Illustrative Problem:

Lemuel Buendia recently established a Laundry Shop and completed the following
transactions during the month of October 1999.
1999
Oct. 1 – Lemuel deposited P50,000.00 in the bank under the name of the company.
3 – Pays for mayors permit and other licenses amounting to P2,000.00
4 – Buys books of accounts, invoices and other forms for P 500.00 cash
6 – Buys detergents, stain remover, dry cleaning fluid, brooms, brushes and rags for
P8,000.00 cash.
9– Buys washing machines from YXL Appliances for P 25,000.00 paying P10,000.00
with the balance on account. Estimated useful life of the machines is five (5) years
11 – Services rendered on charge basis amount to P42,000.00
15 – Pays salaries and wages for P30,000.00
18 – Pays light and power bills for P7,000.00
19 – Services rendered on cash basis amount to P45,000.00
23 – Collects P20,000.00 from customers billed on October 11.
25 – Lemuel Buendia withdraws cash of P 10,000.00 from the business.
28 – Water bills amounting to P 8,000.00 are paid.

Justine Dawn G. Santos

Illustrative Problem:
Barbie Reyes opened a Hair and Beauty Saloon and complete the following transactions
for the month of July.

July 1 – Opened a business bank account with a cash deposit of P 75,000.00

2 – Purchased equipment for saloon use P 15,000.00: Terms on account.
4 – Purchased supplies paid cash of P 2,500.00
5 – Bought furniture and fixtures worth P 5,000.00 by paying cash of P 3,000.00 the
balance
with a promissory note.
7 – Hired parlorist for salary of P 700.00 per week.
10 – Paid the note for the transaction on July 5
13 – Earned P 10,000.00 in first week of operation
14 – Paid parlorist P 700.00
18 – Paid 10,000.00 cash for the transaction on July 2
20 – Earned P 9,500.00 in the 2nd week of operation.
21 – Paid parlorist P 700.00
26 – Received Electric Bill for P5,000.00
27 – Earned P 9,700.00 3rd week of operation.
28 – Paid parlorist P 700.00
29 – Withdraw P5,000.00 for personal use.

Justine Dawn G. Santos

 Buendia Laundry Shop
Trial Balance
October 28, 1999

Cash P 39,500.00
Accounts Receivable 22,000.00
Office Supplies 500.00
Shop Supplies 8,000.00
Washing Machines 25,000.00
Accounts Payable P 15,000.00
Buendia Capital 50,000.00
Buendia Withdrawals 10,000.00
Service Revenue
87,000.00
Salaries and Wages Expense 30,000.00
Taxes and License Expense 2,000.00
Utilities Expense 15,000.00
P 152,000.00 P
152,000.00

Justine Dawn G. Santos

 Reyes Hair and Beauty Saloon
Trial Balance
July 29, 2009

Cash P 74,600.00
Supplies 2,500.00
Equipment 15,000.00
Fixtures and Furniture 5,000.00
Accounts Payable P 5,000.00
Notes Payable 0.00
Buendia Capital
75,000.00
Buendia Withdrawals 5,000.00
Service Revenue
29,000.00
Wages Expense 2,100.00
Utilities Expense 5,000.00
P 109,200.00 P
109,200.00

Justine Dawn G. Santos

 Reyes Hair and Beauty Saloon
Income Statement
July 29, 2009

Service Revenue P 29,200.00

Less:
Wages Expense P 2,100.00
Utilities Expense 5,000.00 7,100.00
Net Income P 22,100.00

Reyes Hair and Beauty Saloon

Capital Statement
for the month ended July 29, 2009

Buendia Capital Beg. P 75,000.00

Less: Withdrawals 5,000.00
Total: 70,000.00
Add: Net Income 22,100.00
Buendia Captial End P 92,100.00

Reyes Hair and Beauty Saloon

Balance Sheet
As of July 29, 2009

Assets

Cash P 74,600.00
Supplies 2,500.00
Equipment 15,000.00
Fixtures and Furnitures 5,000.00

Total Assets: P 97,100.00

Liabilities and Owners Equity

Liabilities
Accounts Payable P 5,000.00
Note Payable 0.00
P 5,000.00

Owners Equity
Reyes Capital P 75,000.00

Total liabilities and Owner’s Equity P

80,000.00

Justine Dawn G. Santos

 Buendia Laundry Shop
Income Statement
October 28, 1999

Service Revenue P 87,000.00

Less:
Salaries and Wages Expense P 30,000.00
Taxes and Licenses Expense 2,000.00
Utilities Expense 15,000.00 47,000.00
Net Income P 40,000.00

Buendia Laundry Shop

Capital Statement
for the month ended October 28, 1999

Buendia Capital Beg. P 50,000.00

Less: Withdrawals 10,000.00
Total: 40,000.00
Add: Net Income 40,000.00
Buendia Captial End P 80,000.00

Buendia Laundry Shop

Balance Sheet
As of October 28, 1999

Assets

Cash P 39,500.00
Accounts Receivable 22,000.00
Office Supplies 500.00
Shop Supplies 8,000.00
Washing Machines 25,000.00

Total Assets: P 95,000.00

Liabilities and Owner’s Equity

Liability
Accounts Payable P 15,000.00

Owners Equity
Buendia Capital P 80,000.00

Total liabilities and Owner’s Equity P

95,000.00

Justine Dawn G. Santos

 GENERAL JOURNAL
Date Particulars P.R. Debit Credit
1999
Oct. P
1 Cash 50,000.00
Beundia’s Capital P 50,000.00
Initial investment

3 Taxes and Licenses Expense 3,000

Cash 3,000
Paid Mayor's Permit and
other Lincenses

4 Office Supplies 500

Cash 500
Purchased Office Supplies

6 Shop Supplies 8,000.00

Cash 8,000.00
Purchase shop Supplies

9 Washing Machines 25,000.00

Cash 10,000.00
Accounts Payable 15,000.00
Purchased shop equipment,
balance
on account

11 Accounts Recievable 42,000.00

Service Revenue 42,000.00
Charged customers for
services rendered

15 Salaries and Wages Expense 30,000.00

Cash 30,000.00
Payment for employee's
salaties and wages.

18 Utilities Expense 7,000.00

Cash 7,000.00
Payment of light and power
bills

19 Cash 45,000.00
Service Revenue 45,000.00
Received cash for services
rendered

23 Cash 20,000.00
Accounts Receivable 20,000.00
Collection of accounts billed
on Oct. 11

25 Oro Withdrawals 10,000.00

Cash 10,000.00
Cash Withdrawal by the
proprietor

Justine Dawn G. Santos

 28 Utilities Expense 8,000.00
Cash 8,000.00
Water bill payment

GENERAL JOURNAL
P.
Date Particulars R. Debit Credit
2009
July P
1 Cash 75,000.00
Capital P 75,000.00
Initial Investment

2 Equipment 15,000.00
Accounts Payable 15,000.00
Purchased Equipment on
account

4 Supplies 2,500.00
Cash 2,500.00
Purchased Supplies

5 Fixtures and Furnitures 5,000.00

Cash 3,000.00
Notes Payable 2,000.00
Bought furniture and
fixtures cash,
the balance with a promissory note.

10 Notes Payable 2,000.00

Cash 2,000.00
Paid the transaction on July 5

13 Cash 10,000.00
Service Revenue 10,000.00
Earnings during the first week
of operation

14 Wages Expense 700.00

Cash 700.00
Paid parlorist

18 Accounts Payable 10,000.00

Cash 10,000.00
Paid the transaction on July 2

Justine Dawn G. Santos

 20 Cash 9,500.00
Service Revenue 9,500.00
Earnings during the second
week of operation

21 Wages Expense 700.00

Cash 700.00
Paid parlorist

26 Utilities Expense 5,000.00

Cash 5,000.00
Received Electric Bill

27 Cash 9,700.00
Service Revenue 9,700.00
Earnings during the third week
of operation

28 Wages Expense 700.00

Cash 700.00

29 Reyes Drawings 5,000.00

Cash 5,000.00
Reyes Withdraw money for
personal use
T-account
ASSETS LIABILITIES and OWNER'S EQUITY

Cash Accounts Payable

10/ P 10/ P 10/ P
1 50,000.00 3 3,000.00 4 15,000.00
10/ 10/ P
19 45,000.00 4 500.00 15,000.00
10/ 10/
23 20,000.00 6 8,000.00
10/
9 10,000.00 Buendia's Capital
10/ 10/ P
15 30,000.00 1 50,000.00
10/ P
18 7,000.00 50,000.00
10/
25 10,000.00
10/
28 8,000.00 Service Revenue
P P 10/ P
115,000.00 75,500.00 11 42,000.00
P 10/
39,500.00 15 45,000.00
P
87,000.00
Accounts Receivable

Justine Dawn G. Santos

 10/ P 10/ P
11 42,000.00 25 20,000.00 Salaries and Wages Revenue
P 10/ P
22,000.00 15 30,000.00
P
30,000.00
Office Supplies
10/ P
4 500.00 Taxes and Linceses Espense
P 10/ P
500.00 3 2,000.00
P
2,000.00
Shop Supplies
10/ P
6 8,000.00 Utilities Expense
P 10/ P
8,000.00 18 7,000.00
P
8,000.00
P
Washing Machines 15,000.00
10/ P
4 25,000.00
P
25,000.00 Buendia's Drawings
10/ P
25 10,000.00

Justine Dawn G. Santos

 T-account
ASSET LIABILITIES and OWNER'S EQUITY

Cash Accounts Payable

7/ P 7/ P 7/ P 7/ P
1 75,000.00 4 2,500.00 18 10,000.00 2 15,000.00
7/ 7/ P
13 10,000.00 5 3,000.00 5,000.00
7/ 7/
20 9,500.00 10 2,000.00
7/ 7/
27 9,700.00 14 700.00 Notes Payable
7/ 7/ P 7/ P
18 10,000.00 10 2,000.00 15 2,000.00
7/
21 700.00 0
7/
26 5,000.00
7/
28 700.00 Buendia's Capital
7/ 7/ P
29 5,000.00 1 75,000.00
P P
104,200.00 29,600.00
P
133,800.00 Services Revenue
7/ P
13 10,000.00
7/
Equipment 20 9,500.00
7/ P 7/
2 15,000.00 27 9,700.00
P
29,200.00
Supplies
7/ P
4 2,500.00 Wage Expense
7/ P
14 700.00
7/
Fixtures and Furniture 21 700.00
7/ P 7/
5 5,000.00 28 700.00
P
2,100.00

Utilities Expense
7/ P
26 5,000.00

Reyes Drawing
7/ P
29 5,000.00

Justine Dawn G. Santos