ECO 02

Introduction to Agricultural Commodity and Enterprise Development

Name: Myrel D. Burguita Section: BSA-IV Date: 11/04/21 Score:

Exercise No. 5.
THE ACCOUNTING EQUATION

INSTRUCTIONS:

The following are sequences of transactions of a given agricultural firm. Analyze each and
record the transaction figures in expanded form of the accounting equation, using the form
provided.

Transaction 1. Issued Ordinary Equity Shares. On December 1, 2018, Nonato Maza & SLSU
faculty members established a company to do laboratory services for agricultural related
concerns. They named the company REINA Laboratories, Inc. (RLI). They invested a total of
P500,000.00 cash in exchange for all the company’s Ordinary share capital.

ASSETS = LIABILITIES + SHAREHOLDERS’ EQUITY

Cash REINA Laboratories, INC. Capital

500,000 = 500,000 investment

Transaction 2. Paid Rent in Advance. RLI prepaid its office rent for the next six months,
December 2018 through May 2019. The transaction was made on December 1, 2018. The RLI’s
monthly rental on the space is P15,000.00.

ASSETS = LIABILITIES + SHAREHOLDERS’ EQUITY

Cash + Prepaid = REINA Laboratories, INC.

Rent Capital

P500,000 500,000 investments

-90,000 + 90,000

410,000 + 90,000 500,000

500,000 = 500,000
 Transaction 3. Purchased Office Supplies on Account. RLI, on December 1, 2018 purchased
office supplies amount P21,100.00 on account.

ASSETS = LIABILITIES + SHAREHOLDERS’

EQUITY

Cash + Office + Prepaid = Account REINA Laboratories, INC.

Supply Rent Payable + Capital

410,000 90,000 500,000

+ 21,100 + 21,100
410,000 + 21,100 + 90,000 = 21,100 + 500,000

521,100 = 521,100

Transaction 4. Signed Bank Note in Exchange for Cash. On December 1, the company
obtained a three-year bank loan in the amount of P330,000.00, after signing a promissory note.
The annual interest charges on the note amount 12% and are due on November 30.

ASSETS = LIABILITIES + SHAREHOLDERS’

EQUITY

Cash + Office + Prepaid = Account + Note + REINA Laboratories, INC.

Supply Rent Payable Payable Capital

410,000 21,100 90,000 21,100 500,000

330,000 + 330,000
740,000 + 21,100 + 90,000 = 21,100 + 330,000 + 500,000

851,100 = 851,100

Transaction 5. Purchased Equipment with Cash. On December 2, RLI purchased office

equipment in cash, costing P275.00.

ASSETS = LIABILITIES + SHAREHOLDERS’

EQUITY

Cash + Office + Prepaid + Equipment = Account + Note + REINA Lab. INC.

Supply Rent Payable Payable Capital

740,000 21,100 90,000 21,100 330,000 500,000

-275 + 275
739,725 + 21,100 + 90,000 + 275 = 21,100 + 330,000 + 500,000

851,100 851,100
 Transaction 6. Received Customer Prepayment. On December 4, 2018, RLI received a payment
in the amount of P40,000.00 for services to be performed over the next few months.

ASSETS = LIABILITIES + SHAREHOLDERS’

EQUITY

Cash + Office + Prepaid + Equipment = Account + Unearned + Note + REINA Lab. INC.
Supply Rent Payable Revenue Payable Capital
739,725 21,100 90,000 275 = 21,100 330,000 500,000
+ 40,000 + 40,000
779,725 + 21,100 + 90,000 + 275 = 21,100 + 40,000 + 330,000 + 500,000

891,100 891,100

Transaction 7. Provided Services to Customers for Cash. Several customers were served on
December 5 and the company was paid P130,000.00 cash.

ASSETS = LIABILITIES + SHAREHOLDERS’

EQUITY

Cash + Office + Prepaid + Equipment = Account + Unearned + Note + REINA Lab. INC. + Retained
Supply Rent Payable Revenue Payable Capital earning
779,725 21,100 90,000 275 21,100 40,000 330,000
+ 130,000 500,000 + 130,000
909,725 + 21,100 + 90,000 + 275 = 21,100 + 40,000 + 330,000 + 630,000

1,021,100 1,021,100

Transaction 8. Provided Services for Cash and on Account. On December 9, RLI performed
services worth P43,800.00 and received P12,000.00 wash with the remaining balance to be paid
to the company by customers within 90 days.

ASSETS = LIABILITIES +
SHAREHOLDERS’
EQUITY

Cash + Account + Office + Prepaid + Equipment = Account + Unearned + Note + REINA Lab. INC. + Retained
Rec. Supply Rent Payable Revenue Payable Capital earning
909,725 21,100 90,000 275 21,100 40,000 330,000 500,000 + 130,000
+12,000 31,800 43,800service revenue
921,725 + 31,800 + 21,100 + 90,000 + 275 = 21,100 + 40,000 + 330,000 + 673,800

1,064,900 1,064,900
 Non-Accounting Transaction> Hired an Employee. On December 9, RLI hired Ms. Argeline
Gurango to provide administrative help in the office. She will be paid P7,500.00 every two
weeks. She will assume her job on December 12, a Monday.

ASSETS = LIABILITIES +
SHAREHOLDERS’
EQUITY

Cash + Account + Office + Prepaid + Equipment = Account + Unearned + Note + REINA Lab. INC. + Retained
Rec. Supply Rent Payable Revenue Payable Capital earning
909,725 21,100 90,000 275 21,100 40,000 330,000 500,000 + 130,000
+12,000 31,800 43,800service revenue
921,725 + 31,800 + 21,100 + 90,000 + 275 = 21,100 + 40,000 + 330,000 + 673,800

1,064,900 1,064,900

Transaction 9. Paid Employee Wages. On December 23, RLI paid the employee after she
completed her first two weeks on the job.

ASSETS = LIABILITIES + SHAREHOLDERS’

EQUITY

Cash + Account + Office + Prepaid + Equipment = Account + Unearned + Note + REINA Lab. INC. + Retained Earnings
Rec. Supply Rent Payable Revenue Payable Capital Rev. Exp.
921,725 31,800 21,100 90,000 275 21,100 40,000 330,000 500,000 + 173,800
+7,500 -7,500 Wages
914,225 + 31,800 + 21,100 + 90,000 + 275 = 21,100 + 40,000 + 330,000 + 500,000 + 173,800 - 7,500 expense

1,057,400 1,057,400

Transaction 10. Received Payment on Account from Customer. On December 27, RLI received
a payment of P21,000.00 from a customer that had previously received services performed on
account (transaction No. 8).

ASSETS = LIABILITIES + SHAREHOLDERS’

EQUITY

Cash + Account + Office + Prepaid + Equipment = Account + Unearned + Note + REINA Lab. INC. + Retained Earnings
Rec. Supply Rent Payable Revenue Payable Capital Rev. Exp.
914,225 31,800 21,100 90,000 275 21,100 40,000 330,000 500,000 + 173,800 - 7,500
+21,000 -21,000

935,225 + 10,800 + 21,100 + 90,000 + 275 = 21,100 + 40,000 + 330,000 + 500,000 + 173,800 - 7,500

1,057,400 1,057,400
 Transaction 11. Paid Cash Dividend. On December 30, RLI paid P6,000.00 cash dividend.

ASSETS = LIABILITIES + SHAREHOLDERS’

EQUITY

Cash + Account + Office + Prepaid + Equipment = Account + Unearned + Note + REINA Lab. INC. + Retained Earnings
Rec. Supply Rent Payable Revenue Payable Capital Rev. Exp. Div.
935,225 10,800 21,100 90,000 275 21,100 40,000 330,000 500,000 + 173,800 - 7,500
-6,000

929,225 + 10,800 + 21,100 + 90,000 + 275 = 21,100 + 40,000 + 330,000 + 500,000 + 173,800 - 7,500 -6,000

1,051,400 1,051,400