Preparation of

Statement of
Financial Position
Atty. Anton Noble invests P500 000 cash.

Assets Liabilities Owner’s Equity

Cash 500,000 Capital 500,000
Noble Law Office obtains a loan from a
bank amounting to P100 000.

Assets Liabilities Equity

Cash 100,000 Notes Payable 100,000
Noble Law Office pays P10 000 for the
necessary permits and licenses for its
operation.

Assets Liabilities Equity

Cash 500,000 Capital 500,000
Cash 100,000 Notes Payable 100,000
Cash (10,000) Expenses (10,000)
Noble Law Office pays P120 000 for the
annual rent of the office space. The lease
contract will expire on December 1, 2016 and
is renewable annually.

Assets Liabilities Equity

Cash 500,000 Capital 500,000
Cash 100,000 Notes Payable 100,000
Cash (10,000) Expenses (10,000)
Prepaid Rent 120,000
Cash (120,000)
Noble Law Office renders a legal advice to
Silverio Shipping Lines. Noble Law office bills
Silverio for P135 000.

Assets Liabilities Equity

Accounts Receivable Professional fee 135,000
135,000
Noble Law Office purchases supplies worth P5
000 on cash basis.

Assets Liabilities Equity

Office Supplies 5,000
Cash 5,000
Noble Law Office renders legal advice to
Celba Co. for P37 500, on cash basis.

Assets Liabilities Equity

Cash 37,500 Professional fee 37,500
Noble Law Office purchases a laptop for
P36 000 cash.

Assets Liabilities Equity

Office Equipment 36,000
Cash (36,000)
Silverio Shipping pays Noble Law Office.

Assets Liabilities Equity

Cash 135,000
Accounts Receivable
(135,000)
Atty. Noble withdraws P25 000 from the law
office for his personal use.

Assets Liabilities Equity

Cash (25,000) Noble, Drawings (25,000)
T - accounts

Cash
Debit Credit
500,000 10,000
100,000 120,000
37,500 5,000
135,000 36,000
25,000
576,500
Account form
Report Form
Example: Prepare a Statement of Financial Position
using the following accounts (one in report form and
one in account form):
 Cash – 5,000
 Loans Payable – 77,500
 Accounts Receivable – 2,600
 Supplies – 2,300
 Equipment – 17,000
 Owner’s equity – 40,000
 Accounts Payable – 22,400
 Building – 113,000
ACCOUNT FORM:
REPORT FORM
 ABC Co.’s post-closing trial balance on December 31, 2022
shows the following account balances:
Accounts Dr. Cr.
Cash 20 000
Accounts Receivable 122 000
Allowance for bad debts 30 000
Notes Receivable (Trade) 8 000
Inventory 200 000
Prepaid Supplies 15 000
Prepaid Rent 25 000
Prepaid Insurance 10 000
Land 1 000 000
Building 2 000 000
Accumulated depreciation – Bldg 1 600 000
Equipment 800 000
Accounts Dr. Cr.
Accumulated depreciation – Equipment 250 000
Accounts Payable 100 000
Notes Payable – Short term loan 200 000
Notes Payable – Long term loan (P50 000 due w/in 1 yr) 1 450 000
Interest Payable 65 000
Salaries Payable 105 000
Utilities Payable 8 000
Unearned Income 35 000
Owner’s Capital 357 000
Totals 4 200 000 4 200 000