PROBLEMS:

1.1 Juan Carlos is a Barber and on July 1 of the current year, Carlos Barber Shop had the following statement of Financial
Condition:

CARLOS BARBER SHOP

Statement of Financial Condition
July 1, 20CY
ASSETS
Cash P 25,000.00
Shop Supplies 23,500.00
Shop Fixtures 55,000.00
Shop Equipment 170,000.00
TOTAL ASSETS P 273,000.00

LIABILITIES
Accounts Payable P 25,000.00
OWNER’S EQUITY
Juan Carlos, Capital 248,500.00
TOTAL LAIBILITIES and OWNER’S EQUITY P 273,500.00

The following transactions were made during the month.

a. Purchased equipment on account, P11,500

b. Withdrew P6,000 for personal use
c. Paid P10,000 of the accounts payable.
d. Cash receipts for the month totaled P65,000 for services rendered
e. Expenses paid for the month totaled P24,000.
f. Shop supplies worth P4,500 was used during the month.
 REQUIRED: Indicate the effects of the above transaction on the accounting equation shown
Below
ASSETS = LIABILITIES + OWNER’S EQUITY
Shop Shop Shop Accounts J. Carlos reve-
Cash Supplies Fixtures Eqpmnt. = Payable + Capital nues Expenses
Bal. 25,000 23,500 55,000 170,000 = 25,000 + 248,500
a. 11,500 = 11,500 +
Bal. 25,000 23,500 55,000 181,500= 36,500 + 248,500
b. (6,000) = + (6,000)
Bal. 19,000 23,500 55,000 181,500 = 36,500 + 242,500
c. (10,000) = (10,000) +
Bal. 9,000 23,500 55,000 181,500 = 26,500 + 242,500
d. 65,000 = + 65,000
Bal. 74,000 23,500 55,000 181,500 = 26,500 + 242,500 65,000
e. (24,000) = + (24,000)
Bal. 50,000 23,500 55,000 181,500 = 26,500 + 242,500 65,000 (24,000)
f. (4,500) = + (4,500)
Bal. 50,000 19,000 55,000 181,500 26,500 242,500 65,000 (28,500)

1.2 Andrea Bonito has decided to go into business for herself as a professional photograph and the following transactions
transpired in October:

a. She invested P300,000 to open the AB Photo arts.

b. Paid rental for the month, P12,000
c. Purchased for cash camera equipment worth P220,000.
d. Bought photo and developing supplies worth P18,000 on account
e. Bought office equipment worth P45,000 on credit from Burroughs
Company.
f. Received P25,000 for Photography services rendered.
g. Andrea Bonita Invested a computer valued at P30,000, in the business
h. Andrea Bonita withdrew P12,000 from the business for her personal use.
i. Paid Borroughs Company P30,000 as partial payment of account.
j. Took wedding pictures and agreed to accept payment fifteen days later,
 P12,000
k. Paid salary of assistant for the month, P6,000
l. Photo supplies used for the month, P4,000.

REQUIRED:

1. Record the peso amount under the appreciate heading below to show the effect of each transaction on the accounting
equation and determine the balances after every transaction. (See solution pattern below).

ASSETS = LIABILITIES + OWNER’S EQUITY

Accounts Photo Camera office computer Accounts A. bonito
Cash Receivable Supplies Equipment eqpt. = Payable + Capital + Revenues -
Expenses

300,000 300,000
(12,000) (12,000)
(220,000) 220,000
18,000 18,000
45,000 45,000
25,000 25,000
30,000 30,000
(12,000) (12,000)
(30,000) (30,000)
12,000 12,000
(6,000) (6,000)
(4,000) (4,000)
1.3 After determining the final balances of the accounts in Problem 1.2 above, prepare the
Following financial statements of AB Photo Arts for the moments of October of the
current year.

REQUIRED:

1. Statement of Comprehensive Income

2. Statement of Changes in Equity
3. Statement of Financial Condition
4. Statement of Cash Flows
 ANDREA BONITA PHOTOGRAPHY SERVICES
STATEMENT OF COMPREHENSIVE INCOME
FOR THE MONTH ENDED OCTOBER 31

REVENUES
Photography services rendered 25,000
Wedding Pictures agreed to accept payment 37,000

Total revenue 37,000

EXPENSES
Rent Expenses 12,000
Salary Expenses 6,000
Supplies Expense 4,000

Total Expenses 22,000

NET INCOME 15,000

 ANDREA BONITA PHOTOGRAPHY SERVICES
Statement of Changes in Equity
For the Month ended in October 31, 20CY

Ms. Bonita Capital 330,000

Add:
Net Income 15,000
Ms. Bonita-Withdrawal -12,000

345,000
Ms. Bonita- Ending Capital 333,000
 AB PHOTO ARTS
STATEMENT OF FINANCIAL POSITION
As of October 2020

ASSET

Current asset:
Cash 45,000
Account Recievable 12,000
Photo Suppliers 14,000
Total: 71,000

Property and Equipment

Camera Equipment 220,000
Office Equipment 45,000
Computer 30,000
Total 295,000
Total Assets P 366,000

LIABILITIES AND OWNER’S EQUITY

Current Liabilities
Account Payable 33,000

Owner’s Equity
Bonito, Capital 333,000
Total Liabilities and Owner’s Equity 366,000
 CASH FLOW FROM OPERATING ACTIVITIES

Cash received from customer 25,000

Cash paid for payment account -30,000

Cash paid for various expenses -18,000

Net cash from operating activities -23,000

CASH FLOW FROM INVESTING ACTIVITIES

Cash paid for PPE -220,000

CASH FLOW FROM FINAANCING ACTIVITIES

Investment of owner 300,000

Withdraws made by the owner 12,000

Net Cashflows 45,000

Cash at the end of the period 45,000