1 Financial Accounting I: Prelim Activities

NAME:
COURSE CODE & SCHEDULE:

ACTIVITY P-1:
Required: Classify the items listed below using the following classification
scheme:

Current Assets (CA) Long-term Liabilities (LTL)

Property and Equipment (PE) Owner’s Equity (OE)
Other Assets (OA) Revenues (R)
Current Liabilities (CL) Expenses (E)

1. Notes payable due in three years

2. Prepaid licenses
3. Beverage inventory
4. Franchise fee revenue
5. Rent incurred
6. Accumulated depreciation
7. LM, Capital
8. LM, Withdrawals
9. Salaries Payable
10. Accrued Rent
11. Cash
12. Accounts Receivable
13. Interest Incurred
14. Building
15. Goodwill
16. Taxes Incurred
17. Rent earned
18. Customers’ deposit
19. Land
20. Accrued Payroll
2 Financial Accounting I: Prelim Activities

NAME:
COURSE CODE & SCHEDULE:

ACTIVITY P-2A:
Required: Innovative Designs, owned by Leopoldo Medina, has been operating
for two years. Below is a series of transactions. For each transaction,
indicate the accounts that should be debited and credited. If no journal
entry is required, write “n/a” in the columns. Use the following account
titles: Cash; Accounts Receivable; Supplies; Prepaid Expenses; Equipment;
Patents; Accounts Payable; Notes Payable; Salaries Payable; Medina, Capital;
Medina, Withdrawals; Service Revenues; and Operating Expenses.

Transactions Debit Credit

1. Purchased equipment for use in the
business; paid one third cash and
gave a note payable for the balance
2. Paid cash for the salaries

3. Collected cash for services performed

this period
4. Collected cash for services performed
last period
5. Performed services this period on
credit
6. Paid operating expenses incurred this
period
7. Paid cash for operating expenses
incurred last period
8. Incurred operating expenses incurred
this period to be paid next period
9. Purchases supplies for inventory to
be used later; paid cash
10. Paid cash on accounts payable for
expenses previously incurred

ACTIVITY P-2B:
Required: Complete the following table by stating the accounting element of
each account, and whether increases or decreases in the accounts are
represented by a debit or a credit entry. For example:

Accounts Element Increase Decrease

Supplies Asset Debit Credit

Accounts Element Increase Decrease

1. Service Revenues
2. Withdrawals
3. Utilities Expense
4. Rent Expense
5. Cash in Bank
6. Trade Payables
7. Salaries Expense
8. Office Equipment
9. Furnitures and Fixtures
10. Interest Expense
11. Prepaid Expenses
12. Loans Payable
13. Capital
14. Depreciation Expense
15. Accounts Receivable
3 Financial Accounting I: Prelim Activities

NAME:
COURSE CODE & SCHEDULE:

ACTIVITY P-3:
Required: On each of the number lines, show by addition or subtraction the effect if each
of the transaction on the equation. For each transaction, identify the changes in owner’s
equity by placing the letter “I” (Income), “E” (Expense), “W” (Withdrawal), or “INV”
(Investment at the right of each increase or decrease in owner’s equity. On the lines
labeled as “Bal.” (i.e., Balance) show the new equation resulting from the transactions.

The assets, liabilities, and owner’s equity of Deogracia Corpuz who operates a repair shop
are expressed in equation form below. Corpuz completed the following transactions:

Assets Liabilities OE
Cash + Supplies + Land = Accounts + Corpuz,
Payable Capital
1. Organized a
repair shop
and deposited
a P500,000
cash in the
bank for use
of the
business (1)
2. Purchase
P20,000 of
supplies on
account (2)
Bal.
3. Purchase land
for future
repair sire
for P140,000
cash (3)
Bal.
4. Paid P18,000
to creditors (4)
Bal.
5. Withdrew
P25,000 for
personal use (5)
Bal.
6. Paid P28,000
for site and
equipment rent
for the month (6)
Bal.
7. During the
month, P10,000
expenses were
incurred on
account by the
business (7)
Bal.
8. During the
month, Corpuz
invested
another
P100,000 of
personal funds
in the
business (8)
Bal.
9. Received a
P5,000 for a
cash service
call (9)
Bal.
10. Corpuz used
P6,000 worth
of supplies (10)
Bal.