2-38 I B~:fcFina ncial Acco unting and Reporting by Prof. WIN Ballg?

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Problem #1
Accounting Events

Kersey Sampang, own s a com ic shop called Kersey Man

ga Cards and work s in the shop.
For each of the follo wing , explain whe ther it is a tran
sact ion to be reco rded in the
acco unting book s of the business:

a. Sampang took PS,000 from his personal bank acco unt

and lent it to his friend ,
Fatima.
b . Sampang depo sited P35,000 from his personal bank
acco unt into the bu si ness bank
account.
c. Sampang sold com ic books wort h P2,500 from the
shop to Alen d . The mon ey was
depo sited into the business bank account.
d. Sampang paid P95,000 from the business bank acco
unt for his holid ay to Europe.
,e. Sampang took hom e Pl,0 00 wort h of com ic books from
the shop .

I
 E !~e Accounting Equation and the Double Ent ry System I 2~39

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PROFESSOR: _ ]
Problem #2
Elements of Financial Statements

1. Using the accounting equation, complete the following table :

Assets
--- -
Liabilities Equity
-
a. P457,000
- -P270,00 0
- - -- - l
b. Pl,006,000 PS00,000
C. P309,000 P120,000
d. P756,000 P451,000
e. P895,000 P148,000
f. P668,000 P222,000
-

2. The following figures are extracted from various sole proprietorships . Using the
expanded accounting equation, complete the following table:

Assets Liabilities Equity

-
Capital Income Expenses
-
a. P96,000 P56,000 P46,S00 P3 2,S00
-
b. PlSl,000 P39,000 P86,000 P48,000
C. Pl82,000 P65,000 P37,000 P25,500 -
d. P123,000 PS.4,000 P42,000 P26,000
.. -
_e. P94,000 P25,000 P37,000 P67, 500
 . WIN Ba/Jada
2-40 I Basic Financial Acc oun ting and Rep ortin g by Prof [Link]

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Problem #3
Accounting Events

gnized in the acc oun ting reco rds of Ruth

Which of the follo win g events wou ld be reco
Chew HR Consultants on the date indi cate d?

a piece of land for

Feb. 15 Chew HR Consultants offe rs to purchase
t the offe r will be
Pl,4 00,0 00. There is a high like liho od tha
accepted.
rent als for an office
Mar . 2 Chew HR Consultants receives noti ce tha t its
per mon th effe ctiv e
space will increase from PS0,000 to P60,000
April 1.
bill for the mon th of
Apr. 29 Chew HR Consultants receives its elec trici ty
April. The bill is due on May 9.
an offic e equ ipm ent
July 10 Chew HR Consultants places an ord er for
costing P108,000.
vere d. Pay men t is
Aug. 6 The offic e equ ipm ent ordered on July 10 is deli
not due unti l Sept. 1.
 The Accounting Equation and the Double Entry System
t arsarrz 2-41

I I !N AME : SCORE:
[secTION:
I PROFESSOR:

I Problem #4A
I Elements of Financial Statements

I Assets Liabilities Owner's Equity

I a. 760,000 360,000 ?
I b. 860,000 ? 592,000
I C. ? 108,000 760,000
d. 626,600 376,240
I e. ?
?
800,000 (100,000)
f

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

Problem #48

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 #4C
' ,
a. At the beginnin.g of the year, the assets of Cleofe Arib Services were P360,000 and
its owner's equity was P200,000. During the year, assets increased by P120,000 and
liabilities increased by P20,000. What was the owner's equity at the end of the
year?

~- At the beginning of the year, Cora Gabayan Calling Station had liabilities of Pl00,000
and owner's equity of P96,000. If assets increased by P40,000 and liabilities
decreased by P30,000, what was the owner's equity at'the end of the year?

c. The liabilities of Lenore Loqueloque Stylist equal one-third of the total assets, and
the owner's equity is P240,000. What is the amount of the liabilities?

Required : Use the accounting equation to answer each of the questions above.
2-42 I Basic Financial Accountin g and Reporting by Prof WIN Bailado
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NAME:
SECTION:
SCORE:
PROFESSOR:
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Problem #SA
Income and Expenses

Income Expenses Profit

(Loss)

a. 840,000 ? 360,000
b. 2,400,000 ? 540,000
C. 1,300,000 860,000 ?
d. ? 2,000,000 720,000
e. ? 1,800,000 (400,000)

Required: Supply the missing element of performance.

Problem #SB

a. A small accounting firm has income of P325,000 and expenses of P237,000.

b. An advertising agency has expenses of P163,000 and profit of P42,000.
c. A compute r-trainin g outfit has expenses of P153,000 and loss of P27,500.
d. A medical practitio ner has income of P737,000 and profit of P168,000.
e. An environm ent consultant has income of P362,000 and loss' of P20,000.

Required: In each of the preceding five situations, determin e the amount of the missing
element of performance.
 The Ac cou ntin g Eq uat ion and
the Double Entry System 2-4 3

NAME~ j SCORE:
SECTION: { PROFESSOR:

problem #6
Transaction Effects on the Basic
Accounting Model

The fol low ing are so me tra ns ac

tio ns of Maricel Supan Services:

A L OE
a. Received cash as ad dit ion al inv
es tm en t.
Purchased supplies on account.
b.
Charged cu sto me rs for services
c. made on
account.
Rendered services to cash custom
d. ers.
Paid cash for ren t on building.
e.
Collected on account receivable
f. in ful l.
Paid cash for supplies.
g.
Re tur ne d supplies purchased on
account.
h.
I Paid cash to se ttle accounts.
I i.
Paid cash to ow ne r for persona
l use .
I j.

I Required:
For each tra ns ac tio n, ind ica te
I wh eth er the assets (A), liabiliti
es (L) or owner's equity
(OE) increased (+), decreased (-)
or did no t change (0) by placing
I the appropriate sign in
the ap pro pri ate co lum n .
I
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2-44 I Basic Financial Accounting and Reporting by Prof. WIN Ba/Jada
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Problem #7
Effects of Transactions

The following selected transactions were completed by Roberto Orcajada DelivE

Service during July 2019:

1. Cash received from delivery services, P92, 700.

2. Paid creditors on account, P20,000.
3. Received cash from owner as additional investment, PG00,000.
4. Paid advertising expense, PS,000.
5. Billed customers for delivery services on account, PSS,200.
6. Purchased supplies for cash, P6,000.
7. Paid rent for July, P20,000.
8. Received cash from customers on account, P25,440.
9. Determined that the cost of supplies on hand was Pl,440 so
P4,560 of supplies were used during the month.
10. Owner withdrew cash for personal use, P20,000.

Indicate the effects of each transaction on the space provided:

a. Increase an asset, decrease another asset.

b. Increase an asset, increase a liability.
c. Increase an asset, increase owner's equity.
d. Decrease an asset, decrease a liability.
e. Decrease an asset, decrease owner's equity.
2-44 I Basic Fin ancial Accounting and Reporting by Prof WIN Bal/ado

ISECTION:
NAME: I SCORE:
PROFESSOR:
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Problem #7
Effects of Transactions

The following selected transactions were completed by Roberto Orcajada Delivery

Service during July 2019:

1. Cash received from delivery services, P92, 700.

2. Paid creditors on account, P20,000.
3. Received cash from owner as additional investmen t, P600,000.
4. Paid advertising expense·, PS,000.
5. Billed customers for delivery services on account, PSS,200.
6. Purchased supplies for cash, P6,000.
7. Paid rent for July, P20,000.
8. Received cash from customers on account, P25,440.
9. Determine d that the cost of supplies on hand was Pl,440 so
P4,560 of supplies were used during the month.
10. Owner withdrew cash for personal use, P20,000.

Indicate the effects of each transaction on the space provided:

a. Increase an asset, decrease another asset.

b. Increase an asset, increase a liability.
c. Increase an asset, increase owner's equity.
d. Decrease an asset, decrease a liability.
e. Decrease an asset, decrease owner's equity.
 -
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2-46 I Baste· Fmanctal . by Pr01·,E WIN Ballada
· • Accounting and Reportmg

Required:
On each of the numbered lines, show by addition or subtraction the effect of ~ach of the
transactions on the equation. For each transaction, identify th e 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 is
the transaction worksheet prepared by her student-assistant:

Accounts Office Accounts Notes Alcala,

• Cash + Receivable + Equipment = Payable + Payable + Capital

1. +70,000 +70,000
-45,000 +45,000
2.
3. +30,000 +10,000 +20,000
4. +18,000 +18,000
-5,000
.
5. -5,000
6. +7,000 +7,000
7. -10,000 -10,000
8. +15,000 -15,000
9. -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.?
 The Accounting Equation and the Double Entry System 2-47
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~AME:
SECTION:
I SCORE:
PROFESSOR:
Problem #10
Classification of Events as to Source, Use or Exchange of Assets

Selected transactions:

a. Set-up a salon business with cash investments from owner.

b. Hired an experienced salon general manager and five all-around salon staff.
c. Paid rent deposit and advance rent on the Lapu-Lapu City salon space.
d. Received cash proceeds of clean loan from the Bank of the Philippine Islands.
e. Finalized plans with the architect fo·r the salon physical set-up and renovations.
f. Paid for 50% of the renovation costs.
g. Bought salon equipment with cash.
h. Renovations completed. Balance payable within 30 days from actual completion.
i. Purchased salon supplies with cash.
j. Provided services for cash.
k. Owner withdrew cash for personal use.
I. Paid for operating expenses,
m. Bought a commercial condominium near Paseo de Mandaue for future expansion;
30% cash down, balance on bank loan.
n. Received cash for services that have been performed.
o. Paid part of the clean loan.

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.

Type of Event Effect on Total Assets

I a. Source of Assets Increase

b. -
I C.
I ~
d.
e.
I ~

f.
~

I _g.
~h.
I
I -i.
j.
..._k.
I I.
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2~48 l ,1
Basic Financial Accounting and Reporting by Pro, . &faTTT5na ran n 7 z
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SECTION:
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PR?FESSOR: J
Problem #11
Recording Transactions in a Financial Transaction Worksheet

·
Nelson Daganta formed the Ltceo •
S1gnages on Oct. 1, 2019 · He deposited P250 ' 000 in
GE Money Ban~ under the name of the new business · en t·,ty · During the month of
October 2019, the following transactions occurred:

Oct. 2 Acquired a service vehicle in the amount of P195,000 on account.

3 Acquired supplies for cash, P57,000.
9 Received P87,500 cash for signs painted.
10 Paid the month's rent, P25,000.
11 Painted signs for Cagayan Mobile on account, Pl 70,000.
12 Paid PSS,000 on account from Oct. 2.
16 Withdrew P25~000 for personal use.
23 Collected P35,000 from Cagayan Mobile.
27 Paid salaries of P57,000 for the month.
30 Paid BayanTel P7,S00 for communication services for the month.
31 Paid a bill from AdAsia for PS,500 of advertising for the month.

Required:

Establish the following accou~ts in a financial transaction worksheet: Cash· Accounts

Receivable; Supplies; Service Vehicle; Accounts Payable; and Daganta, Capital.' Record in
the worksheet the transactions listed above.
 The Accou nting Equation and the Double Entry System I 2-49
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NAME: SCORE:
SECTION: PROFESSOR:

Problem #12
Recording Transactions in a Financial Transaction Worksheet

Jan. 1, 2020, the

Stephanie Calamba is the owne r of the Calamba Repairs Specialist. On
P25,000; Accounts
assets, liabilit ies and propri etor's capital of the business were: Cash,
Payable, P9,000;
Receivable, P4,000; Supplies, PS,000; Equipment, P60,000; Accounts
were as follow s :
Calamba, Capital, P85,000. The transactions for the month of January

Accoun ts · Accounts Calamba,

Cash + Receivable + Supplies + Equipm ent = Payable Capital
Jan. 1
Balance P25,00 0 + P4,000 + PS,000 + PG0,000 = P9,000 + P85,000
a.

b.

C.

d.

e.

f.

g.

h.

i.

a. Paid P3,000 of the outsta nding accounts payable.

b. Received Pl,00 0 on account (part payment) from customers.
C. Purchased P2,500 worth of supplies on account (on credit).
month and
d. Returned a defec tive piece of equip ment that was purchased last
received a cash refund of Pl2,00 0. ·
Borro wed Pl0,00 0 from a supplier, to repay the loan in 30 days. "
,;

e.
f. Paid credit or P2,000 on account (part payment).
to pay the
g. Purchased equip ment for Pl0,00 0, giving P2,000 cash and promising
balance in 60 days.
I h. Bought supplies, paying Pl,650 cash.
Received a P2,500 check from customer on account.
l i.
,
I Required: Record the transactions using a financial transaction worksheet.
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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 f~llow:

a. Deposited P146,200 in a bank account in the name of the business,

Victorino PhotoProfiles .
b. Bought new photography equipment on account from Canon Equipment,
P71,210.
c. Invested personal photography equipment into the business, PSl,620.
d. Paid office rent for the month, PS,500.
e. Bought photography supplies for cash, P7,960.
f. Paid premium for insurance cover on photography equipment, Pl,240.
g. Received P8,960 as professional fees for services rendered.
h. Paid salary of part-time assistant, PG,000.
i. Received and paid bill for telephone service, P640.
j. Paid Canon Equipment part of the amount owed on the purchase of
photography equipment, P4,200.
k. Received PlS,480 as professional fees for services rendered.
I. Paid for minor repairs to photography equipment, P760.
m. Victorino withdrew cash for personal use, P9,600.

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.

I
·I
 The Accou nting Equati on and the Double Entry System I 2-51
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NAME: SCORE :
SECTION: PROFESSOR:

Problem #14
Recording Transactions in a Financial Transaction Worksheet

cti ons
On Mar. 1, 2019, Froilan Labausa established Labausa Catering Service . Transa
completed during the month are as follows:

a. Labausa depos ited Pl65,0 00 in a bank account in the name of the business.
in ca sh
b. Bought a service vehicle from Elpidio Motor s for P194,900, paying P25,000
and placing the balance on account.
c. Bought cateri ng equip ment on account from Quirino Equipment, P28,500.
d. Paid rent for the month , P6,200.
e. Rendered cateri ng services for cash for the first half of the month, P24,200.
f. Bought suppli es for cash, Pl,800.
g. Bought insura nce for the servic;;e vehicle for one year, P4,000.
h. Received and paid the utilitie s bill, P6,040.
the
1. Received a bill from Manila Gas for gas and oil used by the service vehicle for
month , PG,080.
j. Rendered cateri ng services on account, P28,240.
0.
k. Perfor med cateri ng services for cash for the remainder of the month , P25,20
I. Paid salaries of the part-t ime assistants, Pll,20 0.
m. Labausa withd rew cash for personal use, PlS,500.

Required:
ction
Record the transa ctions for the month of March 2019 using a fin~ncial transa
nce;
worksheet. Use the follow ing accounts: Cash; Accounts Receivable; Prepai d Insura
owner ' s
Service Vehicle; Equip ment; Accounts Payable; and Labausa, Capital. If the
ment
equity accou nt is affect ed by a transaction, identi fy it as revenue, expen se, invest
or withdr awal.
 . . by Prof WIN Balloda
2-52 I Basic Financial Accountmg and Repor~~L - w 1; - t -~- 15 , • "":rt l"itr~·a u::sns zmTrstt1J·il½
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Problem #15
Transaction Analysis
Transactions:
a. Received P260,000 cash from clients for services rendered.
b. Paid P480,000 of salaries to employees.
c. Collected P120,000 from clients on account.
d. The owner, Virginia Ruben, withdrew P80,000 cash for personal use.
e. Purchased P140,000 of supplies on account.
f. Billed clients P180,000 for services rendered.
g. Paid Pl00,000 to suppliers on account.
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 affected by the transaction?

2. What type of account is affected-as set, liability, owner's capital, owner's
withdrawal, income or expense account?
3. Should the account be increased or decreased?
4. Should the account be debited or credited?

Accounts Type of Increase or Debit or

Trans. Affected Account Decrease Credit
a. 1.
2.
b. 1.
2.
c. 1.
2.
d. 1.
2.
e. 1.
2.
f. 1.
2. I
g. 1. I
2.
I
I

I
 The Accounting Equation and the Double Entry System I 2-53

~ AME:
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SCORE:
PROFES~SOR;
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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 the business, P60,000.

b. Bought a service vehicle from COO Motors for P112,500, pay ing P22,500 in
cash, with the remainder due in thirty days .
c. Bought spray equipment on account from Misamis Fa rm Suppfi es, P18,000.
d. Paid rent for the month, PS,600.
e. Paid cash for insurance on service vehicle for the year, PS, 760.
f. Received cash for spray services done on a bu ilding, P21,750.
g. Bought supplies for cash, PS, 730.
h. Billed customers on account for services performed, P4,440.
i. Pa-id cash for utilities, P960.
Received bill for gasoline used by the service vehicle during the month, P3,270.
j.
k. Receipts from cash customers, Pl6,420.
I. Baconga withdrew cash for persona l use, Pl0,500.
m. Paid salaries to employees, P20,400.

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 Equ ipment; 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.

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 . p ,f WIN Bailado
2-54 I Basic Financial Accounting and Reportmg by r 0 1 •

-
NAME: SCORE: -
SECTION: PROFESSOR: -

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. Al bay deposited P200,000 in a bank account in the name of the business.

b. Paid office rent for the month, PS,400.
c. Bought supplies for cash, P7, 750.
d. Bought office equipment on account from Dagupan Equipment, P91,800.
e. Bought a computer from Del Rosario Office Outfitters, P18,400, paying PG,000 in
cash and the balance on account.
f. Performed professional services for cash, P24,210.
g. Paid accounts to Del Rosario Office Outf,i tters, P9,000.
h. Received and paid the bill for utilities, P2,430.
i. Paid salaries of the part-time assistants, P9,900.
j. Performed professional services for cash, P25,150.
k. Al bay withdrew cash for personal use, P12,500.

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.
 The Accoun ting Equatio n and the Double Entry System 2-55

t NAME:
SECTION:
I SCORE:
PROFESSOR:

Problem #18
Recording Transa ctions in T-Accounts

ts
Remedios Palaganas is an experienced events planner. The transactions and accoun
for the business are as follow s:

a. Invested Pl00,0 00 in cash to start her own business.

b. Paid PS,000 for one month 's rent.
c. Bough t office furnitu re for P15,000 in cash .
d. Received delive ry of laptop computer, P54,000. Paid 50% down,
balance due in 30 days.
e. Perfor med services for P12,000 in cash.
f. Perfor med services for Pl0,80 0 on credit.
g. Acquir ed a fax machine for P7,S00; paid P3,000 in cash, balance due in
10 days.
h. Received PS,400 from clients on account.
i. Paid Pl0,00 0 for salaries.
j. Settle d in full the P4,S00 balance for the fax machine.
k. Received P7,000 in cash for services perfor med.
I. Perfor med services for P12,000 on credit.
m. Paid Pl,35 0 for the month ly teleph one bill.
n. Paid P2,400 for the electri c and water bills.
o. Collec ted P2,000 from clients on account.
p. [Link] withd rew P7,000 in cash for personal expenses.

Required:
ing
1. With the aid of T-accounts, record the transactions listed above. Use the follow
nts
accounts: Cash; Accou nts Receivable; Office Furnit ure; Office Equip ment; Accou
s
Payable; Palaganas, Capital; Palaganas, Withd rawals ; Consulting Revenues; Salarie
Expense; Rent Expense; Utilitie s Expense and Miscellaneous Expense.

2. Determ ine the balances of the T-accounts.

 . , b . P·ro·' WIN 80 //o do
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2-56 I Basic Fino~cial ~cco!! ntmg Y 'J • ·
on ep . . . . .

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Problem #19
Recording Transactions in T-Accounts

.
The accounts and transactions of Evelyn Tna, Syste ms con
.
sultant, are show n below :

a. Invested PlS0,000 in cash to start the business.

b. Paid P7,500 for one month's rent.
c. Bought office furnit ure for P26,000 in cash.
d. Performed services for Pl0,5 00 in cash.
e. Performed services for P12, 750 on credit .
f. Bought a desktop computer for PSS,000; paid 50% down , balan ce in 30
days.
g. Acquired a personal copier for P39,S00 on credi t; paid P9,S00 cash,
balance due in 30 days.
h. Received P7,000 from credit clients.
i. Bought additional office chairs for PS,000 on credit.
j. Issued a check for P32,500 to pay for salaries.
k. Performed services for Pl0,2 50 in cash.
I. Performed services for Pll,5 00 on credit.
m. Collected PG,000 on accounts receivable.
n. Issued a check for P4,000 in partial payment of the amou nt owed for
office chairs.
o. Paid P2,250 for the mont hly telephone bill.
p'. Paid P2,S00 for the mont hly electric bill.
q. Tria withd rew Pl0,0 00 in cash for personal expenses.

Required:
1
· With the aid of T-accounts, record the transactions listed above. Use
the follow ing
accounts: C~sh; Accounts Receivable; Office Furniture; Office Equipment;
Accounts
Payable; Tna, Capital; Tria, Withd rawal s; Consulting Revenues; Salari
es Expense;
Rent Expense· UtTt·
1 1 E
, ies xpense and Miscellaneous Expense.
2. Determine the balances of the T-accounts . .
 The Accou nting Equation and the Double Entry System I 2-57

NAME: SCORE:
SECTION: PROFESSOR:

Problem #20
Recording Transactions in T-Accounts

Julieta Dillena established a proprietorship, The Professional Shoppers.

The business
charges a fee based on the amou nt of research done to support
a cost-effective
purchase decision and the actual shopping time required. Dillena with
the help of her
"professional shoppers" will _shop for almost anything from corpo
rate giveaways,
computers to office and home furnishings.

Business is partic ularly heavy around Christmas and in early summer.

The business
operates from a rente d office condominium unit. The shoppers receiv
e 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 P300,000 in the business.
b. Acquired office equip ment for Pl00,000. Dillena paid P20,000 in cash and
promised to
pay the balance equally every end of the month.
c. Paid rent for December, PS,000.
d. Provided shopping services for corporate accounts, P52,000.
e. Paid teleph one bill, P900.
f. Borrowed cash from the bank by signing a note payable, PS0,000.
g. Bought a comp uter for office use, P48,000 cash.
h. Collected cash from clients for services performed on account, P40,00
0.
i. Paid commissions to shoppers for revenues generated during the first
half of the
month , P18,200.
j. Paid electr icity bill, PG,000.
k. Earned shopping revenues of P132,000: PG0,000 cash, P72,000 on accou
nt.
I. Paid shoppers' commissions for .last half of month, P46,200.
m. Paid transp ortatio n allowances for the month, PlS,000.
n. Paid Pl0,00 0 on note payable to bank.
o. Paid cash on account for the office equipment purchased in transaction
(b), P20,000.
p. Dillena withdr ew P20,000 for personal use.

Requi red:
1. Record the transa ctions using T-acc ounts. Use the accou nting equat
ion as a guide
for settin g up the T-acc ounts . The follow ing accounts will be
neede d: Cash;
Accou nts Receivable; Office Equip ment; Notes Payable; Accounts
Payable; Oillena,
Capital; Oillen a, Withd rawal s; Shopp ing Revenues; Comm
issions Expense;
Trans portat ion Expense; Rent Expense and Utilitie s Expense.

2. Deter mine the balanc es of the T-accounts.

 2-58 I Basic Financial Accounting and Reporting by Prof. WIN Ballada
iii·

---
I NAME: SCORE: ~
SECTION: I PROFESSOR: j
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. Christopher Abelinde invested P240,000 in the business {increase Cash; increase

Abelinde, Capital).
b. Bought two used delivery vans from The Van Lot for P200,000 and paid PS0,000 as a
down payment (increase Delivery Equipment, P200,000; decrease Cash, PS0,000;
increase Accounts Payable, PlS0,000).
c. Received P25,000 in cash for delivery services (increase Cash; increase Delivery
Revenues).
d. Received bill from Bicol News for advertising, P3,S00 (increase Advertising Expense;
decrease Cash).
e. Billed Naga Surgical Supply for delivery services provided, P6,200 (increase Accounts
Receivable; increase Delivery Revenues).
f. Received and paid telephone bill, Pl,000 (decrease Cash; decrease Telephone
Expense).
g. Abelinde invested in his business office equipment having a fair market value of
P9,600 (increase Office Equipment; decrease Cash).
h. Received and paid bill for gas and oil, Pl,500 (decrease Cash; increase Maintenance
Expense).
i. Paid P3,S00 to Bicol News to pay account in full (increase Advertising Expense;
increase Cash).
j. Received P29,000 cash for delivery services performed (increase Cash; increase
Delivery Revenues).
k. Abelinde withdrew Pll,000 for personal use (decrease Cash; increase Salaries
Expense).
I. Received P4,000 from Naga Surgical Supply to apply on account (increase Cash;
increase Delivery Revenues).
m. Paid salaries to part-time employee, P8,000 (increase Salaries Expense; decrease
Cash).

Required:
1

Find six errors that were made in recording the transactions, and state how they should
have been recorded.