ACTIVITY 1 : CLASSIFICATION 48 Bad Debts Expense EXPENSE

CA – CONTRA-
49 Allowance for doubtful accounts ASSET ASSET
Identify what major account and classify if the
50 Copyright ASSET NCA
following items below are current or non-current
(Current Asset or Non-Current Asset / Current
Liabilities or Non-Current Liabilities).
ACTIVITY 2
Classification I. PROBLEM SOLVING
Major
Accounts for Assets and
Account
Liabilities Solve the following accounting problems.

1 Cash ASSET CA
1.On October 1, Morgan Company has a total assets amounting to P100,000 and
2 Petty Cash Fund ASSET CA total liabilities amounting to P30,000. On October 2, the company paid P2,000 as
partial payment of its outstanding account. How much is the capital balances
3 Cash on Hand ASSET CA after October 2 transactions?
Cash in Bank SOL: ASSETS = LIABILITIES + EQUITY
4 ASSET CA
100,000 = 30,000 + 70,000
5 Investment in Trading Securities ASSET CA Oct.2 (2,000) = (2,000) + 0
98,000 = 28,000 + 70,000
6 Trade and Other Receivables ASSET CA 98,000 = 98,000
7 Accounts Receivable ASSET CA
2. The assets of the business at the start of the month is P2,000,000 and the
8 Notes Receivable ASSET CA owner's equity is P800,000. Equipment worth P600,000 were purchased during
the month of which only 30% of the amount was paid for. At the end of the
9 Commission Receivable ASSET CA month, liabilities will become?
10 Interest Receivable ASSET CA SOL: ASSETS = LIABILITIES + EQUITY
2,000,000 = 1,200,000 + 800,000
11 Rent Receivable ASSET CA Transaction:
purchase eqt. 600,000 = 420,000 + 0
12 Advances to Employees ASSET CA (180,000)
13 Prepaid Expenses ASSET CA 2,420,000 = 1,620,000 + 800,000
2,420,000 = 2,420,000
14 Prepaid Advertising ASSET CA
15 Prepaid Insurance ASSET CA
3. The following are found in these records
Prepaid Rent Prepaid
16 subscriptions ASSET CA
Cash 500,000 Accounts payable 25,000
17 Merchandise Inventory ASSET CA
Accounts 50,000 Notes payable 4,000
18 Property, Plant, and Equipment ASSET NCA Receivable
19 Land ASSET NCA
Prepaid Expenses 3,000 Unearned income 12,000
20 Building ASSET NCA
21 Machinery ASSET NCA Office Equipment 48,000 Service income 200,000

22 Furniture and Fixtures ASSET NCA Furniture 70,000 Operating 36,000

Office Equipment expenses
23 ASSET NCA
24 Store Equipment ASSET NCA How much is the total assets and the total liabilities?
25 Transportation Equipment ASSET NCA Solution: Cash 500,000 Accounts payable 25,000
NCA – CONTRA Receivables 50,000 Notes payable 4,000
26
Accumulated Depreciation ASSET ASSET Prepaid expenses 3,000 Unearned income 12,000
27 Intangible Assets ASSET NCA Office equipment 48,000 Total Liabilities 41,000
Furniture 70,000
28 Accrued Income ASSET CA Total Assets 671,000
29 Short term investments ASSET CA
30 Long term Investments ASSET NCA
31 Owner's Capital EQUITY
32 Owner's Drawing EQUITY
33 Service Revenue REVENUE
34 Rent Income REVENUE
35 Dividend Income REVENUE
36 Commission Income REVENUE
37 Gain of sale of fixed assets REVENUE
38 Advertising Expense EXPENSE
39 Office Supplies Expense EXPENSE
40 Rent expense EXPENSE
41 Professional fee EXPENSE
42 Salaries Expense EXPENSE
43 Repair and maintenance expense EXPENSE
44 Travel Expense EXPENSE
45 Utilities Expense EXPENSE
46 Depreciation Expense EXPENSE
47 Miscellaneous Expense EXPENSE
PREPARATION OF JOURNAL ENTRIES:

Mr. Alfredo Ignacio began a professional practice as a system

analyst on October. He plans to prepare monthly financial
statements for September, the owner completed the A. Business B.
transaction or DEBIT CREDIT
transactions: Non-business
transaction
1. Oct 1. Mr. Ignacio invested P150,000 cash along with (YES/NO)
furniture and fixtures that had a P30,000 market value 1. YES Cash Ignacio, Capital
2 years ago but was now worth P20,000. Furniture and
Fixtures
2. Oct 2. Paid P15,000 cash for September rent of a
2 YES Rent expense Cash
fully furnished office space at the Makati Building.
3. Oct 4. Purchased P90,000 worth of equipment on 3 YES Equipment Accounts payable
credit for 12 monthly equal installment payments. 4 YES Office supplies Cash
4. Oct 6. Purchased office supplies for cash, P2,500
5 YES Cash Service Revenue
from Miriam Bookstore.
6 YES Accounts receivable Service revenue
5. Oct 8. Completed work for a client and immediately
collected the P25,000 cash earned. 7 YES Salaries expense Cash
6. Oct 10. Completed work for clients and sent bills for 8 YES Cash Accounts Receivable
P45,000 to be paid within 30 days. 9 YES Cash Service revenue
7. Oct 15. Paid the salary of assistant, P8,000 cash as Accounts receivable
wages for 15 days. 10 YES Ignacio, Drawing Cash
8. Oct 18. Collected 50% of the amount owed by the 11 YES Accounts payable Cash
client on September 10.
12 YES Salaries Expense Cash
9. Oct 25. Completed work for another client who, paid
13 YES Utilities expense Cash
P20,000 or 50% of the total computerized system.
The client promised to pay the balance in thirty days. 14 YES Supplies expense Office supplies
10. Oct 28. Owner withdrew P3,000 cash for personal
use.
11. Oct 29. Paid the first installment of the liability on the
equipment purchased.
12. Oct 30. Paid salary of assistant.
13. Oct 31. Received Globe Telecom bill, P1,200 and
Meralco bill P5,800. (auto expense)
14. Oct 31. Used up P1,000 worth of supplies.

Directions:

a. Identify the above transactions whether it is to be recorded

or not to be recorded.
b. Analyze the transactions as to the accounts affected and its
effect whether increase or decrease following the rules of debit
and credit.
c. Journalize accounts affected and the effects of the
transactions by recording the journalize entries.

CHART OF ACCOUNTS
ASSETS
101 Cash
112 Accounts Receivable
114 Office Supplies
115 Equipment
116 Furnitires and Fixtures
LIABILITIES
201 Accounts Payable
OWNER'S EQUITY
301 Ignacio, Capital
302 Ignacio, Drawing
REVENUE
401 Service Revenue
EXPENSES
501 Rent Expense
502 Salaries Expense
503 Supplies Expense
504 Utilities Expense