ASSET = LIABILITES + CAPITAL

Business Transaction
Service Business:

1 Putting capital into the business, either cash & non-cash assets
June Makabayan put-up a men salon shop by investing the
following into his business:
Cash - P50,000
Equipments - P170,000
Furnitures - P60,000

2 Purchasing supplies needed in the business

June made cash purchase of supplies - P5,000

June purchased supplies on account - P3,0000

3 Recording service income

June Makabayan received cash of P20,000 from a group of clients.
June billed and amount of P15,000 for service rendered to a wedding event.

4 Recording of expenses
June recorded rent expense P6,000 to be paid at the end of the month.
June paid salaries amounting to P7,000.

5 Collection of receivables
June collected full amount from the wedding event.

6 Payment of payables
June paid 50% of supplies purchased on account.

Principles
Asset = Liabilities + Capital

Increase in Asset = Increase in Liabilities

Decrease in Asset = Decrease in Liabilities
Increase in one asset/ decrease in another = zero
Increase in Asset = Increase in Capital
Decrease in Asset = Decrease in Capital
Increase in Liabilities & Decrease in Capital = zero
AMOUNT ASSET = LIABILITIES +
Account Title (Owned) Account Title (owe)

50,000 Cash 50,000 =

170,000 Equipments 170,000 =
60,000 Furnitures 60,000 =

5,000 Supplies 5,000 =

Cash -5,000
3,000 Supplies 3,000 = Accounts Payable 3,000

20,000 Cash 20,000 =

15,000 Accounts Receivable 15,000 =

6,000 0 = Accrued Rent 6,000

7,000 Cash -7,000 =

15,000 Cash 15,000 =

Accounts Receivable -15,000

3,000 Cash -3,000 = Accounts Payable -3,000

308,000 6,000

308,000 308,000

Purchase on account or Expense incurred on account

Payment of liabilities
Purchase of asset paying cash
investment by owner or receive income
Withrawals by owne or incurring expenses
Incurring expenses on account
 + CAPITAL
Account Title (net worth)

J. Makabayan, Capital 50,000

J. Makabayan, Capital 170,000
J. Makabayan, Capital 60,000 280,000

Shop Revenue 20,000

Shop Revenue 15,000

Rent Expense -6,000

Salaries Expense -7,000

302,000