Escolar Documentos
Profissional Documentos
Cultura Documentos
Exercises
Exercise 1
e. Land 180,000
Cash 90,000
Notes Payable 90,000
Exercise 2
Exercise 3
a. P0
b. P900
c. P10,000
2 Chapter 8
Exercise 4
a. Debit
b. Credit
c. Credit
d. Debit
e. Debit
f. Credit
g. Debit
h. Credit
i. Debit
j. Credit
Exercise 5
4 No entry
8 No entry
17 Cash 4,500
Accounts Receivable 500
Tuition Revenue 5,000
20 Cash 500
Accounts Receivable 500
Exercise 6
Assets Debit
Liabilities Credit
Owners Equity Credit
Revenues Credit
Expenses Debit
Exercise 7
Requirement (1)
Revenues
Service revenue P1,512,000
Expenses
Salary expense P490,000
Rent expense 240,000
Utilities expense 68,000
Supplies expense 40,000
Property tax expense 12,000
Total expenses 850,000
Net income P 662,000
Requirement (2)
First, we prepare the statement of owners equity for the year ended December
31, 2007. The format of the statement of owners equity is as follows:
Exercise 8
Exercise 9
JOURNAL
Page 1
Post
Date Account Titles and Explanation Ref Debit Credit
2007
Mar. 1 Cash 590,000
Anne Shin, Capital 590,000
Investment by owner.
4 Building 400,000
Cash 400,000
Paid cash for a building.
6 Cash 20,000
Service Revenue 20,000
Performed services for cash.
23 Cash 12,000
Accounts Receivable 12,000
Received cash on account.
Exercise 10
Rent Expenses
Mar. 31 5,000
Mar. 31 5,000
Recording Business Transactions 7
Exercise 11
Tarlac Enterprises
Trial Balance
February 28, 2007
_______
* Explanations:
Cash: P42,000 + P4,000 = P46,000
Accounts Receivable: P20,000 P4,000 = P16,000
Accounts Payable: P30,000 + P10,000 P1,000 + P2,000 = P41,000
Emz Iglesia, Capital: P416,000 + P4,000 = P420,000
Utilities Expense: P3,000 + P2,000 = P5,000
Exercise 12
Rent Expenses
Mar. 31 5,000
Mar. 31 5,000
Exercise 13
The ethical issue is whether Alalay sa Kapwa is taking advantage of the banks
generosity.
Students who approve of Alalay sa Kapwa action can point out that the bank
allows Alalay sa Kapwa to overdraw its cash balance. In this view, Alalay sa
Kapwa is merely using a privilege the bank has granted. Most banks are civic-
minded and are relatively generous with charitable organizations.
Students who disapprove may argue that Alalay sa Kapwa is using the banks
money adequately compensating the bank a subtle form of stealing. In this
view, Alalay sa Kapwa should curtail its spending until it has the money to cover
its expenditures and maintain a positive balance. Alternatively, Alalay sa Kapwa
could sign a note payable to borrow the needed money. The related interest is
the banks compensation.
The bank is the key player in this case. Whether the bank approves or
disapproves of Alalay sa Kapwa overdrafts is critical to the ethical decision.
Approval by the bank turns the overdrafts into a gift to Alalay sa Kapwa.
Disapproval by the bank would no doubt be communicated to Mr. Oscar.
Exercise 14
JOURNAL
Page 1
10 Chapter 8
Post
Date Accounts and Explanation Ref Debit Credit
Recording Business Transactions 11
9 Land 420,000
Cash 420,000
10 Supplies 12,000
Accounts Payable 12,000
22 Cash 200,000
Notes Payable 200,000
30 Cash 60,000
Accounts Receivable 50,000
Service Revenue 110,000
Received cash on account.
Exercise 15
Explanations:
Exercise 16
7 Supplies 3,000
Accounts Payable 3,000
19 Cash 5,000
Service Revenues 5,000
22 Cash 6,000
Unearned Service Revenue 6,000
Exercise 17
22 6,000
61,000 31,500
Balance 29,500
Exercise 18
Trial Balance
May 31, 2007
Debit Credit
Cash P29,500
Accounts receivable 25,000
Supplies 3,000
Office equipment 25,000
Accounts payable P 3,000
Unearned service revenue 6,000
Service revenue 30,000
Rent expense 6,500
Share capital 50,000
P89,000 P89,000
Exercise 19
Smallville Company
Trial Balance
June 30, 2008
Debit Credit
Cash (balancing figure) P 1,000
Accounts receivable 14,000
Equipment 20,000
Accounts payable P 7,000
M. Cruz, capital 22,000
Service revenue 15,000
Office expense 9,000
P44,000 P44,000
Exercise 20
Trial Balance
January 31, 2007
Debit Credit
Cash P20,000
Accounts receivable 13,000
Prepaid rent 1,500
Accounts payable P 4,000
Unearned service revenue 2,500
Ling Kim, Capital 15,000
Ling Kim, Drawing 6,500
Service revenue 17,500
Wage expense
Fuel expense 8,000
P52,000 P39,000
Unlocated difference 13,000
P52,000 P52,000
Test Material
16 Chapter 8
Requirement (1)
a. Cash 184,000
Furniture 62,000
Microcomputers 146,000
Garcia, Capital 392,000
To record initial investment of E. Garcia.
c. Software 15,000
Accounts payable 15,000
To take up purchase of computer software on credit.
e. No entry.
g. Cash 12,000
Tuition revenue 12,000
To record collection from 3 students.
l. Microcomputers 94,000
Cash 94,000
To record purchase of 2nd microcomputer.
20,000
Garcia, Drawing
(m) 6,000
Requirement (3)
18 Chapter 8
Debit Credit
Cash P 82,200
Accounts receivable 4,000
Software 15,000
Furniture 62,000
Microcomputers 240,000
Accounts Payable P 10,000
Garcia, Capital 392,000
Garcia, Drawing 6,000
Tuition Revenue 20,000
Wages Expense 3,000
Utility Expense 2,200
Rent Expense 5,600
Advertising Expense 2,000
P422,000 P422,000
Recording Business Transactions 19
Requirement (1)
GENERAL JOURNAL
7 Supplies 3,000
Accounts Payable 3,000
8 Cash 5,800
Service Revenue 5,800
9 Equipment 26,000
Accounts Payable 26,000
14 Cash 3,800
Accounts Receivable 3,800
22 Equipment 5,600
Accounts Payable 5,600
24 Cash 7,800
Accounts Receivable 7,800
20 Chapter 8
GENERAL JOURNAL
Requirement (4)
Requirement (1)
GENERAL JOURNAL
5 Truck 38,000
Cash 10,000
Notes Payable 28,000
7 Supplies 6,400
Accounts Payable 6,400
10 Cash 3,000
Painting Fees Earned 3,000
11 No entry
12 Supplies 3,200
Cash 3,200
13 Cash 9,600
Accounts Receivable 9,600
GENERAL JOURNAL
Recording Business Transactions 25
24 Cash 6,600
Accounts Receivable 6,600
26 Cash 7,200
Painting Fees Earned 7,200
Requirement (2)
26 7,200 19 800
20 6,400
28 4,000
29 3,600
30 6,000
168,400 45,000
123,400
Requirement (3)
Cash P123,400
Accounts Receivable 5,800
Supplies 15,400
Prepaid Insurance 8,000
Equipment 25,800
Truck 38,000
Notes Payable P 24,000
Accounts Payable 8,200
Gomez, Capital 166,600
Gomez, Drawing 6,000
Painting Fees Earned 32,200
Wages Expense 6,600
Telephone Expense 1,200
Truck Expense 800
P231,000 P231,000
Requirement (4)
a. Since the painting services have been rendered on June 8 and June 10,
income should be recognized. Since June 8s service has not been paid for,
a receivable should be set up as contrasted with June 10s service which has
been settled or paid by the customer.
b. Both transactions involved payment for benefits that the company would
receive and had received. June 14 payment of insurance premium for 18
months represents consideration for the protection / coverage for a future
period hence, an asset is set up, Prepaid Insurance. June 18 payment is for
services already received by the company, hence an expense was
recognized.