PROBLEM 3-3 TRANSACTION THAT AFFECT THE ELEMENTS OF FINANCIAL

STATEMENTS

Give an example of a transaction for each of the following:

1. Decrease an asset and decrease owner's equity (use of assets event).

Jax and Jhia paid ₱50, 000 to instructors as salary for teaching training course.

♠ Cash; capital. This means that the cash account, which is an asset, decreased and the capital,
which is an owner’s equity, decreased. Thus, the event would be an asset use.

2. Increase a liability and decrease owner’s equity (exchange of claims event).

J&J Company incurred an operating expense on account, ₱23, 000.

♣ Accounts payable; capital. This means that the accounts payable, which is a liability,
increased and the capital, which is an owner’s equity decreased. Thus, the event would be a
claims exchange.

3. Increase an asset and increase owner's equity (source of assets event).

J&J Company received ₱18, 000 for services rendered today.

♥ Cash; service revenue. This means that the cash, which is an asset, increased and the service
revenue, which is an owner’s equity, increased. Thus, the event would be an asset source.

4. Decrease a liability and increase owner's equity (exchange of claims event).

J&J Company’s consulting revenues recognized during the year out of unearned
consulting revenue.

♦ Unearned revenues; service revenue. This means that the unearned revenue, which is a
liability, decreased and the service revenue, which is an owner’s equity, increased. Thus, the
event would be a claims exchange.

5. Increase an asset and decrease another asset (exchange of assets event).

J&J Company received ₱42, 000 from accounts receivable.

☻ Cash; accounts receivable. This means that the cash, which is an asset, increased and the
accounts receivable, which is also an asset, decreased. Thus, the event would be an asset
exchange.
Ma’am arat ng magtongits, balasado na po HAHAHAHA.
PROBLEM 3-4 ACCOUNTABLE ECONOMIC TRANSACTIONS

Determine whether the business transaction is to be recorded in the books of accounts or not and
identify the accounts title for debit and credit.

Business Transactions: Recordable? Account Titles

Yes or No Dr Cr
Owner’s personal contribution to business Yes Cash Capital
Owner’s personal withdrawal from the Yes Withdrawal Cash
business
Hiring of office secretary No
Payment of salary for the office secretary Yes Salaries Cash
expense

Billings of services rendered for audit Yes Accounts Service

service receivable Revenue
Payment of supplies used in the Yes Supplies Cash
performance of service expense
Signing of contract with the new client No
Payment of transportation cost incurred Yes Transportation Cash
during the signing of contract expense

Unpaid office rent incurred. Yes Rent expense Accounts

payable
Purchase of new computer on account. Yes Computer Accounts
Equipment payable
PROBLEM 3-5 RECORDING TRANSACTION IN A WORKSHEET

Nelson Daganta formed the Liceo Signages on Oct. 1, 2015. He deposited P250, 000 in GE
Money Bank under the name of the new business entity. During the month of October 2015, the
following transactions occurred:

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

Oct 3. Acquired supplies for cash, P57, 000.

Oct 9. Received P87, 500 cash for signs painted.

Oct 10. Paid the month's rent, P25, 000.

Oct 11. Painted signs for Cagayan Mobile on account, P170, 000.

Oct 12. Paid P55, 000 on account from Oct. 2.

Oct 16. Withdrew P25, 000 for personal use.

Oct 23. Collected P35, 000 from Cagayan Mobile.

Oct 27. Paid salaries of P57, 000 for the month.

Oct 30. Paid BayanTel P7, 500 for communication services for the month.

Oct 31. Paid a bill from AdAsia for P5, 500 of advertising for the month.
 GE Money Bank
Financial Transaction Worksheet
Month of October 2015

Assets = Liabilities + Owner's Equity

Cash Accounts Receivable + Supplies + Service Vehicle = Accounts Payable Daganta, Capital
1 ₱250, 000 = ₱250, 000
2 195, 000 = 195, 000
3 (57, 000) 57, 000 =
9 87, 500 = 87, 500
1
0 (25, 000) = (25, 000)
1
1 170, 000 = 170, 000
1
2 (55, 000) = (55, 000)
1
6 (25, 000) = (25, 000)
2
3 35, 000 (35, 000) =
2
7 (57, 000) = (57, 000)
3
0 (7, 500) = (7, 500)
3
1 (5, 500) = (5, 500)
₱140, 500 + ₱135, 000 + ₱57, 000 + ₱195, 000 = ₱140, 000 + ₱387, 500
₱527, 500 = ₱527, 500
PROBLEM 3-6 CLASSIFICATION OF ACCOUNTS

The following accounts are taken from the books of accounts of A Store:

Accounts receivable 150, 000 Owner's capital 70, 000

Accrued interest income 2, 000 Owner's drawing 5, 000
Accumulated depreciation- 2, 000 Prepaid insurance expense 10, 000
furniture
Allowance for bad debts 2, 000 Rent income 6, 000
Bad debt expense 1, 000 Salaries and wages 60, 000
Cash 50, 000 Service income 109, 500
Depreciation expense 1, 000 SSS premium payable 2, 000
Expired insurance 2, 000 Taxes and licenses 1, 000
Interest income 500 Unearned rent 3, 000
Notes payable 80, 000 Withholding tax payable 3, 000
Furniture 20, 000

Required: Classify the account as to whether they are debit or credit.

How much is the total debit? Credit? Differences of total debits and credits?
 A STORE
Trial Balance
Date

Account Titles Debit Credit

Accounts receivable ₱150, 000
Accrued interest income 2, 000
Accumulated depreciation-furniture ₱2, 000
Cash 50, 000
Furniture 20, 000
Prepaid insurance expense 10, 000
Taxes and licenses 1, 000
Allowance for bad debts 2, 000
Notes payable 80, 000
SSS premium payable 2, 000
Unearned rent 3, 000
Withholding tax payable 3, 000
Owner's capital 70, 000
Owner's drawing 5, 000
Interest income 500
Rent income 6, 000
Service income 109, 500
Bad debt expense 1, 000
Depreciation expense 1, 000
Expired insurance 2, 000
Salaries and wages 60, 000
Total ₱302, 000 ₱278, 000

Total debit: ₱302, 000

Total credit: ₱278, 000

Differences of total debits and credits: ₱24, 000