A business is started with the injection of 10,000 in cash. In which account

is the credit entry made?
Cash
Capital
2. A business purchases equipment cash. In which account is the debit
entry made?
Equipment
Supplies
3.Insurance of 2,000 is paid in advance. In which account is the debit entry
made?
Insurance prepayments
Insurance expense
A business purchases supplies on account for 2,000. On which account is
the credit entry made?
Supplies
Accounts payable
5. A business collects fees from a customer in cash for work done. In
which account is the credit entry made?
Accounts Receivable
Fee Income
6. A business owner withdraws cash of 1,000 from the business. In which
account is the debit entry made?
Drawings account
Cash
7. Net wages of 24,000 are paid to employees. Which account is debited?
Cash
Net wages control
8. A business invoices customers for fees, giving credit of 30 days. Which
account is the debit entry posted to?
Accounts receivable
Accounts payable
9. A telephone bill is received by the business for 500. Which account is the
debit entry posted to?
Telephone expense
Accounts payable
10. A deposit of 1,500 is received from a customer for work to be started
next month. Which account is credited?
Deferred income
Fee income

11. Howard Company had a transaction that caused a $5,000 increase in

both assets and total liabilities. This transaction could have been a(n)

a. Investment of $5,000 cash in the business by the stockholders.

b. Repayment of a $5,000 bank loan.

c. Purchase of office equipment for $5,000 cash.

d. Purchase of office equipment for $12,000, paying $7,000 cash and issuing a note payable for
the balance.

Juan de la Cruz began professional practice as a system analyst on July 1. He plans to prepare a
monthly financial statement. During July, the owner completed these transactions (PHP = Philippine
Peso, currency of Philippines):

July 1. Owner invested PHp 500,000 cash along with computer equipment that had a market value of
php. 120,000 two years ago but was now worth Php. 100,000 only.
July 2. Paid php. 15,000 cash for the rent of office space for the month.
July 4. Purchased php. 12,000 of additional equipment on credit (due within 30 days).
July 8. Completed awork for a client and immediately collected the php. 32,000 cash.
July 10. Completed work for a client and sent a bill for php. 27,000 to be paid within 30 days.
July 12. Purchased additional equipment for php. 8,000 in cash.
July 15. Paid an assistant php. 6,200 cash as wages for 15 days.
July 18. Collected php. 15,000 on the amount owed by the client.
July 25. Paid php. 12,000 cash to settle the liability on the equipment purchased.
July 28. Owner withdrew php. 500 cash for personal use.
July 30. Completed work for another client who paid only php. 40,000 for 50% of the system design.
July 31. Paid salary of assistant php. 700.
July 31. Received PLDT bill, php. 1,800 and Meralco bill php. 3,800.

Required:
Prepare the journal entries, T accounts and trial balance for this business.