Q: 

Mr. Yes began professional practice as a system analyst on January 1. He plans to prepare a
monthly financial statement. During January, the owner completed these transactions (USD=
United State Dollar):
January 1. Owner invested USD 500,000 cash along with computer equipment that had a market
value of USD. 120,000 two years ago but was now worth USD. 100,000 only.
January 2. Paid USD. 15,000 cash for the rent of office space for the month.
January 4. Purchased USD. 12,000 of additional equipment on credit (due within 30 days).
January 8. Completed a work for a client and immediately collected the USD. 32,000 cash.
January 10. Completed work for a client and sent a bill for USD. 27,000 to be paid within 30 days.
January 12. Purchased additional equipment for USD. 8,000 in cash
January 15. Paid an assistant USD. 6,200 cash as wages for 15 days.
January 18. Collected USD. 15,000 on the amount owed by the client.
January 25. Paid USD. 12,000 cash to settle the liability on the equipment purchased.
January 28. Owner withdrew USD. 500 cash for personal use.
January 30. Completed work for another client who paid only USD. 40,000 for 50% of the system
design.
January 31. Paid salary of assistant USD. 700.
January 31. Received PLDT (Utility Company Telephone) bill, USD. 1,800 and Meralco (Utility
Company) bill USD. 3,800.

Required:
Prepare the journal entries, T accounts and trial balance for this business.
Journal entries for the above transactions:
January 1 Dr Cash 500,000
Dr Computer Eqpt 100,000
Cr Capital 600,000
Owner started business with Cash and Computer Equipment

Jan. 2 Dr Rent Exp 15,000

Cr Cash 15,000
Paid rent of office for the month of January.
Jan. 4 Dr Equipment 12,000
Cr Creditors 12,000
Equipment purchased for business use.
Jan. 8 Dr Cash 32,000
Cr Services rendered (income) 32,000
Services rendered for a client.
Jan. 10 Dr Debtors 27,000
Cr Services rendered (income) 27,000
Services rendered for a client.
Jan.12 Dr Equipment 8,000
Cr Cash 8,000
Additional equipment purchased.
Jan. 15 Dr Salaries & Wages 6,200
Cr Cash 6,200
Paid wages to assistant for 15 days.
Jan. 18 Dr Cash 15,000
Cr Debtors 15,000
Received cash from debtor.
Jan. 25 Dr Creditors 12,000
Cr Cash 12,000
Creditors of Eqpt purchased, settled.
Jan. 28 Dr Drawings 500
Cr Cash 500
Owner withdrew cash for personal use.
Jan. 30 Dr Cash 40,000
Dr. Debtors 40,000
Cr Services rendered (income) 80,000
50% amount received by a client on a/o work completed.
Jan. 31 Dr Salaries & Wages 700
Cr Cash 700
Paid salary to the assistant.
Jan. 31 Dr Utilities Exp (PLDT) 1,800
Dr Utilities Exp (Meralco) 3,800
Cr Creditors 5,600
PLDT and Meralco have been assumed to be the utility companies.
Note: In this example we have combined salaries and wages into one account, but sometimes in
real life these are kept separate - one account for wages and another account for salaries.
Ledger Entries

Dr. Cash Account Cr.

2016 USD USD
Jan. 1 Capital 500000 Jan 2 Rent 15000
Jan. 8 Services (income) 32000 Jan 12 Equipment 8000
Jan. 18 Debtors 15000 Jan 15 Wages 6200
Jan. 28 Services (income) 40000 Jan 25 Creditors 12000
Jan 28 Drawings 500
Jan 31 Salary 700
Balance C/F 544600
Total 587000 587000

Dr. Computer Equipment Cr.

2016 USD USD
Jan. 1 Capital 100000 Jan 31 Balance C/F 100000
Total 100000 100000

Dr. Equipment Account Cr.

2016 USD USD
Jan. 04 Creditors 12000
Jan. 12 Cash 8000 Balance C/F 20000
Total 20000 20000

Dr. Rent Account Cr.

2016 USD USD
Jan. 31 Cash 15000
Balance C/F 15000
Total 15000 15000

Dr. Creditors Account Cr.

2016 USD USD
Jan. 25 Cash 12000 Jan 4 Equipment 12000
Jan 31 Utility (PLDT) 1800
Jan 31 Balance C/F 5600 Jan 31 Utility 3800
(Meralco)
Total 17600 17600

Dr. Services Rendered (Income) Cr.

2016 USD USD
Jan 8 Cash 32000
Jan 10 Debtors 27000
Jan 30 Cash 40000
Jan 30 Debtors 40000
Jan 31 Balance C/F 139000
Total 139000 139000
Dr. Debtors Account Cr.
2016 USD USD
Jan. 10 Services (Income) 27000 Jan 18 Cash 15000
Jan. 30 Services (Income) 40000 Balance C/F 52000
Total 67000 67000

Dr. Capital Account Cr.

2016 USD USD
Jan 1 Cash 500000
Jan 31 Balance C/F 600000 Jan 10 Computer 100000
Equipment
Total 600000 600000

Dr. Salaries & Wages Account Cr.

2016 USD USD
Jan 15 Cash 6200
Jan 31 Cash 700 Jan 31 Balance C/F 6900
Total 6900 6900

Dr. Drawings Account Cr.

2016 USD USD
Jan 28 Cash 500
Jan 31 Balance C/F 500

Dr. Utilities Exp. Account (PLDT Telephone) Cr.

2016 USD USD
Jan 31 Creditors 1800
Jan 31 Balance C/F 1800
Total 1800 1800

Dr. Utilities Exp. Account (ABCL) Cr.

2016 USD USD
Jan 31 Creditors 3800
Jan 31 Balance C/F 3800
Total 3800 3800
 Trial Balance of Mr. Yes on the 31st January 2016
Debit (USD) Credit (USD)
Computer Equipment 100000
Equipment 20000
Debtors 52000
Cash 544600
Capital 600000
Creditors 5600
Drawings 500
Services rendered (Income) 139000
Rent 15000
Salaries and Wages 6900
Utilities Expense (PDLT) 1800
Utilities Expense (Meralco) 3800
744600 744600