EXERCISES

1. The following information were made available relative to the construction of an annex
building of DTI, Region VIII:
Appropriation P20M
Allotment for Capital Outlay 18M
NCA received from DBM is net of estimated tax
Cost of the project 16M
5% performance bond paid by the contractor.
15% mobilization fee was advanced to the contractor
P8,500 liquidating damages was imposed due to delay in completion.
10% retention was deducted for each billing until completed.
Billings:
1st - 25% completion
2nd – 55% completion
3rd and final completion
The project was turned-over after the completion of the project. All liabilities were
settled and remitted all due payments.
Required: Give the journal entries of the following:
a.1) performance bond collected was temporarily deposited to the national
treasury.
a.2) granting of cash advance to the contractor.
a.3) when the 3rd and final completion was received and paid.
Tax rates:( CC x 8.5% x 10/12=)
(CC X 2% x 10/12=)
a.4) the project is turned-over and the performance bond was also
released.

Post to the obligation column of the RAOD-CO the amount of P16,000,000 to be transferred to
the implementing agency.

a.1) Cash - Treasury/Agency Deposit - Trust 10104030 800,000

Cash - collecting officer 10101010 800,000
To record the temporary deposit of the
performance bond to the National Treasury

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 a.2) Advances to contractors 19902010 2,400,000
Cash - MDS, Regular 10104040 2,400,000
(16,000,000 x 15%)
To record the 15% of the mobilization fee to contract
amount as advances to contractor

Construction in progress - Building and other structure10610030 4,000,000

Accounts Payable 20101010 3,400,000
Advances to Contractors 19902010 600,000
To record the 1st progress billing, 25% completion

Accounts Payable 20101010 3,400,000

Cash - MDS, Regular 10104040 2,720,000
Guaranty/Security and Dep Payable 20401040 340,000
Due to BIR (assumed 10% tax) 20201010 340,000
To record payment of 1st billing

Construction in progress - Building and other structure10610030 4,800,000

Accounts Payable 20101010 4,080,000
Advances to Contractors 19902010 720,000
To record the 2nd progress billing, 55% completion

Accounts Payable 20101010 2,400,000

Cash - MDS, Regular 10104040 1,920,000
Guaranty/Security and Dep Payable 20401040 240,000
Due to BIR 20201010 240,000
To record payment of 2nd billing

a.3) Construction in progress - Building and other structure 10610030 7,191,500

Accounts Payable 20101010 6,111,500
Advances to Contractors 19902010 1,080,000
To record the receipt of final billing, 100% completion

To adjust obligation by negative entry in the obligation column of the RAOD-CO, reducing
the original amount by P55,000 LD.

Accounts Payable 20101010 6,111,500

Cash - MDS, Regular 10104040 4,889,200
Guaranty/Security and Dep Payable 20401040 611,150
Due to BIR 20201010 611,150
To record payment of final billing

a.4) Building 10604010 15,991,500

Construction in progress - Building and other structure 10610030 15,991,500
To record the turnover

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 Cash - MDS, Trust 10104060 800,000
Cash - Treasury /Agency Deposit - Trust 10104030 800,000
To record receipt of NCA for temporary deposited performance bond to be returned.

Guaranty/Security and Dep Payable (PB) 20401040 800,000

Cash - MDS, Trust 10104060 800,000
To record release of performance bond.

2. An inventory office supplies account has a beginning balance of P 55,750. A purchase was
made from the Procurement Service amounting to P200,000. All these supplies were delivered
after payment. Three months later, MRSMI showed that 60% of office supplies were reported
issued and used in operation and recorded in the books.
a. Record the purchase, deliveries and issuances to the end-users.
b. Determine the balance of Office Supplies at year end.

A.

Account Number Debit Credit

Due from NGAs 10303010 P200,000

Cash-MDS Regular 10104040 P200,000

To record the advance payment of office supplies

Office Supplies Inventory 10404010 P200,000

Due from NGAs 10303010 P200,000

To record of the acceptance delivery of the office supplies

Office Supplies Expense 50203010 P153,450

Office Supplies Inventory 10404010 P153,450

B. The ending balance of office supplies is P102,300.

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 3. The accountant received a bill from VECO for their electricity consumption and water
from MCWD.

VECO – P 8,500 while MCWD bill was P3,250.

a). Give the journal entry when both utilities were paid.
b) TRA was received and remitted the withholding taxes to BIR. (VECO and MCWD
franchise tax rate, 2% straight)

A. Obligate the billed accounts and post under the obligation column RAOD-MO.

Electricity expense-VECO 50204020 8, 500

Water Expense-MCWD 50204010 3, 250
Accounts Payable 20101010 11, 750
To record bills incurred

Accounts Payable 20101010 11, 750

Due to BIR* 20201010 235
Cash-MDS, Regular 10104010 11, 515
To record payment of bills

*(8, 500x.02)+(3, 250x.02)=P235

Due to BIR 20201010 235

Cash-MDS TRA 10104070 235
To record remittance to BIR with approved TRA

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 4. The Auditor examined the P10,000 petty cash fund of Mr. Co, the petty cash custodian is due
to retire the following month. He counted the cash on hand totaling P3,150 and noted that there
were receipted cash items composed of the following: P4,000 – office supplies, P1,000 - postage
and deliveries, and P1,850 of messenger transportation expenses. The petty cash fund will be
closed and refunded the unused cash.

Record the expenses paid from the petty cash fund, closure, refund of unused cash and
remittance to the national treasury

A. Obligation- RAOD MO of P10, 000

Petty Cash 10101020 10, 000
Cash- MDS, Regular 10104040 10, 000
To record the granting of cash advances

Office supplies 50203010 4, 000

Transportation and
delivery expenses 50299040 2, 850
Petty Cash 10101020 6, 850
To record unreplenished expenses, return and close the cash on hand

Cash- collecting officer 10101010 3, 150

Petty Cash 10101020 3, 150

Cash- Treasury/
Agency Deposit, Regular 10104010 3, 150
Cash- collecting officer 10101010 3, 150
To record the return on cash on hand

5. On December 5, 2019, the Regional Director of the DSWD, Region VII, was granted a cash
advance totaling P20,200 for a 3 days official travel to Davao to attend a National Conference.
His itinerary of travel showed his claims of per diem, plane fare, transportation and other
incidental expenses. The per diem allowed was P1,800/day. The itinerary also showed that he
left for Manila on the 1st day at 1pm and left Manila on the last day at 11:45am. Upon return on

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 December 20, 2019, he liquidated his cash advance and requested for reimbursement of his 2
days extended stay. The total transportation and other incidental expenses was P2,200 while the
round trip plane fare amounted to P12,600..
Transportation expense and other
incidental expenses during the duration of the travel period P2, 200
Per diem (1, 800x 3 days) 1, 800
Plane fare 12, 600
Amended itinerary was made and showed an addition of
The per diem equivalent to (additional two days-P1, 800*2) 3, 600
P20, 200

1. Obligate the cash advance for travel to the RAOD-MO amounting to P20, 200
2. Advances to Officers and Employees 19901040 P20, 200
Cash-MDS, Regular 10104040 P20, 200
To record the grating of cash advances
3. Traveling Expenses- Local 50201010 P20, 200
Advances to Officers and Employees 19901040 P20, 200
To record liquidation upon return from travel and submission of LR

On February 15, 2020, the director’s liquidation was post-audited and the auditor issued a
Management Letter requiring him to refund the 1 day extended stay since it was found not
official. The director immediately refunded and was receipted. The refund was immediately
remitted to the National Treasury.

Journalize the following:

a. Granting of cash advance.

b. Liquidation and recognizing the actual travelling expenses.

c. Claim for reimbursement.

d. Refund of disallowed claim and remittance to BTr.

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 6. Payroll was prepared for the month summarized as follows:

Salaries and wages – regular P750,000

PERA 80,000

Gross Pay P 830,000

Deductions:

Withholding taxes P 210,000

Life and retirement premium(GSIS) 67,500

Pag-ibig premium 30,000

PhilHealth premium 10,000 317,500

Net Pay P512,500

========

Additional information:

Government contribution for GSIS – 10.5%

ECC Insurance premium 3,000

Payment of salaries and wages were made thru ATM.

Requirement:

Journalize the recognition of salaries and wages, mandatory contribution and its

government counterpart, and remittances to the respective offices

1. Obligate the P 830,000 salaries and wages for the month and post in the RAOD-PS.

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 2. Salaries and wages - Regular 50101010 750,000
PERA 50102020 80,000
Due to BIR 20201010 210,000
Due to GSIS 20201020 67,500
Due to PAG-IBIG 20201030 30,000
Due to PhilHealth 20201040 10,000
Due to Officers and Employees 20101020 512,500
To recognize the expenses and liabilities

3. Due to Officers and Employees 20101020 512,500

Cash - MDS, Regular 10104040 512,500
To record check issuances for ATM employee’s account

4. Due to GSIS 20201020 67,500

Due to PAG-IBIG 20201030 30,000
Due to PhilHealth 20201040 10,000
Cash - MDS, Regular 10104040 107,500
To record remittance of mandatory contributions

5. Obligation and recording of the government share of mandatory contributions. The

agency paid P3,000 for ECC.

6. ECC Insurance Premiums 50103040 3,000

Ret and Life Insurance Premium 50103010 67,500
Pag-ibig contribution 50103020 30,000
PhilHealth Contribution 50103030 10,000
Cash - MDS, Regular 10104040 110,500
To record payment and remittance of the corresponding counterparts

7. Due to BIR 20201010 210,000

Cash - MDS, Tax Remittance Advise 10104070 210,000
To record remittance to the BIR supported
with the approved TRA from DBM.

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