TRANSACTION 2

DATE TRANSACTIONS
Dec-03 Reyes invested P230,000 from her personal savings in the new business. She deposited the
money at the Bank of Philippine Islands-Lucena Branch.
Dec-05 Office equipment costing P85,000 is acquired on cash basis.
Dec-08 Office supplies in the amount of P5,000 are acquired on account.

Dec-09 The Ricardo Reyes Dance Studio collected P28,000 in cash for ballroom dance lessons.

Dec-16 Reyes paid Chua Company P16,000 for monthly utilities.

Dec-18 The Lambada dance studio has an arrangement with several dance clubs. Lessons will be
given on various weeknights. Reyes billed these clubs P90,000 for the month.
Dec-20 Reyes made a partial payment of P5,000 for the Nov 9 purchase of office supplies
Dec-25 A check in the amount of P20,000 is received from a dance club for their monthly lessons,
billed on Dec 18.
Dec-26 Reyes withdrew P4,000 from the business for her personal use
Dec-28 The Rockstar Advertising Agency submitted a bill to Reyes for P8,000 worth of advertising for
this month of operations. Reyes will pay this bill next month.
Dec-29 Reyes paid her dance instructor's salaries worth P30,000 for the month of December.

Required:

1.Journal Entry with Explanation

2. Ledger with Running Balance

3. Trial Balance

4. Statement of Comprehensive Income

5. Statement Financial Position

6. Cash Flow Statement

7. Closing entries

8.Post-Closing Entries

Problem 1

Show that the accounting equation is satisfied after taking into consideration each of the following transactions in the
books of Mr. N

1. Started business with capital 1,00,000

2. Bought furniture 25,000

3. Bought goods for cash 20,000

 4. Bought goods from Ram on Credit 5,000

5. Sold goods for cash for 15,000

6. Sold goods to Shyam on credit 8,000

7. Paid cash to Ram 4,000

8. Received cash from Shyam 5,000

9. Paid Cash into Bank 25,000

10. Withdrawn from bank 10,000

Solution hide

1.

Capital + Liabilities = Assets

1,00,000 + 0 = 1,00,000 (Cash)

3.

Capital + Liabilities = Assets

1,00,00 + 0 =    75,000 (Cash)

0 + 25,000 (Furniture)

5.

Capital + Liabilities = Assets

1,00,00 + 0 =    55,000 (Cash)

0 + 25,000 (Furniture)
+ 20,000 (Goods)

7.

Capital + Liabilities = Assets

1,00,00 + 5,000 (Ram) =    55,000 (Cash)

0 + 25,000 (Furniture)
+ 25,000 (Goods)

9.

Capital + Liabilities = Assets

1,00,00 + 5,000 (Ram) =    70,000 (Cash)

0 + 25,000 (Furniture)
+ 10,000 (Goods)
11.

Capital + Liabilities = Assets

1,00,00 + 5,000 (Ram) =    70,000 (Cash)

0 + 25,000 (Furniture)
+ 2,000 (Goods)
+ 8,000 (Shyam)

13.

Capital + Liabilities = Assets

1,00,00 + 1,000 (Ram) =    66,000 (Cash)

0 + 25,000 (Furniture)
+ 2,000 (Goods)
+ 8,000 (Shyam)

15.

Capital + Liabilities = Assets

1,00,00 + 1,000 (Ram) =    71,000 (Cash)

0 + 25,000 (Furniture)
+ 2,000 (Goods)
+ 3,000 (Shyam)

17.

Capital + Liabilities = Assets

1,00,00 + 1,000 (Ram) =    46,000 (Cash)

0 + 25,000 (Furniture)
+ 2,000 (Goods)
+ 3,000 (Shyam)
+ 25,000 (Bank)

19.

Capital + Liabilities = Assets

1,00,00 + 1,000 (Ram) =    56,000 (Cash)

0 + 25,000 (Furniture)
+ 2,000 (Goods)
+ 3,000 (Shyam)
+ 15,000 (Bank)
This solution differs from the next only in the way the data is presented. Data here is presented in the form of a
statement while in the next it is presented in the form of a mathematical equation.

Problem 2

Following are the accounting transactions relating to Mr. P's business. Use the accounting equation to show their effect
on his assets, liabilities and capital.

1. Commenced business with a Capital of 50,000

2. Bought Machinery for cash 10,000

3. Purchased goods for cash 15,000

4. Purchased goods from A on credit 5,000

5. Sold goods for cash 10,000

6. Paid to A 2,000

7. Sold goods to B on credit 3,000

8. Paid into Bank 6,000

9. Paid to A by cheque 1,000

10. Received from B a cheque for 2,000

Solution hide

This solution differs from the first only in the way the data is presented. Data here is presented in the form of a
mathematical equation while in the previous it is presented in the form of a statement.

1.

Capita
+ Liabilities = Assets
l

50,000 + 0 = 50,000 (Cash)

3.

Capital + Liabilities = Assets

50,000 + 0 = 40,000 (Cash) + 10,000 (Machinery)

5.

Capita
+ Liabilities = Assets
l

50,000 + 0 = 25,000 (Cash) + 10,000 (Machinery) + 15,000 (Goods)

7.
 Capita
+ Liabilities = Assets
l

50,000 + 5,000 (A) = 25,000 (Cash) + 10,000 (Machinery) + 20,000 (Goods)

9.

Capita
+ Liabilities = Assets
l

50,000 + 5,000 (A) = 35,000 (Cash) + 10,000 (Machinery) + 10,000 (Goods)

11.

Capita
+ Liabilities = Assets
l

50,000 + 3,000 (A) = 33,000 (Cash) + 10,000 (Machinery) + 10,000 (Goods)

13.

Capital + Liabilities = Assets

50,000 + 3,000 (A) = 33,000 (Cash) + 10,000 (Machinery) + 7,000 (Goods) + 3,000 (B)

15.

Capital + Liabilities = Assets

50,000 + 3,000 (A) = 27,000 (Cash) + 10,000 (Machinery) + 7,000 (Goods) + 3,000 (B)
+ 6,000 (Bank)

17.

Capital + Liabilities = Assets

50,000 + 2,000 (A) = 27,000 (Cash) + 10,000 (Machinery) + 7,000 (Goods) + 3,000 (B)
+ 5,000 (Bank)

19.

Capital + Liabilities = Assets

50,000 + 2,000 (A) = 27,000 (Cash) + 10,000 (Machinery) + 7,000 (Goods) + 1,000 (B)
+ 7,000 (Bank)