Regular Transactions

Ms. Joyce Ann B. Latoja established the “Hair Glam Salon”, a salon business on Januar
The financial activities of th
Date Transactions
Jan-01 Ms. Latoja invested P1,000,000 in cash to start a hair salon business named, Hair Glam Salon.
Mar-03 Paid rent in advance for the year amounting to P120,000.
Apr-01 Acquired equipment for P100,000 on account.
May-20 Purchase supplies on account amounting to P60,000.
Jul-01 Purchase furniture and fixtures for P60,000.
Aug-01 Provided a home service for P150,000 on account.
Sep-21 Ms. Latoja withdrew cash from business due to emergency need amounting P50,000.
Oct-15 Salaries paid for employees amounting P15,000.
Nov-27 The entity received P350,000 on cash for service rendered.
Dec-30 Paid the following: Utilities, P10,000; Rent, P120,000

Additional Information
Furniture and fixtures is determined to have a useful life of 10 years. Depreciated using the straight line method
Equipment purchased has a useful life of 5 years. The entity uses the straight line method for the depreciation.
Latoja used one month of rent paid in advance. The company paid for the space, but not have used it yet.
Anticipates that the customer from September 01 would only pay 15,000. Allowance for bad debts would be 15
The remaining Supplies on hand for P40,000.

100
110
120
125
130
140

150
155

160
165

210

310
320
m Salon”, a salon business on January 1, 2020. The business filed its business registration papers with the calendar year ending Decemb
The financial activities of the business for the year 2020 were the following:

, Hair Glam Salon.

ciated using the straight line method.

t line method for the depreciation.
pace, but not have used it yet.
llowance for bad debts would be 15,000.

CHART OF ACCOUNTS
Balance Sheet Accounts Income Statement Accou
Assets
Current Asset 410
Cash
Accounts Receivable
Allowance for Bad Debts 510
Prepaid Rent 520
Supplies 530
540
Non-Current Assets 550
Equiment 560
Accumulated Depreciation-Equipment 570

Furniture and Fixtures

Accumulated Depreciation- F&F

Liabilities
Accounts Payable

Equity
Hair Glam, Capital
Hair Glam, Withdrawals
on papers with the calendar year ending December 31 .

Income Statement Accounts

Income
Service Revenue

Expenses
Supplies Expense
Utilities Expense
Rent Expense
Salaries Expense
Bad Debt Expense
Depreciation Expense-Equipment
Depreciation Expense-F&F
 Journal Entry
Date Debit
Jan-01 Cash 1,000,000
Hair Glam, Capital
To record the owner’s initial investment to the businesss
Mar-03 Prepaid Rent 120,000
Cash
To record rent paid in advance
Apr-01 Equipment 100,000
Accounts Payable
To record the equipment purchase on account
May-20 Supplies 60,000
Accounts Payable
To record the supplies purchase on account
Jul-01 Furniture and Fixtures 60,000
Cash
To record the furniture and fixtures acquired
Aug-01 Accounts Receivable 150,000
Service Revenue
To record the service rendered on account
Sep-21 Hair Glam, Drawings 50,000
Cash
To record the withdrawal of the owner
Oct-15 Salaries Expense 65,000
Cash
To record the salaries of the employees
Nov-27 Cash 350,000
Service Revenue
To record the service rendered
Dec-30 Utilities Expense 80,000
Rent Expense 120,000
Cash
To record the various expenses
Credit

1,000,000

120,000

100,000

60,000

60,000

150,000

50,000

65,000

350,000

200,000
 Adjusting Entry Debit Credit
a. Depreciation Expense (60,000/10)*6/12 3,000
Accumulated Depreciation- F&F 3,000

b. Depreciation Expense (100,000/20)*9/12 3,750

Accumulated Depreciation- Equipment 3,750

c. Rent Expense (120,000 x 1/12) 10,000

Prepaid Rent 10,000

d. Bad Debts Expense 15,000

Allowance for Bad Debts 15,000

e. Supplies Expense 20,000

Supplies 20,000
 HAIR
WO
DECE
Account Title Unadjusted Trial Balance Adjustments
ASSETS Debit Credit Debit
Current Asset
Cash P 855,000
Accounts Receivable 150,000
Allowance for Bad Debts
Prepaid Rent 120,000
Supplies 60,000
Non Current Asset
Equipment 100,000
Accumulated Depreciation-Equipment
Furniture and Fixtures 60,000
Accumulated Depreciation-Furniture and Fixtures
LIABILITIES
Current Liabilities
Accounts Payable P 160,000
EQUITY
Hair Glam, Capital 1,000,000
Hair Glam, Withdrawals 50,000
INCOME
Service Revenue 500,000
EXPENSES
Supplies Expense P 20,000
Utilities Expense 80,000
Rent Expense 120,000 10,000
Salaries Expense 65,000
Bad Debt Expense 15,000
Depreciation Expense-Equipment 3,750
Depreciation Expense-Furniture and Fixtures 3,000
TOTAL P 1,660,000 P 1,660,000 P 51,750
NET INCOME
 HAIR GLAM SALON
WORKSHEET
DECEMBER 31, 2020
Adjustments Adjusted Trial Balance Income Statement Balance Sheet
Credit Debit Credit Debit Credit Debit

P 855,000 P 855,000
150,000 150,000
P 15,000 P 15,000
10,000 110,000 110,000
20,000 40,000 40,000

100,000 100,000
3,750 3,750
60,000 60,000
3,000 3,000

160,000

1,000,000
50,000 50,000

500,000 P 500,000

20,000 P 20,000
80,000 80,000
130,000 130,000
65,000 65,000
15,000 15,000
3,750 3,750
3,000 3,000
P 51,750 P 1,681,750 P 1,681,750 P 316,750 P 500,000 P 1,365,000
183,250
P 500,000 P 500,000 P 1,365,000
Balance Sheet
Credit

P 15,000

3,750

3,000

160,000

1,000,000

P 1,181,750
183,250
P 1,365,000
 Hair Glam Salon
Statement of Comprehesive Income
For the Year Ended December 31, 2020

Revenues
Service Revenues P 500,000
Total 500,000

Expenses
Rent Expense P 130,000
Utilities Expense 80,000
Salaries Expense 65,000
Supplies Expense 20,000
Bad Debt Expense 15,000
Depreciation Expense- Equipment 3,750
Depreciatio Expense-Furniture&Fixtures 3,000
Total 316,750
Profit P 183,250
 Hair Glam Salon
Statement of Changes in Equity
For the Year Ended December 31, 2020

Hair Glam, Owner's Equity, 01/01/2020 P 1,000,000

Add: Additional Investment by Hair Glam P0
Profit 183,250 183,250
Total P 1,183,250
Less: Withdrawals 50,000
Hair Glam, Owner's Equity, 12/31/2020 P 1,133,250
 HAIR GLAM SALO
STATEMENT OF FINANCIAL
AS OF DECEMBER 31,

ASSETS
Current Assets
Cash
Accounts Receivable
Allowance for Doubtful Accounts
Prepaid Rent
Supplies
Total Current Assets

Non-Current Assets
Equipment
Accumulated Depreciation-Equipment
Furniture and Fixtures
Accumulated Depreciation-Furniture & Fixtures
Total Non-Current Assets
TOTAL ASSETS

LIABILITIES
Current Liablities
Accounts Payable
Total Liabilities

OWNER'S EQUITY
Owner's Equity
Hair Glam, Capital, 12/31/2020
TOTAL LIABILITIES AND EQUITY
 HAIR GLAM SALON
TEMENT OF FINANCIAL POSITION
AS OF DECEMBER 31, 2020

P 855,000
150,000
-15,000
110,000
40,000
1,140,000

100,000
-3,750
60,000
-3,000
153,250
P 1,293,250

160,000
P 160,000

1,133,250
P 1,293,250
Cash Flows from Operating Activities:
Cash Received from clients ₱ 350,000
Payment to employees - 65,000
Payment for utilities - 80,000
Payment for rent - 240,000
Net cash provided by (used in) operating activities
Cash Flows from Investing Activities:
Payment to acquire office furniture and fixtures - 60,000
Net cash provided by (used in) investing activities
Cash Flows from Financing Activities:
Cash Received as investments by owner ₱ 1,000,000
Payments for withdrawals by owner - 50,000
Net cash provided by (used in) financing activities
Net Increase (decrease) in Cash
Cash balance at the beginning of the period
Cash balance at the end of the period
 Hair Glam Salon
Statement of Cash Flows
For the Year Ended December 31,2020

-₱ 35,000

-₱ 60,000

₱ 950,000
₱ 855,000
-
₱ 855,000