Asynchronous Activity: Pre-Midterm exam
Accounting Cycle
Prior to the start of the 2021 accounting period Song Joon Company had the following ending
balances:
Song Joon Company
Balance Sheet
As of December 31, 2020
ASSETS LIABILITIES AND
CAPITAL
Cash P480,000 Accounts Payable P240,000
Accounts Receivable 280,000
Land 190,000 Song Joon, Capital 710,000
TOTAL 950,000 TOTAL 950,000
The following accounting events apply to 2021:
Jan 1 Song Joon made additional investment amounting to P100,000. It comprised of the
following: Cash, P 80,000 and supplies, P 20,000.
Feb 1 Purchased a service vehicle costing P 120,000. Soon Joon paid 30% of the cost and
issued a promissory note for the balance payable after 5 years.
Mar 1 Paid 24,000 cash in advance for a 1-year rent for office space.
9 Song Joon withdrew cash P30,000 for personal use.
9 Purchased a land costing 80,000.
May 8 Made a cash payment on accounts payable amounting to P25,000
Jun 1 Received P45,000 cash for services to be performed monthly evenly for 18 months.
Sept 3 Purchased supplies on account amounting to 20,000.
Dec 22 Rendered services to customers on account, P250,000.
Dec 31 Total cash collection from accounts receivable amounted to P100,000.
31 Incurred operating expenses on account during the year that amounted to 50,000
31 Rendered services for cash, P 35,000
The company’s chart of accounts is presented below:
Assets Income
101 Cash 401 Service Revenues
102 Accounts Receivable
103 Prepaid Rent Expenses
104 Supplies
105 Land 501 Salaries Expense
106 Vehicle 502 Supplies Expense
106-A Accumulated Depreciation-Vehicle 503 Operating Expense
Asynchronous Activity: Pre-Midterm exam
Accounting Cycle
Liabilities 504 Insurance Expense
201 Accounts Payable 505 Depreciation Expense
202 Notes Payable 506 Rent Expense
203 Unearned Service Revenue
204 Salaries Payable
205 Interest Payable
Equity
301 Song Joon, Capital
302 Song Joon, Withdrawals
303 Income Summary
Required:
1. Post the beginning balances (As of December 31, 2020) to the Ledger/T-account.
2. Prepare the necessary 2021 journal entries and immediately after journalizing each
transaction, post it to the Ledger or T-account.
3. Prepare the Unadjusted Trial balance.
4. Prepare the adjusting journal entries and posting using the following information:
a. Accrued salaries amounted to P32,000
b. The service vehicle has a useful life of 5 years
c. The interest rate on the notes payable was 2%
d. Supplies remained on hand at the end of the year was P 5,000
e. Performed services for the advanced collection of revenues (Please refer to June 1
transaction)
5. Prepare the Adjusted Trial Balance
6. Prepare the (1) Income Statement, (2) Statement of Changes in Owner’s Equity and (3)
Balance Sheet (Account Form).
7. Prepare the closing entries and post them
8. Prepare the Post-Closing Trial Balance
9. Prepare the Reversing Entries and post them.
