FDNACCT 09 · Enoteca Capstone

₱1,538,000 = 1,540,000 − 1,500 − 500.

Net sales deduct amounts that reduce the sales proceeds retained: returns/allowances and sales discounts. ₱1,540,000 − ₱1,500 − ₱500 = ₱1,538,000. Adding those contra-sales would overstate revenue; expenses and drawings do not enter the net-sales calculation.

₱895,000 = 910,000 − 12,000 − 3,000.

Purchase returns and discounts reduce the supplier invoice cost retained by the business. Net purchases before freight = ₱910,000 − ₱12,000 − ₱3,000 = ₱895,000. Freight in is added in the next step to obtain net purchase cost, so it is excluded from this particular subtotal.

₱897,250 = 895,000 + 2,250 freight in.

Goods purchased cost both their net invoice amount and the freight needed to bring them in. Net purchases = ₱910,000 − ₱12,000 − ₱3,000 = ₱895,000; adding ₱2,250 Freight in gives ₱897,250 net cost of purchases. Freight out would instead be a selling expense and is not part of this amount.

₱907,250 = 150,000 + 897,250 − 140,000.

Under periodic inventory, cost of sales is goods available less the cost still unsold. Net purchase cost = ₱910,000 − ₱12,000 − ₱3,000 + ₱2,250 = ₱897,250; goods available = ₱150,000 beginning inventory + ₱897,250 = ₱1,047,250. Subtract ₱140,000 ending inventory to obtain ₱907,250 cost of sales; ₱897,250 is purchases only, and ₱1,047,250 still includes unsold goods.

₱630,750 = 1,538,000 − 907,250.

Gross profit is the margin on goods sold before other income and operating/financing expenses. Net sales = ₱1,540,000 − ₱1,500 − ₱500 = ₱1,538,000; cost of sales = ₱150,000 + (₱910,000 − ₱12,000 − ₱3,000 + ₱2,250) − ₱140,000 = ₱907,250. Therefore gross profit = ₱1,538,000 − ₱907,250 = ₱630,750, which is not yet net profit.

Ending allowance ₱340; expense ₱140 after deducting existing ₱200 credit.

Required ending allowance = ₱17,000 × 2% = ₱340 estimated uncollectible. Because the allowance already has a ₱200 credit, the additional expense and credit are only ₱340 − ₱200 = ₱140. The ending valuation balance and the current-period adjustment answer different questions; using ₱340 for both would count the existing credit twice.

₱3,600 used; ₱1,200 remains prepaid.

Asset-method advertising expense equals the used service: ₱4,800 × 3/4 expired months = ₱3,600. The unexpired one month is ₱4,800 − ₱3,600 = ₱1,200 prepaid. December’s statements therefore expense the coverage already consumed and retain January’s future benefit as an asset.

₱1,700 = 3,000 − 1,300 unused.

The physical count identifies supplies still available for future use; only consumption becomes expense. ₱3,000 available − ₱1,300 unused = ₱1,700 supplies expense. Debit Supplies expense and credit Supplies; the ₱1,300 count remains an asset rather than being the expense amount.

₱50,000 = (270,000 − 20,000)/5.

Straight-line depreciation allocates cost less residual value across the five-year useful life. (₱270,000 − ₱20,000) ÷ 5 = ₱50,000 for the full 2020 year. The ₱25,000 already recorded relates to six months of 2019; do not use another half-year for 2020 or deduct prior depreciation from the current annual charge.

₱9,000; credit Accumulated depreciation—Furniture and fixtures.

The case specifies annual furniture depreciation of 15% of cost, so ₱60,000 × 15% = ₱9,000. Debit Furniture depreciation expense and credit Accumulated depreciation—Furniture and fixtures, the contra-account for that asset. The adjusting-key PDF labels the credit as Store Equipment in error; the worksheet, notes and post-closing trial balance consistently place it under Furniture and fixtures.

₱8,000 = 200,000 × 6% × 8/12.

Accrual accounting recognizes borrowing cost for time elapsed even though it has not been paid. May through December is eight months, so I = Principal × annual rate × time = ₱200,000 × 6% × 8/12 = ₱8,000 additional expense and payable. The separate ₱1,500 already recorded remains in total Interest expense, making ₱9,500 total; it is not part of the additional adjustment.

₱60,000 earned; ₱20,000 remains unearned.

The advance is earned only as the seminar service is completed. ₱80,000 × 6/8 = ₱60,000 belongs in 2020 revenue; ₱80,000 − ₱60,000 = ₱20,000 remains unearned for two future seminars. Receiving all the cash in advance did not earn all the revenue.

₱44,000 = (132,000 / 9) × 3 unpaid months.

Rent must include all months occupied, even if three months remain unpaid. The ₱132,000 recorded covers nine months, so accrued rent = (₱132,000 ÷ 9 months) × 3 months = ₱44,000. Debit Rent expense and credit Rent payable for that extra amount; total annual rent becomes ₱176,000, and avoid rounding the monthly rate before multiplying.

₱1,530 = ₱1,240 social security + ₱290 Medicare.

Employer payroll taxes are incurred on December salary even though unpaid. December salary = ₱240,000 ÷ 12 = ₱20,000; social security = ₱20,000 × 6.2% = ₱1,240 and Medicare = ₱20,000 × 1.45% = ₱290. Debit Payroll taxes expense for ₱1,240 + ₱290 = ₱1,530 and credit the two payables. Annual salary is already recorded; use the supplied historical rates only for this case, not another salary accrual.

₱78,000 = ₱18,000 commissions + ₱60,000 seminars.

Include income earned during the year, whether collected or still receivable. Commissions = ₱9,700 recorded + ₱8,300 accrued = ₱18,000; seminar revenue = ₱80,000 × 6/8 completed = ₱60,000. Other operating income = ₱18,000 + ₱60,000 = ₱78,000; including all seminar advances would count unperformed services as income.

₱184,040.

Accrual profit uses adjusted earned income and incurred expenses, not cash received minus paid. Gross profit = ₱1,538,000 net sales − ₱907,250 cost of sales = ₱630,750; other income = (₱9,700 + ₱8,300) commissions + ₱60,000 seminars = ₱78,000. Selling expenses = ₱50,000 + ₱3,600 = ₱53,600; administration = ₱240,000 + ₱176,000 + ₱34,770 + ₱9,000 + ₱1,700 + ₱140 = ₱461,610; interest = ₱1,500 + ₱8,000 = ₱9,500. Net profit = ₱630,750 + ₱78,000 − ₱53,600 − ₱461,610 − ₱9,500 = ₱184,040; ₱193,540 is before financing, and drawings reduce capital rather than profit.

₱376,740 = 333,800 + 184,040 − 141,100.

Ending capital equals beginning capital plus profit and contributions, less drawings or loss. With no additional contribution, ₱333,800 + ₱184,040 − ₱141,100 = ₱376,740. Profit increases the owner’s claim and drawings reduce it directly; ₱517,840 ignores withdrawals, while adding drawings would reverse their effect.

Both ₱697,320.

Net assets = ₱466,320 current assets + ₱231,000 PPE after accumulated depreciation = ₱697,320. Liabilities = ₱100,580 payables + ₱20,000 unearned seminars + ₱200,000 note = ₱320,580; adding ₱376,740 ending capital gives ₱697,320. Both sides agree because Assets = Liabilities + Equity, with profit already included in ending capital rather than added again.

Debit ₱796,660 and credit ₱796,660.

Closing leaves permanent accounts; the trial balance shows gross asset debits and separate contra-asset credits. Debit total = ₱298,860 + ₱17,000 + ₱8,300 + ₱1,200 + ₱1,300 + ₱140,000 + ₱270,000 + ₱60,000 = ₱796,660. Credit total = ₱340 + ₱75,000 + ₱24,000 + ₱200,000 + ₱47,050 + ₱44,000 + ₱1,240 + ₱290 + ₱8,000 + ₱20,000 + ₱376,740 = ₱796,660. Equal totals check debit/credit balance, while ₱697,320 is the different net asset total after contra-assets.

January 1, 2021 reversals (₱): Dr Interest payable 8,000; Cr Interest expense 8,000. Dr Commissions income 8,300; Cr Commissions receivable 8,300. Dr Rent payable 44,000; Cr Rent expense 44,000. Dr Social security tax payable 1,240 and Dr Medicare tax payable 290; Cr Payroll taxes expense 1,530.

Use the opposite debit and credit of each December accrual: interest payable/expense ₱8,000; commissions income/receivable ₱8,300; rent payable/expense ₱44,000; and social-security payable ₱1,240 plus Medicare payable ₱290/payroll-tax expense ₱1,530. These reversals let later collections or payments use ordinary revenue/expense entries without double-counting 2020 amounts. They are January entries and do not cancel the income or expenses recognized in finalized 2020 statements.