Legacy of Wisdom Academy of Dasmariñas, Inc.

Golden City, Salawag, Dasmariñas City

SY 2020-2021
FUNDAMENTALS OF ACCOUNTING
Lesson 10- Accounting Equation

ACTIVITY-11

Name: Gianna Delos Reyes

COMPUTATION OF MISSING AMOUNTS

Drill NO. 1 : Mr. Pedro Perez started a car wash business on January 1, 2019. His initial investments
were cash amounting to ₱ 50,000 and one piece of cleaning equipment worth ₱20,000. Compute for the
correct total owner’s equity as of Jan. 1 2019.

Account title Assets =50,000 Liabilities +20,000 Owner’s

Equity or
Capital

Cash ₱50,000 +90,000

Cleaning 20,000
equipment

TOTAL 70,000

To compute for owner’s equity:

Account Title Owner’s =50,000 Assets + 20,000 Liabilities

Equity or
capital

Perez, capital ₱70,000 =-0 ₱70,000 ₱-0

Using the basic accounting equation, the correct owner’s equity as of JAN. 1, 2019 IS ₱70,000.

Total assets ₱70,000

Less liabilities

Total owner’s equity ₱ 70,000

Drill NO. 2 . Using the same given from Drill No.1 , assume that on January 15, 2019 Mr Pedro Perez
borrowed ₱40,000 cash from his friend to increase the working capital. Working capital is the
difference between current assets and current liabilities. On January 16, 2019, he used ₱5,000 of the
money borrowed to buy cleaning supplies. Compute for the correct total assets as of Jan 16, 2019.

Answer:

Account title Assets = Liabilities + Owner’s

Equity or
capital

Cash ₱ 85,000

Cleaning 20,000
equipment

Cleaning 5,000
supplies

Accounts ₱40,000
payable

Perez, capital ₱ 70,000

TOTAL ₽110,000 ₱40,000 ₱70,000

Using the basic accounting equation, the correct total assets as of January 16, 2019 is₱110,000

TOTAL LIABILITIES ₱40,000

ADD: Total Owner’s Equity 70,000

TOTAL ASSETS ₱110,000

Cash was computed this way:

Cash balance January1, 2019 ₱50,000

Add: amount borrowed from a friend 40,000

Deduct: Amount used to buy cleaning supplies 5,000

 Subtotal 90,000

Cash balance, January 16, 2019 ₱ 85,000

Drill no.3

Ms. Juana Jimenez started a food catering business on January 1 , 2019. By December 31, 2019, total
assets totalled ₱150,000 and total owner’s equity was 90,000. Compute for the correct total liabilities as
of Dec 31, 2019.

Using the basic accounting equation we can derive:

Liabilities = Assets- Owner’s Equity or Capital

TOTAL ASSETS ₱ 150,000

Deduct total Owner’s Equity 90,000

Total liabilities ₱60,000

DRILL NO. 4

In addition to the given Drill 3 , Juana Jimenez reported total catering revenues of ₱ 80,000 and a
total expenses of ₱45,000 for 2019. Compute for the correct net income by the year ended December 31,
2019.

Total catering revenues ₱80,000

Deduct Total expenses ₱45,000

Net income ₱35,000

Continuing Drill no.4 . Assume that Juana Jimenez had initial investments of ₱50,000 cash and there
was no other transactions that took place in 2019 that would affect owner’s equity aside from owner’s
cash withdrawal . Compute for the correct cash withdrawal made by Juana in 2019.

Answer:

Initial investment cash P50,000

Cash withdrawal (2019) P35,000
Correct cash withdrawal P85,000

DRILL NO 5.

Total Owner’s Equity 90,000

Dec 31, 2019

Deduct initial investment 50,000

Jan 1, 2019

Net Income 35,000

Total withdrawals made 50,000

ACRONYMS : CREW

Capital contribution by the owner ( increases ownre’s equity) = CC

Revenue earned( increases owner’s equity) = Rev.

Expenses incurred( decreases owner’s euity) = Exp.

Withdrawals made by the owner ( decreases equity) = W/D

 DRILL NO. 6

Filemon Car Repair Shop started the business with the Total Assets of₱100,000 and a total liabilities of
₱ 50,000 on January 1, 2019. During the year the business recorded ₱140,000 in car repair revenue, ₱
85,000 in expenses and Filemon withdrew ₱12,000.

Required:

1. Compute for the correct balance of Filemon ‘s Car Repair Shop for the year Ended Dec. 31,
2019.
CORRECT BALANCE = P93,000
2. Compute for the correct change ( net movement) in Filemon , Capital during the year 2019.
CAPITAL = P50,000
3. Compute for the correct change( net movement) in Filemon ,Capital account from the beginning
of the year to the end of the year. CAPITAL ACCOUNT = P287,000

Total car repair revenue 100,000

Deduct total expenses 50,000

Net Income (1) 50,000

Net Income 140,000

Deduct Withdrawal 12,000

Filemon, Capital, Jan 1, 2019 (2) 50,000

Add Change in Felimon Capital 337,000

Filemon, Capital Dec 31, 2019 (3) 93,000