Chapter 2

 

Fill in the Blanks 1. ________ ___________is ___is the recording recording function function of the accounting accounting process process. . 2. Assets = __ __________ ____________ ____ + Own Owner's er's Equity 3. The owner' owner's s current investment investment or equity equity in the assets assets of a busine business ss is called _______________. 4. A list of a assets, ssets, liabilitie liabilities, s, and owner's owner's equity equity as of a pa particular rticular date is reported on a ________________. 5. ________ ______________ ______ create create an outward outward or potential potential outward fl flow ow of assets. 6. Revenue ea earned rned on account account creates an asset asset entitled entitled _______ ______________ _________. __. 7. ________ ______________ ______ record record personal personal expenses expenses that that are not re related lated to t the he business. They are a subdivision of owner's equity. 8. The left s side ide of any T-accoun T-account t is called the _____ ____________ _________. __. 9. Assets Assets are inc increas reased ed by ____ ________ _______. ___. 10. Withdraw Withdrawals als ar are e incr increas eased ed by __ ______ ________ _______ ______. ___. 11. Cash, Cash, Acco Accounts unts Re Receiv ceivable able a and nd Equ Equipme ipment nt are ex exampl amples es of  ________________. 12. Increasi Increasing ng exp expense enses s ultim ultimate ately ly caus cause e owne owner's r's eq equity uity to  ________________. 13. An increase increase in in rent expense is a ________ ________________ ________ by the rules of debits and credits. 14. A debit debit to one a asse sset t and a cre credit dit to anot another her as asset set fo for r the sa same me transaction reflect an ________________ of assets. 15. Chubby Cat Food Food Sup Supplies plies d delivere elivered d cat food t to o Joll Jolly y Pet Shop b but ut did not receive payment from Jolly Pet Shop till the following month. This is known as a ________________ transaction. 16. Enchanted Enchanted Paws Pet Sh Shop op pai paid d Chub Chubby by Cat Food S Supplies upplies immedia immediately tely fo for r the cat food purchased. This is known as a ________________ transaction. 17. The basic basic unit unit to reco record rd all busine business ss tra transac nsaction tions s is call called ed  ________________. 18. The effec effect t of eac each h transact transaction ion is r recor ecorded ded in e eithe ither r the  ________________ or ________________ _____ ___________ column of each ledger l edger account. 19. The double-en double-entry try recording recording rule states that for e every very transac transaction, tion, total debits must ________________ total credits. In addition, every transaction affects at least ________________ ledger accounts.

Fill in the Blanks   Rules of Debit and Credit The account type determines how increases or decreases in it are recorded. Determine whether the word debit or credit is appropriate for each statement. 1. Asset acco accounts unts normally normally have ____________ ____________ balances. balances. An i increase ncrease in as asset set is recorded as a ____________ while a decrease in asset is recorded as a  ____________. 2. Liabilit Liability y accounts normally normally have have ____________ ____________ balan balances. ces. An incre increase ase in liability is recorded by a ____________ and a decrease is entered as a  ____________. 3. The owner' owner's s capital account account normally normally has a ____________ ____________ bal balance. ance. This account increases on the ____________ side and decreases on the  ____________ side. 4. Income acc accounts ounts normally normally have ___________ ____________ _ balances balances. . These accou accounts nts increase on the ____________ side and decrease on the ____________ side.

 

5. Expense ac accounts counts normally normally have __________ ____________ __ balance balances. s. These acco accounts unts increase on the ____________ side and decrease on the ____________ side.

Fill in the Blanks a. The four p phases hases of accountin accounting g are ____________ ____________, , _______ ____________, _____,  ____________, and ____________. _______ _____. b. Increase Increases s in the the capital capital account account are _________ ____________. ___. c. Increase Increases s in income accounts are __________ ____________. __. d. Increase Increases s in expense accounts accounts are ________ ____________. ____. e. The diffe difference rence between between assets assets and liabilities liabilities is ______ ____________. ______. f. Financia Financial l events that that occur in a business business are termed termed ____ ____________ ________. . g. An investm investment ent (by the owner) owner) in the business business increases increases ______ ____________ ______ and  ____________. h. To acquir acquire e something something "on account" account" is to to create a ________ ____________. ____. i. The transa transaction ction description description "paid "paid on account" account" means a reduc reduction tion of the asset ____________ and reduction of the liability ____________. j. Income i increase ncreases s net assets assets and also __________ ____________. __. k. A withdra withdrawal wal of cash cash for owner's owner's personal personal use reduces reduces cas cash h and  ____________. l. The left s side ide of the account account is known as the the ______ ____________, ______, w whereas hereas th the e right side is the ____________. m. Increase Increases s in asset accounts are __________ ____________. __. n. Increase Increases s in liabili liability ty accounts accounts a are re ____ ___________ ________. _.

True or False 1. The first Ste Step p in analyzing analyzing a transaction transaction is to determine determine What acc accounts ounts are involved. 2. Capital re represents presents the the owner's investment investment, , Or equity, in a bu business. siness. 3. When a bus business iness receives receives cash, cash, it is always always reco recorded rded as an i increase ncrease t to o Cash and a decrease to an Expense. 4. Liabilit Liabilities ies represent represent amounts owed to to cred creditors. itors. 5. In the fundam fundamental ental accounting accounting equation, equation, assets assets are added to l liabiliti iabilities. es. 6. Business transactions transactions are are expressed expressed in terms terms of money. 7. Accounts Receivable Receivable is consider considered ed an asset. 8. An owner c can an invest cash or Other Other assets of value i in n the busi business. ness. 9. Both sides of t the he fundamen fundamental tal accounting accounting equation equation must alwa always ys be equal. 10.account The liability liapayable. bility created when supplies supplies are bought bought on account is cal called led an 11. Equipment Equipment is listed as an asset because it is used up in a relative relatively ly long period of time. 12. The owner's owner's Withdrawa Withdrawals ls account account i is s liste listed d with the Oth Other er exp expenses enses o of f a business. 13. A Withdrawal Withdrawal by the Owner is rec recorded orded a as s a d deductio eduction n from assets and an increase in expenses. 14. Assets Assets are t thing hings s of val value ue owned owned by a bu busine siness ss ent entity. ity. 15. Every transact transaction ion is recorde recorded d in terms o of f incr increases eases a and/or nd/or decrease decreases s in two or more accounts.

Multiple Choice 1. If assets total P700,000 and liabilities total P400,000, how much are the net assets?

 

a. b. c. d.

P300,000 P400,000 P700,000 P1,100,000

2. What are increases in resources that a firm earns by providing goods or services to its customers? a. Assets b. Income c. Expenses d. Liabilities 3. If assets increase by P100,000 and liabilities decrease by P30,000, owner's equity must a. remain unchanged. b. increase by p 130,000, c. decrease by P70,000. d. decrease by P130,000. 4. A T-account consists of how many parts? a. One b. Two c. Three d. Four 5. Which of the following is true? a. The debit is on the right side of an asset account. b. The debit is on the left side of an asset account. c. The credit is on the left side of a liability account. d. The debit is on the right side of an expense account. 6. Which a. b. c. d.

of the following accounts has a normal debit balance? Accounts Payable Notes Payable Consulting Revenues Advertising Expense

7. Which of the following accounts is increased by a credit? a. Accounts Receivable b. Sales c. Withdrawals d. Advertising Expense 8. Which a. b. c. d.

Of the following is true? A debit will increase a liability account. A credit Will increase an asset account. A credit will increase a revenue account. A debit will decrease an expense account.

9. In applying the rules of debits and credits, which of the following statements is correct? a. The word "debit" means to increase, and the word "credit" means to decrease b. Asset, expense and capital accounts are debited for increases. c. Liability, revenue and capital accounts are debited for increases. d. Asset, expertise and withdrawals are debited for increases.

 

Multiple Choice 1. Which Of t the he following following accounting accounting equations equations are are correct correct? ? 1. Non-cur Non-current rent assets assets + Current Current assets = Non-cur Non-current rent liab liabilities ilities Current liabilities + Capital 2. Assets - Liabilities Liabilities = Capital + Revenue Revenue – Exp Expenses enses 3. Capital + Non-current Non-current liabilities liabilities = Non-curr Non-current ent asset assets s + Workin Working g capital a. b. c. d.

(1) and (2) only (1) and (3) only (2) and (3) only (1), (2) and (3)

2. Which of t the he following following a. A sole proprietor entity. b. A sole proprietor the office. c. A sole proprietor the entity's account. d. A sole proprietor receiving any rent.

is not an an example of additi additional onal capi capital? tal? purchases a car through the bank account of the brings a second-hand computer from his home to transfers P 1,000 from his own bank account to

uses his own building as an Office without

3. Which Of t the he following following is not an an example of non-cu non-current rrent ass assets? ets? a. a second-hand computer used in the office b. a van that is purchased through installments the total amount of which is not fully settled c. P40,000 cash d. a building bought by the entity 4. Which Of the followi following ng statements statements are correct? correct? 1. The tota total l amount of of liabilities liabilities can be be greater t than han the to total tal amount of capital. 2. Capital Capital + L Liabi iabilit lities ies 3. The tota total l amount of of assets can can be greater greater than th the e sum of liabilities and capital. a. b. c. d.

(1) (1) and and (2) (3) only only (2) and (3) only (1), (2) and (3)

5. The entity pu purchases rchases P10,000 P10,000 fixtures fixtures for entity entity use on credi credit. t. Which of the following will be affected? 1. assets 2. liabilities 3. capital a. b. c. d.

(1) and (2) only (1) and (3) only (2) and (3) only (1), (2) and (3)

 

6. Suppose a debtor repays repays his debt debt of P50,000 P50,000 by tra transferri nsferring ng the mone money y into the bank account of the business. The effect of the transaction on the accounting equation would be: a. Both assets and liabilities increase by P50,000. b. Both assets and liabilities decrease by p50,000. c. Only assets decrease by P50,00. d. Assets and liabilities remain unchanged. 7. Under the dou double-ent ble-entry ry system, what what is the value of X if assets, assets, curr current ent liabilities, non-current liabilities and capital are X, P40,000, P60,000 and P350,000 respectively? a. P250,000 b. P350,000 c. P370,000 d. P450,000 8. Which of t the he following following is correct correct under under the double-entry double-entry system? a. Asset amount must be equal to liability amount. b. The change in asset must be compensated by a change in liability. c. The change in a debit-side entry must be compensated by a change in credit-side entry. d. An increase in asset must be compensated by a decrease in asset.   9. Which Of the fo following llowing sta statements tements regarding regarding the the double-e double-entry ntry syste system m is incorrect? a. An increase in asset means a credit entry in assets account. b. A decrease in liability means a debit entry in liabilities account. c. An increase in drawings means a debit entry in capital account. d. A decrease in non-current asset means a credit entry in assets account. 10. Which Which of the fol follow lowing ing tra transac nsactio tions ns affe affects cts th the e total v value alue o of f liabilities of a firm? a. goods purchased from suppliers by cash b. interest received from bank c. office equipment bought on credit d. goods sold to customers on credit 11. On Apr. Apr. 1, 201 2019, 9, Jerome Jerome Ma Marque rquez z sets u up p a firm a and nd bri brings ngs in o offi ffice ce equipment of P50,000 Ofcash P30,000 business. Jerome Marquez puts P80,000 and intoinventory the firm's box to andthe into the firm's bank account. Meanwhile, the firm lends P50,000 cash to SJ and Associates and borrows P200,000 from the bank to acquire a piece of premises. What is the amount of the firm's capital on Apr. 1, 2019? a. P510,000 b. P210,000 c. P260,000 d. P460,000 12. Which Of Of the followin following g is correct if the sole p proprieto roprietor r of an enti entity ty borrows P30,000 in the name of the entity and deposits it into the entity's bank account? a. The assets of the entity increase by P30,000. b. The liabilities of the entity decrease by P30,000. c. The capital of the entity increases by P30,000. d. The drawings of the entity increase by P30,000.

Problem #1

 

Accounting Events Kersey Sampang owns a comic shop called Kersey Manga Cards and works in the shop. For each of the following, explain whether it is a transaction to be recorded in the accounting books of the business: a. Sampang t took ook P5,000 P5,000 from his personal bank account account and le lent nt it to his friend, Fatima. b. Sampang d deposited eposited P35,000 from from his personal personal bank bank accoun account t into the business bank account. c. Sampang so sold ld comic books books worth P2,500 P2,500 from the shop to Alend. Alend. The mon money ey was deposited into the business bank account. d. Sampang pa paid id P95,000 from from the business business bank account account for his holi holiday day to Europe. e. Sampang t took ook home P1,000wor P1,000worth th of comic comic books from from the sho shop. p.

Problem #2 Elements of Financial Statements 1. Using the accounting accounting equation, equation, complete complete the following following t table: able:

Assets a . b . c . d . e . f .

Liabilities P457,000

P1,006,000

Equity P270,000

P500,000

P309,000

P120,000 P756,000

P895,000

P451,000

P148,000

P668,000

P222,000

2. The follow following ing figures figures are extracted extracted from various various sole propr proprietorsh ietorships. ips. Using the expanded accounting equation, complete the following table: Equity Liabilitie Assets s Capital Income Expenses a . b . c . d . e .

P96,000

P56,000

P46,000

P32,500

P39,000

P86,000

P48,000

P37,000

P25,500

P151,00 0 P182,00 0 P123,00 0

P65,000 P54,000

P42,000

P94,000

P25,000

P37,000

P25,500 P67,500

Problem #3 Accounting Events Which Of the following events would be recognized in the accounting records of Ruth Chew HR Consultants on the date indicated?

 

Feb.

15

Che Chew H HR R C Con ons sultan tants O Of ffers ers to to p pu urcha chase a piec iece o of f l lan and d f for or P1,400,000. There is a high likelihood that the Offer will be accepted.  

Mar.

2

Apr

29

Che Chew H HR R C Con ons sultan tants r re eceiv eives it its e el lectri tricity bill ill f for or the m mo onth nth of April. The bill is due on May 9.

Ju July ly

10

Ch Chew ew HR Co Cons nsul ulta tant nts s pl plac aces es an orde order r for for an offi office ce equi equipm pmen ent t costing P108,000.

Aug.

6

Che Chew HR Cons onsultan tants receiv eives notice that hat its rent entals for an office space will increase from P50,000 to P60,000 per month effective April 1.

The The Offi ffice equipm ipment order dered on July uly 10 is delive ivered. Payme yment is not due until Sept. 1.

Problem #4A Elements of Financial Statements 

a . b . c . d . e

Assets

Liabilities

Equity

760,000

360,000

?

860,000

?

592,000

?

108,000

760,000

626,600

376,240

?

?

800,000

(100,000)

Required: Fill in the amount of the missing element of financial position. problem

Problem #4B a. Jimmy Delgado Pest Control has assets of P600,000 and owner's equity of P450,000. b. Margie Clavano Realtors has liabilities Of P530,000 and owner's equity Of P410,000. c. Marko Fuentes Plumbing Contractor has assets of P473,000 and liabilities of P153,700. d. Ryan Morales. Acting Studio has liabilities of P147,000 and owner's equity of P236,500. e. Fely Monarca Dance has assets of P624,000 and liabilities of P237,000. Required: Compute the amount of the missing element of financial position.

Problem #5A Income and Expenses Income

Expenses

Profit

 

(Loss) a . b . c . d . e

840,000

?

360,000

2,400,000

?

540,000

1,300,000

860,000

?

? ?

2,000,000 1,800,000

720,000 (400,000)

Required: Supply the missing element of performance. Problem #5B a. b. c, d. e.

A small accounting firm has income of P325,000 and expenses of P237,000. An advertising agency has expenses of P163,000 and profit of P42,000. A computer-training outfit has expenses Of P153,000 and loss Of P27,500. A medical practitioner has income of P737,000 and profit of P168,000. An environment consultant has income Of P362,000 and loss Of P20,000.

Required: In each of the preceding five situations, determine the amount of the missing element of performance.

Problem #6 Transaction Effects on the Basic Accounting Model The following are some transactions Of Maricel Supan Services:

a . b . c . d .

Received cash as additional investment.

A _____

L _____

OE _____

Purchased supplies on account.

_____

_____

_____

 _____

_____

_____

_____

_____

_____

e . f . g . h . i . j .

Paid cash for rent on building.

_____

_____

_____

Collected on account receivable in full.

_____

_____

_____

Paid cash for supplies.

_____

_____

_____

Returned supplies purchased on account.

_____

_____

_____

Paid cash to settle accounts.

_____

_____

_____

Paid cash to owner for personal use.

_____

_____

_____

Charged customers for services made on account. Rendered services to cash customers.

Required: For each transaction, indicate whether the assets (A), liabilities (L) or owner's equity (OE) increased (+), decreased (-) or did not change (O) by placing the appropriate sign in the appropriate column.

 

Problem #7 Effects of Transactions The following selected transactions were completed by Roberto Orcajada Delivery Service during July 2019:  ______ 1. Cash received from fro m delivery services, P92,700. P92,700 .  ______ 2. Paid creditors on account, P20,000.  ______  ______  ______  ______  ______  ______  ______

3. Paid Received cash from fro expense, m owner as additional investment, invest ment, P600,000. 4. advertising P5,000. 5. Billed customers for delivery services on account, acc ount, P55,200. 6. Purchased supplies supplie s for cash, P6,000. 7. Paid rent for July, Jul y, P20,000. 8. Received cash from fro m customers on account, P25,440. P25, 440. 9. Determined that the t he cost of supplies on hand was PI,440 so P4,560 of supplies were used during the month.  ______ 10. Owner withdrew cash c ash for personal use, P20,000. P20,00 0. Indicate the effects of each transaction on the space provided: a. b. c. d.

Increase Increase Increase Decrease

an an an an

asset, asset, asset, asset, asset, asset, asset, asset,

decrease increase increase decrease

another asset. a liability. liability. owner's equity. a liability. liability.

e. Decrease an asset, asset, decrease owner's equity.

Problem #8 Financial Transaction Worksheet  The assets, liabilities and owner's equity of Deogracia Corpuz who operates a repair shop are expressed in equation form below. Corpuz completed the following transactions: Assets Cash + Supplies + Land

1.

2.

3.

O rgani zeddeposited a repair shop and P500,000 cash in the bank for use by the business. Purcha chased P20,0 0,000 of supplies on account.

(1 (1) )

=

Liabilitie s Accounts Payable

OE +

Corpuz, Capital

__ _____ _____ _____ ______ _____ _____ _____ _____ _____ _____ _____ _____ ______ _____ __

(2)  ______________________________________  __________________________ ____________ Bal.  __________________________  ______________________________________ ____________

Purchased land for future repair site for P140,000 cash. (3)  ______________________________________  __________________________ ____________ Bal.  __________________________  ______________________________________ ____________

4.

5.

Paid P18,000 to creditors. Withdr hdrew P25,00 ,000 for for personal use.

(4)  ______________________________________  __________________________ ____________ Bal.  __________________________  ______________________________________ ____________ (5)

______________________________________

 

Bal. Bal . 6.

7.

8.

9.

10 10. .

Paid P28,0 8,000 for sit site and equipment rent for the month.

____ _______ _______ ________ ________ ________ ________ _______ _______ ________ ____

(6)  ______________________________________  __________________________ ____________ Bal.  __________________________  ______________________________________ ____________

During t th he m mo onth, P10,000 expenses were incurred on account by the business. During t th he m mo onth, Corpuz invested another P100,000 of personal funds in the business. Receiv eived P5,000 000 for a cash service call. Corp Corpuz uz us used ed P6,0 P6,000 00 worth of supplies.

(7)  __________________________ ____________ Bal.  ______________________________________  ______________________________________  __________________________ ____________

(8)  ______________________________________  __________________________ ____________ Bal.  __________________________  ______________________________________ ____________ (9)  ______________________________________  __________________________ ____________ Bal.  __________________________  ______________________________________ ____________ (10)  ______________________________________  __________________________ ____________ Bal.  __________________________  ______________________________________ ____________

Required: On each of the numbered lines, show by addition or subtraction the effect of each of the transactions on the equation. For each transaction, identify the changes in owner’s equity by placing the letter I (income), E (expense), W (withdrawal), or INV (investment) at the right of each increase or decrease in owner’s equity. On the lines labeled "Bal.” (i.e. Balance) show the new equation resulting from the transaction.

Problem #9 Transactions in a Completed Worksheet   Asuncion Alcala, to be able to guide the accountancy students in their pursuits for CPA glory, established the AA Tutorial Services. On May 1, 2019, she contributed P70,000 as investment to start the business. During the month, she entered into several transactions. Note that she made no withdrawals during the month. The following the transaction worksheet prepared by her student-assistant:

Cash

1 . 2 . 3 . 4 . 5 . 6 .

+

Accounts Receivable

+

Office Equipment

=

Accounts Payable

+

Notes Payable

+70,000

+

Alcala , Capita l +70,00 0

-45,000

+45,000 +30,000 +18,000

+10,000

+20,000

-5,000

+18,00 0 -5,000

+7,000

+7,000

 

7 . 8 . 9 .

-10,000 +15,000

-10,000 -15,000

-7,000

-7,000

Required: 1. Describe each of the above transactions. 2. If these transactions represent the operations of AA Tutorial Services during the month of May, what was the amount of profit or loss before depreciation?

Problem #10 Classification of Events as to Source, Use or Exchange of Assets Selected transactions: a. Set-up a s salon alon business business with cash investments investments from from owner owner. . b. Hired an expe experienced rienced salon salon general general manager and five five all-aro all-around und salon staff. c. Paid rent deposit and and advance advance rent on the the Lapu-L Lapu-Lapu apu City sa salon lon space space. . d. Received cash proceeds proceeds of clean clean loan from from the Bank Bank of the Ph Philippine ilippine Islands. e. Finalize Finalized d plans with with the architect architect for for the salon salon physica physical l set-up a and nd renovations. f. Paid for for 50% o of f the renova renovatio tion n cost costs. s. g. Bought Bought sal salon on equ equipm ipment ent wi with th cas cash. h. h. Renovati Renovations ons completed. completed. Balance Balance payable payable within within 30 days f from rom actua actual l completion. i. Purchase Purchased d salo salon n supp supplies lies wi with th cas cash. h. j. Provided Provided serv services ices for c cash. ash. k. Owner Owner with withdrew drew ca cash sh for pe perso rsonal nal use use. . l. Paid for o opera perating ting expe expenses nses. . m. Bought a c commercia ommercial l condominium condominium near Paseo de Mandaue Mandaue fo for r future expansion; 30% cash down, balance on bank loan. n. Received cash for services that have have been performe performed. d. o. Paid part of th the e cle clean an lo loan. an. Required: Identify each of the above unrelated events as a source, use or exchange of assets transaction. Some events may not be recordable under current accounting practice. In this case, classify the events as not applicable (n/a). Also, for each event, indicate whether total assets will increase, decrease or remain unchanged.

a . b . c . d .

Type of Event

Effect on Total Assets

Source of Assets

Increase

 

e . f . g . h . i . j . k . l . m . n . o .

Problem #11 Recording Transactions in a Financial Transaction Worksheet   Nelson Daganta formed the Liceo Signages on Oct. 1, 2019. He deposited P 250,000 in GE Money Bank under the name of the new business entity. During the month of October 2019, the following transactions occurred: Oct. Oct . 2 3 9 10 11 12 16 23 27 30 31

Acqu Acquired ired a se servic rvice e vehi vehicle cle in th the e amount amount of P195 P195,00 ,000 0 on acco account. unt. Acq Acquir uired ed su supp pplie lies s for c cash ash, , P57 P57,00 ,000. 0. Rece Received ived P87, P87,500 500 cash for sign signs s p pain ainted. ted. Paid Paid th the e mo mont nth's h's ren rent, t, P25 P25,0 ,000. 00. Painted Painted s signs igns for Ca Cagay gayan an Mo Mobile bile o on n acc account ount, , P17 P170,0 0,000. 00. Paid Paid P5 P55, 5,000 000 on a acco ccoun unt t fr from om O Oct ct. . 2. Withdr Withdrew ew P P25 25,0 ,000 00 for for p pers erson onal al use. use. Collecte Collected d P P35, 35,000 000 from Caga Cagayan yan Mobi Mobile. le. Paid sal salarie aries s o of f P P57,0 57,000 00 for the mon month. th. Paid BayanT BayanTel el P7, P7,500 500 fo for r commu communica nicatio tion n servi services ces fo for r the mon month. th. Paid a bill bill from from AdA AdAsia sia fo for r P5,5 P5,500 00 Of ad advert vertisin ising g for th the e mont month. h.

Required: Establish the following accounts in a financial transaction worksheet: Cash; Accounts Receivable; Supplies; Service Vehicle; Accounts Payable; and Daganta, Capital. Record in the worksheet the transactions listed above.

Problem #12 Recording Transactions in a Financial Transaction Worksheet Stephanie Calamba is the owner of the Calamba Repairs Specialist. On Jan. 1, 2020, the assets, liabilities and proprietor's capital of the business were: Cash, P25,000; Accounts Receivable, P4,000; Supplies, P5,000; Equipment,

 

P60,000; Accounts Payable, P9,000; Calamba, Capital, P85,000. The transactions for the month Of January were as follows:

Jan. 1 Balanc e

Cash

+

P25,000

+

Accounts Receivabl e P4,000

___ ____  _

 ________

b.

_______  _ _______  _ _______  _ _______  _ _______  _ _______  _ _______  _ _______  _

 ________

d. e. f. g. h. i.

a. b. c. d. e. f. g. h. i.

Supplie s

 ________  ________  ________  ________  ________  ________  ________

+

Equipmen t

P5,000 _______  _ _______  _ _______  _ _______  _ _______  _ _______  _ _______  _ _______  _ _______  _

=

Account s Payable

=

+

+

a.

c.

+

P60,000  ________  ________  ________  ________  ________  ________  ________  ________  ________

Calamba, Capital +

P85,000

P9,000 _______  _ _______  _ _______  _ _______  _ _______  _ _______  _ _______  _ _______  _ _______  _

 ________  ________  ________  ________  ________  ________  ________  ________  ________

Aid P3 P3,000 ,000 th the e outs outstanding tanding accounts accounts payable. payable. Received P1,000 on account (part (part payment) payment) from customer customers. s. Purchase Purchased d P2,500 worth worth of supplies supplies on account (on (on credit credit). ). Returned a de defective fective piece piece of equipment equipment that was purchased purchased la last st month and received a cash refund Of P12,000. Borrowed P10,000 from from a supplier, supplier, to repay repay the loan loan in 30 da days. ys. Paid c creditor reditor P2,000on account (part payment) payment). . Purchase Purchased d equipment equipment for P10,000, P10,000, giving P2,000 P2,000 cash and pro promising mising to pa pay y the balance in 60 days. Bought Bought supp supplies lies, , payin paying g P1,650 P1,650 cash. Received a P2,500 check from from customer customer on account account. .

Required: Record the transactions using a financial transaction worksheet.

Problem #13 Recording Transactions in a Financial Transaction Worksheet Ludivinia Victorino, a veteran photographer, opened a studio for her professional practice on July 1. Transactions completed during the month follow: a. Deposite Deposited d P146,200 P146,200 in a bank account in in the name of of the busi business, ness, Victorino PhotoProfiles. b. Bought ne new w photography photography equipment equipment on account account from from Canon E Equipment quipment, , P71,210. c. Invested p personal ersonal photograph photography y equipment equipment into the business, business, P51,6 P51,620. 20. d. Paid office rent for t the he mo month, nth, P5,500.

 

e. f. g. h. i. j.

Bought photogr photography aphy supplies supplies for cash, cash, P7, P7,960. 960. Paid premi premium um for insurance insurance cover on photograph photography y equipmen equipment, t, P1,240. Received P8,960 as professional professional fees for services services rende rendered. red. Paid s salary alary o of f .par .part-time t-time assista assistant, nt, P6,000. P6,000. Received and paid bill for telephone telephone service, service, P640 P640. . Paid Cano Canon n Equipment Equipment part of the amount amount owed on the the purchas purchase e of photography equipment, P4,200. k. Received P15,480 as as professional professional fees fees for services services rend rendered. ered.

l. Victorin Paid forominor repairs repairs tfor o photography photog raphyuse, equipment eq, uipment, , P760. m. Victorino withdrew withdrew cashto personal personal use P9,60 P9,600. 0. Required: Record the transactions for, the month of July 2019 using a financial transaction worksheet. Use the following accounts: Cash; Accounts Receivable; Supplies; Prepaid Insurance; Photography Equipment; Accounts Payable; and Victorino, Capital. If the owner's equity account is affected by a transaction, identify it as revenue, expense investment or withdrawal.

Problem #14 Recording Transactions a Financial Transaction Worksheet On Mar. 1, 2019, Froilan Labausa established Labausa Catering Service. Transactions completed during the month are as follows: a. Labausa d deposited eposited P165,000 in a bank account account in the name of the business. b. Bought a s service ervice vehicle vehicle from from Elpidio Motors for for P194,90 P194,900, 0, paying P25,000 in cash and placing the balance on account. c. Bought cat catering ering equipment equipment on account account from Quirino Quirino Equipm Equipment, ent, P28,5 P28,500. 00. d. Paid rent rent fo for r the mo month, nth, P6,2 P6,200. 00. e. Rendered catering services for cash for for the first first half of m month, onth, P24,200. f. Bought Bought sup supplie plies s for cas cash, h, P1,800. P1,800. g. Bought in insurance surance for for the service service Vehicle Vehicle for one one year, P4 P4,000. ,000. h. Received and paid paid the utilities utilities bill, bill, P6,040. P6,040. i. Received a bill from from Manila Gas Gas for gas and and oil use used d by the se service rvice vehicle for the month, P6,080. j. Rendered catering services on account, account, P P28,240. 28,240. k. Performe Performed d catering services services for cash cash for the remainder remainder Of the P2 P25,200. 5,200. l. Paid sal salaries aries of of the part-time part-time assistants, assistants, P11,200. P11,200. m. Labausa withdrew withdrew cash for personal personal use, P P15,500. 15,500. Required: Record the transactions for the month of March 2019 using a Worksheet. Use the following accounts: Cash; Accounts Receivable; Prepaid Insurance; Service Vehicle; Equipment; Accounts Payable; and Labausa, Capital. If owner’s equity account is affected by a transaction, identify it as revenue, expense, investment or withdrawal.

Problem #15 Transaction Analysis Transactions: a. b. c. d.

Received P260,000 cash from clients for for services services render rendered. ed. Paid P480, P480,000 000 of sal salarie aries s to emplo employees yees. . Collecte Collected d P120,000 P120,000 f from rom cli clients ents o on n accou account. nt. The owner owner, , Virginia Virginia Ruben, withdrew withdrew P80,000 P80,000 cash cash for per personal sonal use use. .

 

e. Purchase Purchased d P140,000 P140,000 Of su supplies pplies on account. account. f. Billed clients P180,000 for services services rendered rendered. . g. Paid P100, P100,000 000 to su suppli ppliers ers on ac accoun count. t. For each of the transactions for Virginia Ruben Antique Restorer, a sole proprietorship, fill in the spaces to answer the following questions: 1. What are the two accounts accounts affected affected by the the trans transaction? action? 2. owner's What type of ac account countincome is affe affected—ass cted—asset, et, liability, liability, owner owner's 's capital capital, , withdrawal, or expense account? 3. Should the ac account count be incr increased eased or dec decreased? reased? 4. Should the ac account count be debi debited ted or credited? credited?

Trans. a. b. c. d. e. f. g.

1. 2. 1. 2. 1. 2. 1. 2. 1. 2. 1. 2. 1. 2.

Accounts Affected _______________ _______________ _______________ _______________ _______________ _______________ _______________ _______________ _______________ _______________ _______________ _______________ _______________ _______________

Type of Account _______________ _______________ _______________ _______________ _______________ _______________ _______________ _______________ _______________ _______________ _______________ _______________ _______________ _______________

Increase or Decrease _______________ _______________ _______________ _______________ _______________ _______________ _______________ _______________ _______________ _______________ _______________ _______________ _______________ _______________

Debit or Credit _______________ _______________ _______________ _______________ _______________ _______________ _______________ _______________ _______________ _______________ _______________ _______________ _______________ _______________

Problem #16 Recording Transactions in a Financial Transaction Worksheet Pio Baconga started Baconga Industrial Spray Service on Apr. 1, 2019. During April, Baconga completed the following transactions: a. Invested cash in th the e bus business, iness, P60,000. P60,000. b. Bought a serv service ice vehicle vehicle from CDO Motors Motors for P112,500, P112,500, paying P2 P22,500 2,500 in cash, with the remainder in thirty Bought spr spray ay equipment equipme nt ondue account from from days. Misamis Farm Farm Supplie Supplies, s, P18,000 P18,000. . Paid rent rent fo for r the mo month, nth, P5,6 P5,600. 00. Paid cash for insurance insurance on service service vehicle vehicle for the the year, P5 P5,760. ,760. Received cash for spray spray services services done on a building, building, P21, P21,750. 750. Bought Bought sup supplie plies s for cas cash, h, P5,730. P5,730. Billed cu customers stomers on on account for services services performed, performed, P4, P4,440. 440. Paid cash for u utili tilities ties, , P96 P960. 0. Received b bill ill for gasoline gasoline used by the service service vehi vehicle cle during th the e month, P3,270. k. Receipts from cash customer customers, s, P16,420. P16,420. l. Baconga withdrew withdrew cash for for personal personal use, use, PIO,500. PIO,500. m. Paid salar salaries ies to emp employe loyees, es, P20 P20,40 ,400. 0.

c. d. e. f. g. h. i. j.

Required: Record the transactions for the month of April 2019 using a financial transaction worksheet. Use the following accounts: Cash; Accounts Receivable; Supplies; Prepaid Insurance; Spray Equipment; Service Vehicle; Accounts Payable; and Baconga, Capital. If the owner's equity account is

 

affected by a transaction, identify it as revenue, expense, investment or withdrawal.

Problem #17 Recording Transactions in a Financial Transaction Worksheet On June 1, 2019, Teofila Albay, Optometrist, established the Albay Eye Clinic. Transactions completed during the month are as follows: a. b. c. d. e. f. g. h. i. j. k.

Albay depo deposited sited P200,000 P200,000 in a bank account account in the name of of the busines business. s. Paid office rent for t the he mo month, nth, P8,400. Bought Bought sup supplie plies s for cas cash, h, P7,750. P7,750. Bought Off Office ice equipment equipment on account account from Dagupan Dagupan Equipmen Equipment, t, P91,800 P91,800. . Bought a comp computer uter from Del Rosario Rosario Office Office Outfitters, Outfitters, P18,4 P18,400, 00, paying P6,000 in cash and the balance on account. Performe Performed d professional professional services for cash, cash, P24,2 P24,210. 10. Paid acc accounts ounts to to Del Rosario Rosario Office Office Outfitters Outfitters, , P9,000 P9,000. . Received and paid the bill for utilities, utilities, P2,430. Paid sal salaries aries of of the part-time part-time assistants, assistants, P9,900. P9,900. Performe Performed d professional professional services for cash, cash, P25,1 P25,150. 50. Albay Withdrew cash for for personal personal u use, se, P12 P12,500. ,500.

Required: Record the transactions for the month of June 2019 using a financial transaction worksheet. Use the following accounts: Cash; Accounts Receivable; Office Equipment Accounts Payable; and Albay, Capital. If the owner's equity account is affected by a transaction, identify it as revenue, expense, investment or withdrawal.

Problem #18 Recording Transactions in T-Accounts Remedios Palaganas is an experienced events planner. The transactions and accounts for the business are as follows: a. Invested P100,000 in cash to start start her own own busin business. ess. b. Paid P5,00 P5,000 0 for on one e month's month's re rent. nt. c. Bought Office furniture furniture for P15,000 in cash. cash. d. Received delivery elivery of laptop laptop computer, computer, P54,000. P54,000. Paid 50% dow down, n, balance due in 30 d days. e. Performe Performed d servi services ces for P12,00 P12,000 0 in cash. f. Performe Performed d services services for P PIO,800 IO,800 on credit. credit. g. Acquired a fax machine machine for P7,500; P7,500; paid paid P3,000 in in cash, bal balance ance due i in n 10 days. h. Received P5,400 from clients on account. account. i. Paid P1O, P1O,000 000 f for or sa salari laries. es. j. Settled in full the P4,500 P4,500 balance balance for the fax machine. k. Received P7,000 in cash cash for services performed. performed. l. Performe Performed d services services for P P12,000 12,000 on credit. credit. m. Paid P P1,350 1,350 f for or the monthly telephone telephone bill. bill. n. Paid P P2,400 2,400 f for or the electric and water water bills. bills. o. Collecte Collected d P2,000 P2,000 f from rom c clients lients on account. account. p. Palagana Palaganas s withdrew withdrew P7,000 P7,000 in cash cash for personal expenses expenses. . Required:

 

1. With the aid of TT-accounts accounts, , record the transacti transactions ons listed ab above. ove. Use the following accounts: Cash; Accounts Receivable; Office Furniture; Office Equipment; Accounts Payable; Palaganas, Capital; Palaganas, Withdrawals; Consulting Revenues; Salaries Expense; Rent Expense; Utilities Expense and Miscellaneous Expense. 2. Determin Determine e the balances of the the T-a T-accounts. ccounts.

Problem #19 Recording Transactions in T-Accounts   The accounts and transactions Of Evelyn Tria, Systems Consultant, are shown below: a. b. c. d. e. f. g. h. i. j. k. l. m. n. o. p. q.

Invested P150,000 in cash to start start the business. business. Paid P7,50 P7,500 0 for on one e month's month's re rent. nt. Bought Office furniture furniture for P26,000 in cash. cash. Performe Performed d servi services ces for P1O,50 P1O,500 0 in cash. Performe Performed d services services for P P12,750 12,750 on credit. credit. Bought a d desktop esktop computer computer for for P55,000; P55,000; paid 50% down, bal balance ance in 30 days. Acquired a personal personal copier for for P39,500 P39,500 on credit; credit; paid P9 P9,500 ,500 cash cash, , balance due in 30 days. Received Received P7 P7,000 ,000 from from cred credit it clients. clients. Bought a addition dditional al office office chairs for P8,000 P8,000 On c credit. redit. Issued a check for for P32,500 P32,500 to pay pay for salaries. salaries. Performe Performed d servi services ces for P1O,25 P1O,250 0 in cash. Performe Performed d services services for P P11,500 11,500 on credit. credit. Collecte Collected d P6,000 P6,000 on accounts receivable. receivable. Issued a C Check heck for P4,000 P4,000 in partial partial payment payment of th the e amount o owed wed for office chairs. Paid P P2,250 2,250 f for or the monthly telephone telephone bill. bill. Paid P P2,500 2,500 f for or the monthly electric bill. Tria wit withdrew hdrew P1O,000 P1O,000 in in cash for for personal personal expenses. expenses.

Required: 1. With the aid of T-accounts, record the transactions listed above. Use the following accounts: Cash; Accounts Receivable; Office Furniture; Office Equipment; Accounts Payable; Tria, Capital; Tria, Withdrawals; Consulting Revenues; Salaries Expense; Rent Expense; Utilities Expense and Miscellaneous Expense. 2. Determine the balances of the T-accounts.

Problem #20 Recording Transactions In T-Accounts Julieta Dillena established a proprietorship, The Professional Shoppers. The business charges a fee based on the amount of research done to support a costeffective purchase decision and the actual shopping time required. Dillena with the help of her "professional shoppers" will shop for almost anything from corporate giveaways, computers to office and home furnishings. Business is particularly heavy around Christmas and in early summer. The business operates from a rented Office condominium unit. The shoppers receive a commission based on the revenues they produce and a transportation allowance

 

for the use of their personal vehicles for shopping trips. The following transactions are for December 2019: a. Dillena invested invested P300,000 P300,000 in th the e bus business. iness. b. Acquired o office ffice equipment equipment for P100,000. P100,000. Dillena Dillena paid P20 P20,000 ,000 in cash an and d promised to pay the balance equally every end of the month. c. Paid rent rent fo for r Dece December mber, , P5,0 P5,000. 00. d. Provided shopping services for corporate corporate accounts, accounts, P52 P52,000. ,000. e. f. g. h. i. j. k. l. m. n. o. p.

Paid tele telephon phone bil bill, l, P9 P900. 00. Borrowed cashe from the bank by by signing a note paya payable, ble, P50, P50,000. 000. Bought a computer for office office use, P48,000 cash. Collecte Collected d cash from clients clients for serv services ices performed performed on accou account, nt, P40,00 P40,000. 0. Paid commi commissions ssions to shoppers shoppers for revenues revenues generated generated duri during ng the first half of the month, P18,200. Paid elect electrici ricity ty bil bill, l, P6, P6,000 000. . Earned sh shopping opping revenues revenues Of P132,000: P132,000: cash, P72,000 P72,000 on a account. ccount. Paid shop shoppers' pers' commissions commissions for last half half of month, month, P46,2 P46,200. 00. Paid tra transporta nsportation tion allowances allowances for the month, P15,000. Paid P1O,0 P1O,000 00 on not note e payable payable to ban bank. k. Paid cash on ac account count for the of office fice equip equipment ment purch purchased ased in trans transaction action (b), P20,000. Dillena withdrew withdrew P20,000 P20,000 f for or pe personal rsonal use.

Required: 1. Record the transactions using T-accounts. Use the accounting equation as a guide for setting up the T-accounts. The following accounts will be needed: Cash; Accounts Receivable; Office Equipment; Notes payable; Accounts payable; Dillena, Capital; Dillena, Withdrawals; Shopping Revenues; Commissions Expense; Transportation Expense; Rent Expense and Utilities Expense. 2. Determine the balances of the T-accounts.

Problem #21 Identification of Errors On Sept. 1, 2019, Christopher Abelinde established Abelinde Delivery Service. During the month, the entity had the following transactions: a. Christop Christopher her Abelinde Abelinde invested invested P240,000 in the the business ( (increase increase C Cash; ash; Abelinde, b. Bought tw two oCapital). used delivery delivery vans vans from The Van Van Lot for P200,000 and paid P50,000 as a down payment (increase Delivery Equipment, P200,000; decrease Cash, P50,000; increase Accounts Payable, P150,000). c. Received P P25,000 25,000 in cash cash for delivery delivery services (increase (increase Ca Cash; sh; increa increase se Delivery Revenues). d. Received bill from Bicol News News for advertising, advertising, P3,500 (i (increase ncrease Advertising Expense; decrease Cash). e. Billed Nag Naga a Surgical Supply Supply for delivery delivery services services provid provided, ed, P6,200 (increase Accounts Receivable; increase Delivery Revenues). f. Received and paid telephone telephone bill, P1,000 P1,000 (decrease (decrease Cash Cash; ; decreas decrease e Telephone Expense). g. Abelinde i invested nvested in his his business office office equipment equipment havin having g a fair market value of P9,600 (increase Office Equipment; decrease Cash). h. Received a and nd paid bill for gas gas and oil, P1, P1,500 500 (decrea (decrease se Cash; inc increase rease Maintenance Expense). i. Paid P3,50 P3,500 0 to Bicol News to pay pay account in full full (increa (increase se Adverti Advertising sing Expense; increase Cash).

 

j. Received P P29,000 29,000 cash cash for delivery delivery services performed performed (i (increase ncrease Ca Cash; sh; increase Delivery Revenues). k. Abelinde w withdrew ithdrew P11,000 P11,000 for personal personal use (decrease (decrease Cas Cash; h; increas increase e Salaries Expense). l. Received P P4,000 4,000 from Naga Naga Surgical Surgical Supply to apply apply on account (i (increase ncrease Cash; increase Delivery Revenues). m. Paid salar salaries ies to part-time part-time employee, employee, P8,000 (increase (increase Sa Salaries laries Exp Expense; ense; decrease Cash). Required: Find six errors that were made in recording the transactions, and State how they Should have been recorded.