1. Analyze whether the transaction is accountable or not.

Then identify the accounts that are

affected, and the effects on such accounts.

Transaction Accounts affected Effect (increase

or decrease)
1. The owner withdrew cash from the OWNER’S DRAWING, EQUITY INCREASE
business. CASH, ASSETS DECREASE

2. The business obtained a loan from the LOAN PAYABLE, LIABILITIES INCRASE
bank. CASH, ASSETS DECREASE

3. Payment of the loan from the bank. CASH, ASSETS DECREASE

LOAN PAYABLE, LIABILITIES DECREASE

4. Sale on account. ACCOUNTS RECEIVABLE, ASSETS INCREASE

SALES, INCOME INCREASE

5. Purchase in cash. PERCHASE, EXPENSES INCREASE

CASH, ASSET DECREASE

6. Purchase on account. ACCOUNTS PAYABLE, LIABILITIES INCREASE

PURCHASES, EXPENSES INCREASE

7. Sale for cash. CASH, ASSETS INCREASE

SALES, INCOME INCREASE

8. Payment of salaries expense. SALARIES EXPENSES, EXPENSES INCREASE

CASH, ASSET DECREASE

9. Payment of accounts payable. CASH DECREASE

ACCOUNTS PAYABLE DECREASE

10. Purchase of inventory on account. PURCHASE, EXPENSES INCREASE

ACCOUNTS PAYABLE, LIABILITIES INCREASE

11. Purchase of inventory in cash. PURCHASES, EXPENSES INCREASE

CASH, ASSET DECREASE

12. Purchase of equipment on account. EQUIPMENT, ASSET INCREASE

ACCOUNTS PAYABLE, LIABILITIES INCREASE

13. Collection of receivables from customer. ACCOUNTS RECEIVABLE, LIABILITIES DECREASE

CASH, ASSET INCREASE
 14. Payment of various small expenses. SMALL EXPENSES, EXPENSES INCREASE
CASH, ASSET DECREASE

15. The business posted a job hiring. ADVERTISING EXPENSES, EXPENSES INCREASE
CASH DECREASE

16. Sale partly in cash and on account. CASH INCREASE

ACCOUNTS RECEIVABLE INCREASE
SALE INCREASE

17. The dog of the owner won 2nd place in a NULL NULL
pet contest.

2. Provide the journal entries to record the transactions described below. You do not need to provide a
short description for the journal entries.
1. Owner contributes ₱600,000 to the business.
2. The business obtains a loan of ₱400,000.
3. Purchase of inventory worth ₱200,000 on cash basis.
4. Purchase of inventory worth ₱500,000 on account.
5. Sale of goods for ₱900,000, on account. The cost of the goods sold is ₱400,000.
6. Payment of ₱400,000 as settlement of accounts payable.
7. Collection of ₱500,000 on accounts receivable.
8. Purchase of equipment worth ₱480,000.
9. Drawings of owner amounting to ₱10,000.
10. Payment for interest expense of ₱5,000.
JOURNAL
NUMBER ACCOUNT TITLES DEBIT CREDIT
1 CASH 600,000
OWNERS, CAPITAL 600,000
To record owner’s contribution to the business

2 CASH 400,000
LOAN PAYABLE 400,000
To record obtained loan

3 CASH 200,000
PURCHASE 200,000
To record purchase of inventory on cash

4 ACCOUNTS PAYABLE 500,000

PURCHASE 500,000
To record purchase of inventory on account
5 CASH 900,000
COST OF GOODS SOLD 400,000
SALES 900,000
INVENTORY 400,000
To record Sale of goods with cost of the goods sold

6 ACCOUNTS PAYABLE 400,000

CASH 400,000
To record Payment of settlement of accounts payable

7 CASH 500,000
ACCOUNTS RECEIVABLE 500,000
To record Collection on accounts receivable.

8 EQUIPMENT 480,000
CASH 480,000
To record purchase of equipment

9 OWNER’S DRAWING 10,000

CASH 10,000
To record Drawings of owner

10 INTEREST EXPENSE 5,000

CASH 5,000
To record Payment for interest expense
 3. Record the transactions in the journal provided below. Indicate the dates and provide a brief
description for each journal entry.

Dates Transactions
Nov. 1, 20x1 A business owner provides ₱2,000,000 cash as investment to the business.
Nov. 5, 20x1 The business obtains a ₱500,000 loan and issues a promissory note.
Nov. 8, 20x1 The business acquires equipment costing ₱1,000,000 on cash basis.
Nov. 16, 20x1 The business purchases inventory costing ₱200,000 on cash basis.
Nov. 30, 20x1 The business sells goods costing ₱135,000 for ₱300,000 on cash basis.
Dec. 1, 20x1 The business sells goods costing ₱180,000 for ₱400,000 on account.
Dec. 4, 20x1 The business purchases inventory costing ₱600,000 on account.
Dec. 9, 20x1 The business collects ₱100,000 accounts receivable.
Dec. 17, 20x1 The business pays ₱200,000 accounts payable.
Dec. 28, 20x1 The business owner made temporary withdrawal of ₱120,000 cash from
the business.

JOURNAL
DATE ACCOUNT TITLES DEBIT CREDIT
20X1
Nov. 1 CASH 2,000,000
OWNER’S CAPITAL 2,000,000
To record owner’s contribution to the business

Nov. 5 LOAN PAYABLE 500,000

CASH 500,000
To record obtained loan

Nov. 8 EQUIPMENT 1,000,000

CASH 1,000,000
To record purchase of equipment

Nov. 16 PURCHASES 200,000

CASH 200,000
To record purchase of inventory on cash

Nov. 30 CASH 300,000

COST OF GOODS SOLD 135,000
SALES 300,000
INVENTORY 135,000
To record Sale of goods with cost of the goods sold
Dec. 1 ACCOUNTS RECEIVABLE 400,000
COST OF GOODS SOLD 180,000
SALES 400,000
INVENTORY 180,000
To record Sale of goods with cost of the goods sold

Dec. 4 ACCOUNTS PAYABLE 600,000

PURCHASE 600,000
To record purchase of inventory on account

Dec. 9 CASH 100,000

ACCOUNTS RECEIVABLE 100,000
To record purchase of inventory on account

Dec. 17 ACCOUNTS PAYABLE 200,000

CASH 200,000
To record Payment of accounts payable

Dec. 28 OWNER’S DRAWING 120,000

CASH 120,000
To record owner’s temporary withdrawal