. Cash 1,200,000
Accumulated Depreciation 427,500
Machine 1,425,000
Gain On Sale 202,500

8. a) 1. Historical Cost (1,000,000 x .55) P550,000

2. Book Value (1,000,000 – (55,000 x 6)) 220,000
3. Replacement Cost 350,000
4. Realizable Value (550,000 x 50%) 275,000
5. Economic Value 372,588
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 b) Book value of P220,00

8. a) Gross 12,000.00 P6,000.00 P6,000.00

SSS ( 400.00)
PH ( 150.00)
Pag-ibig ( 100.00) 650.00
Taxable 11,350.00 / 2 = P5,675.00
Tax .20(5,675 – 5,000)
135.00 + 354.17 = 234.78 489.17 489.17
Net Pay P5,510.83 P4,860.83
March 15 March 31
9. a) Payroll Sheet
Gross Withholding Total
Names Pay Tax SSS PH HDMF Advances Deductions Net Pay
Tessa 3,000 52.08 P200.00 75.00 100 427.08 2,572.92
Rose 3,750 20.31 250.00 87.50 100 500 957.81 2,792.19
Shirley 4,250 115.02 283.30 100.00 100 598.32 3,651.68
11,000 187.41* 733.30 262.50 300 500 1,983.21 9,016.79
 20.83 + 10% of 312.50 (2,812.50 – 2,500)
 0 + 5% of 406.25 (3,531.25 - 3,125)
 0 + 5% of 2,300.35 (4,008.35 – 1,708)

b) Employer's Share
SSS PH EC Pag-Ibig
424.00 75.00 10 100
530.00 87.50 10 100
600.70 100.00 10 100
1,554.70 262.50 30 300

c) 1. Advance to Employees 500.00

Cash On Hand 500.00
2. Salaries Expense 11,000.00
Withholding Taxes Payable *187.41
SS Premiums Payable 733.30
PH Premiums Payable 262.50
Advances to employees 500.00
Pag-Ibig 300.00
Cash On Hand 9,016.79
3. SSS Premiums Expense 1,554.70
Medicare Premiums Expense 262.50
EC Premiums Expense 30.00
Pag-Ibig 300.00
SSS Premiums Payable 1,554.70
PH Premiums Payable 262.50
EC Premiums Payable 30.00
Pag-Ibig Premiums Payable 300.00
d) Withholding Taxes Payable 187.41
Cash On Hand 187.41
EC Premiums Payable 30.00
SS Premiums Payable 2,288.00
Cash On Hand 2,318.00
PH Premiums Payable 525.00
Cash On Hand 525.00
Pag-Ibig Premiums Payable 600.00
Cash On hand 600.00
10. a) 1. Isaiah Evangelista 3. P8,500 4. P8,691.25
2. Ever Bright 5. 18% P191.25 6. 45 days

b) Notes Receivable 8,500

Service Income 8,500
Cash 8,691.25
Notes Receivable 8,500.00
Interest Income 191.25
c) Expense 8,500
Notes Payable 8,500
Notes Payable 8,500.00
Interest Expense 191.25
Cash 8,691.25
11. A B C D

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 Maturity Date July 16 June 8 Aug. 27 Dec 15
Term 60 days 45 days 75 days 60 days
Interest P 200.00 P750.00 P375.00 P150
Maturity Value 8,200.00 50,750.00 10,375 P15,150
Interest Rate 15% 12% 18% 6%

12. Books of Air Manila Books of Decena

12/15 Repairs & Maintenance 15,000 Notes Receivable 15,000
Notes Payable 15,000 Service Income 15,000
Cash 15,150
2/13 Notes Payable 15,000 Interest Income 150
Interest Expense 150 Notes Receivable 15,000
Cash 15,150
13.
CTC Bank: Books of Master Work
4/24 Notes Receivable 50,000 Cash 49,250
Cash 49,250 Interest Expense 750
Interest Income 750 Notes Payable 50,000
6/8 Cash 50,000 Notes Payable 50,000
Notes Receivable 50,000 Cash 50,000
14.
Equipment 14,250
Accounts Payable 14,250
Equipment 1,200
Cash On Hand 1,200
Accounts Payable 1,500
Equipment 1,500
Accounts Payable 12,750
Notes Payable 12,750
Notes Payable 12,750
Interest Expense 63.75
Cash In Bank 12,813.75
15. Cash 9,500
Accounts Receivable 1,500
Service Income 11,000

Taxes Expense 285

Cash In Bank
(9,500x3%) 285

PROBLEMS
1. Payroll Sheet
From March 1 to 15, 2011
Employees Position Gross Withholding Tax Net Pay
A Helper 4,000 169.22 3,830.78
B Helper 4,000 169.22 3,830.78
C Helper 4,000 169.22 3,830.78
D Helper 4,000 169.22 3,830.78
E Helper 4,000 169.22 3,830.78
F Helper 4,000 169.22 3,830.78
G Sec-bookkeeper 4,750 277.03 4,472.97
H Teller 4,750 277.03 4,472.97
I Technician 4,750 138.87 4,611.13
38,250 1,708.25 36,541.75

A to F 104.17 + 65.05 which is 15% of (3,766.65 - 3,333)

G and H 104.17 + 172.86 which is 15% of (4,485.40 - 3,333)
I = 5% of (4,485.40 – 1,708)
Payroll Sheet
From March 16 to 31, 2011
Total
Position Gross W/ Tax SS PH Pag-ibig Ded Net Pay
A Helper 4,000 169.22 266.70 100.00 100.00 635.92 3,364.08
B Helper 4,000 169.22 266.70 100.00 100.00 635.92 3,364.08
C Helper 4,000 169.22 266.70 100.00 100.00 635.92 3,364.08
D Helper 4,000 169.22 266.70 100.00 100.00 635.92 3,364.08
E Helper 4,000 169.22 266.70 100.00 100.00 635.92 3,364.08
F Helper 4,000 169.22 266.70 100.00 100.00 635.92 3,364.08
G Sec-Bkeeper 4,750 277.03 316.70 112.50 100.00 806.23 3,943.77
H Teller 4,750 277.03 316.70 112.50 100.00 806.23 3,943.77
I Technician 4,750 138.87 316.70 112.50 100.00 668.07 4,081.93
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 38,250 1,708.25 2,550.30 937.50 900.00 6,096.05 32,153.95

2. a) Mar 1 Amusement Rides 3,000,000

Descalzo, Capital 2,500,000
Mortgage Payable 500,000
2 Cash In Bank 200,000
Cash On Hand 50,000
Descalzo, Capital 250,000
3 Equipment 100,000
Notes Payable 100,000
Equipment 1,120
Cash On Hand 1,120
5 Advertising Expense 20,000
Cash On Hand 20,000
12 Cash On Hand 10,000
Accounts Receivable 10,000
Rental Income 20,000
13 Cash On Hand 10,000
Accounts Receivable 10,000
Rental Income 20,000
14 Cash On hand 25,000
Ticket Sales 25,000
15 Cash In Bank 45,000
Cash On Hand 45,000
16 Salary Expense 38,250
Withholding Taxes Payable 1,708.25
Cash On Hand 36,541.75
17 Cash On Hand 22,000
Ticket Sales 22,000
18 Accounts Receivable 10,000
Cash On Hand 10,000
Rental Income 20,000
20 Cash On Hand 5,000
Notes Receivable 5,000
Accounts receivable 10,000
23 Notes Payable 100,000
Interest Expense 889
Cash In Bank 100,889
24 Advances to Employees 1,500
Cash On Hand 1,500
25 Utility Expense 10,500
Cash In Bank 10,500
26 Cash On Hand 10,000
Accounts Receivable 10,000
27 Cash On Hand 10,000
Accounts Receivable 10,000
28 Rent Expense 10,000
Cash In Bank 10,000
30 Cash On Hand 5,016.67
Notes Receivable 5,000.00
Interest Income 16.67
Cash On Hand 28,000
Ticket Sales 28,000
31 Salary Expense 38,250
Withholding Taxes Payable 1,708.25
SSS Premiums Payable 2,550.30
PH Premiums Payable 937.50
HDMF Payable 900
Advances to Employees 1,500.00
Cash In Bank 30,653.95

Customer: Wesleyan
Date Particulars F Debit Credit Balance
March 12 On account 10,000 10,000
27 Full 10,000 0
Customer: International School
Date Particulars F Debit Credit Balance
March 13 On account 10,000 10,000
20 Partial 5,000 5,000
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 20 10 days 12% note 5,000 0
Customer: St. Michael
Date Particulars F Debit Credit Balance
March 18 On account 10,000 10,000
26 Full 10,000 10,000

b) Accounts Receivable
3/12 10,000 3/20 10,000
13 10,000 26 10,000
18 10,000 27 10,000

c) Employer's Contribution
Names SS EC PH Pag-ibig
A 565.30 10 100 100
B 565.30 10 100 100
C 565.30 10 100 100
D 565.30 10 100 100
E 565.30 10 100 100
F 565.30 10 100 100
G 671.30 10 112.50 100
H 671.30 10 112.50 100
I 671.30 10 112.50 100
5,405.70 90 937.50 900

SS Premium Expense 5,405.70

PH Premium Expense 937.50
EC Premium Expense 90.00
Pag-ibig Premium Expense 900.00
SS Premiums Payable 5,405.70
PH Premiums Payable 937.50
EC Premium Payable 90.00
Pag-ibig Premium Payable 900.00

SS Premiums Payable 5,405.70

PH Premiums Payable 937.50
EC Premium Payable 90.00
Pag-ibig Premium Payable 900.00
Cash In Bank 7,333.20

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3. Cash On Hand Cash In Bank Accounts Recble. Ticket Rent Inc. Salaries Sundry
Date Names Explanation Debit Credit Debit Credit Debit Credit Credit Credit Debit Account Title Debit Credit
Mar 1 Descalzo Investment Amusement Rides 3,000,000
Mortgage Payable 500,000
Descalzo, Capital 2,500,000
2 Descalzo Investments 50,000 200,000 Descalzo, Capital 250,000
3 Electro Zone 1,120 Equipment 101,120
5 Advertisement 20,000 Notes Payable 100,000
Advertising 20,000
12 Wesleyan Rent of rides 10,000 10,000 20,000
13 Int'l. School Rent of rides 10,000 10,000 20,000
14 Patrons Ticket Sales 25,000 25,000
15 Bank Deposit 45,000 45,000
Payroll 36,541.75 38,250 WT Payable 1,708.25
17 Patrons Ticket Sales 22,000 22,000
18 St. Michael Rental 10,000 10,000 20,000
20 Int’l. Shool Partial payment, 5,000 10,000 Notes Receivable 5,000
10 day 12% note
23 Electyro Zone Paid note 100,889 Notes Payable 100,000
Interest Expense 889
24 Employees Advances 1,500 Advances 1,500
25 PLDT Utilities
Meralco 10,500 Utilities 10,500
26 Wesleyan Collection 10,000 10,000
27 St. Michael Collection 10,000 10,000
28 Rent 10,000 Rent Expense 10,000
30 Int’l. Shool Paid note 5,016.67 Notes Receivable 5,000
Patrons Ticket sales 28,000 28,000 Interest Income 16.67
31 Employees Salaries 30,653.95 38,250 W/tax Payable 1,708.25
SS Premium Payb 2,550.30
PH Premium Payb 937.50
HDMF Payable 900.00
Advances 1,500.00
SS Premium 5,405.70
EC Premium 90.00
SS & EC Pay. 5,495.70
PH Premiums 937.50
PH Prem.Pay. 937.50
HDMF Prem. 900.00
HDMF Pay. 900.00

185,016.67 88,120 245,000 168,084.70 30,000 30,000 75,000 60,000 76,500 3,256,342.20 3,371,654.17

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4. Taxes Expense (135,000 x 3%) 4,050
Cash In Bank 4,050

5. a) July 15 Notes Receivable 1,200,000

Cash In Bank 1,200,000
Notes Receivable 2,000,000
Cash In Bank 1,280,000
Interest Income 720,000
Sept. 13 Cash On Hand 2,000,000
Notes Receivable 2,000,000
Oct. 13 Cash On Hand 1,242,000
Notes Receivable 1,200,000
Interest Income 42,000
b) Victor Co.
July 15 Cash On Hand 1,200,000
Notes Payable 1,200,000
Oct 13 Notes Payable 1,200,000
Interest Expense 42,000
Cash On Hand 1,242,000
Kenneth Co.
July 15 Cash 1,280,000
Interest Expense 720,000
Notes Payable 2,000,000
Sept. 13 Notes Payable 2,000,000
Cash In Bank 2,000,000

CASE STUDY

Assets (45,000 + 135,000 + 3,000) P183,000

Liabilities (3,500 + 10,000 + 1,200) 14,700
Net Worth P168,300

1) Yes, if you consider other factors such as good location, steady and captured market, good
product, etc.
2) P168,300.

Business Ethics
Payroll must be supported by a document either a Payslip where a duplicate is signed and
returned to employer or a payroll sheet where employee signs acknowledgement of receipt.
Liabilities for SS, PH, Pag-ibig and Tax should be deducted accordingly.

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