ACTIVITY SHEET 8.3.

Effects of Business Activities

ATZ Servicing completed the following selected transactions during the period:

1. Investment of the owner, P100,000. Deposited in bank.

2. Paid business registration, P1,000.

3. Hired secretary for a monthly salary of P5,000.

4. Purchased on cash supplies, P60,000.

5. Purchased on account supplies, P30,000.

6. Purchased office equipment, P50,000 on cash.

7. Borrowed money to be used to buy delivery truck, P200,000.

8. Bought delivery truck, P300,000 paid only P200,000, the balance on account.

9. Received P250,000 cash as service income for services rendered.

10. Billed P150,000 to customers for services rendered.

12. Paid business tax, P3,000.

13. Sold equipment for P5,500 on cash.

14. Paid interest on borrowed money, P4,000.

15. Received interest on bank deposit, P500.

16. Determined that the remaining supplies is P5,000.

17. Accrued secretary's salary.

18. Received bills of light and water, P2,000.

19. Paid 25% of borrowed money used to buy delivery truck.

20. Withdraw P10,000 for personal use.

Required:

1. Determine whether the selected transaction is (a) financing, (b) operating, or (c) investing
activities of the business.

A 1. Investment of the owner, P100,000. Deposited in bank.

B 2. Paid business registration, P1,000.

3. Hired secretary for a monthly salary of P5,000.

 B 4. Purchased on cash supplies, P60,000.

B 5. Purchased on account supplies, P30,000.

C 6. Purchased office equipment, P50,000 on cash.

C 7. Borrowed money to be used to buy delivery truck, P200,000.

C 8. Bought delivery truck, P300,000 paid only P200,000, the balance on account.

B 9. Received P250,000 cash as service income for services rendered.

10. Billed P150,000 to customers for services rendered.

B 12. Paid business tax, P3,000.

C 13. Sold equipment for P5,500 on cash.

B 14. Paid interest on borrowed money, P4,000.

B 15. Received interest on bank deposit, P500.

16. Determined that the remaining supplies is P5,000.

17. Accrued secretary's salary.

18. Received bills of light and water, P2,000.

B 19. Paid 25% of borrowed money used to buy delivery truck.

A 20. Withdraw P10,000 for personal use.

2. Prepare a table showing the effects (increase or decrease) of the selected transactions to the
elements of accounting.

Transactions Assets Liabilities Owner’s Revenue Expenses

equity

Investment of the Increased by Increased by

owner, P100,000. P100,000 P100,000
Deposited in bank.

Paid business Decreased Decreased Increased

registration, P1,000. by P1,000 by P1,000 by P1,000

Hired secretary for a

No effect
monthly salary of P5,000.

Purchased on cash
No effect
supplies, P60,000.
Purchased on account Increased by Increased by
supplies, P30,000. P30,000 P30,000

Purchased office
equipment, P50,000 on No effect
cash.

Borrowed money to be Increased by Increased by

used to buy delivery P200,000 P200,000
truck, P200,000.

Bought delivery truck, Increased by Increased by

P300,000 paid only P100,000 P100,000
P200,000, the balance
on account.

Received P250,000 cash Increased by Increased by Increased

as service income for P250,000 P250,000 by
services rendered P250,000

Billed P150,000 to Increased by Increased by Increased

customers for services P150,000 P150,000 by
rendered. P150,000

. Paid business tax, Decreased Decreased Increased

P3,000. by P3,000 by P3,000 by P3,000

Sold equipment for Increased by Increased by

P5,500 on cash. P5,500 P5,500

Paid interest on Decreased Decreased

borrowed money, by P4,000 by P4,000
P4,000

Received interest on Increased by Increased by

bank deposit, P500. 500 500

Determined that the Decreased Decreased Increased

remaining supplies is by P85,000 by P85,000 by P85,000
P5,000.

supplies, P60,000. +
supplies, P30,000. =
90,000 – 5,000=
P85,000

Accrued secretary's Increased by Increased by Increased

salary. P5,000 P5,000 by P5,000

Received bills of light and Increased by Increased by Increased

water, P2,000. P2,000 P2,000 by P2,000
 Paid 25% of borrowed Decreased Decreased
money used to buy by P50,000 by P50,000
delivery truck.

delivery truck,
P200,000. X 25% =
P50,000

Withdraw P10,000 for Decreased Decreased

personal use. by P10,000 by P10,000

3. Prepare the simple cash receipts and disbursements of APZ Servicing.

Cash receipts:
Cash received from investments by owners
Cash received from borrowings
Cash received from customers
Cash received from sale of equipment
Cash received from interest on bank deposit
TOTAL CASH RECEIPTS

Cash Disbursements
Payments for business registration
Payments for supplies
Payments to acquire office equipment
Payments to acquire delivery truck P 200,000
Payments for business tax
Payments for interest on borrowings
Payments to creditors
Payments for withdrawal by owners
TOTAL CASH DISBURSEMENTS

CASH, END OF YEAR