COMPREHENSIVE EXAMPLE ON ACCOUNTING CYCLE

The following example, DRA. ASUNCION SANTIAGO MEDICAL SERVICES, will be used in
illustrating the accounting cycle for a service business.
DRA. SANTIAGO MEDICAL SERVICES
In December, 2016 Asuncion Santiago started her own medical practice in City of Malolos,
Bulacan. Presented below are the transactions for the first month of operations of Dra.
Santiago’s medical practice.
DEC 1 Dra. Santiago invested P1,000,000 in the business
1 Purchased land and building, amounting to P1,000,000 and P2,500,000
respectively, from the China Bank as follows; payment of cash by P500,000 and
issuance of a 4-year, notes, P3,000,000-
1 Bought medical equipment, P300,000 on account from XYZ Corp. by issuing a
note payable due in 12 months. On the same date, Dr. Santiago bought medical
supplies, P50,000
1 Additional medical equipment was purchased, worth P52,000 on account
2 Purchased office supplies, P 3,000 for cash
3 Payment of one year insurance premium for the building, P28,000
4 Received P132,000 from clients for medical services rendered
6 Additional medical supplies purchased on account, P42,000.
10 Salaries of medical staff, P90,000.
15 Received P200,000 as payment for seminar fees (other income).
17 Rendered medical services to client on account, P180,000.
18 Payment for various minor repairs on building, P14,000.
20 Paid the telephone bill, P6,500.
22 Collected P130,000 from clients on account.
23 Made partial payment of P30,000 for medical supplies purchased last December
6.
27 Personal Withdrawals, P100,000.
29 Paid membership dues of P4,800. (dues expense)
29 Billed customers for medical services rendered. P280,000
 Use the following accounts

Cash
Accounts Receivable
Land
Building
Medical Equipment
Office Supplies
Medical Supplies
Accounts Payable
Notes Payable
Dra. Santiago, Capital
Dra. Sanatiago, drawing
Fees Earned
Other income
Salaries Expense
Insurance Expense
Repairs and Maintenance
Expense
Communication Expense
Dues Expense

Required:
a. Prepare journal entries to record the above transactions (worksheet)
b. Post the entries to T-accounts with ending balances indicated.
c. Prepare a trial balance, Income Statement, Statement of Equity, and Balance Sheet as
of December 31, 2016. (Worksheet)
 Answer for ABC Activity

DRA. SANTIAGO MEDICAL SERVICES

Trial Balance
December 31, 2016
DEBIT CREDIT
Accounts
Cash 635,700
Accounts Receivable 330,000
Land 1,000,000
Building 2,500,000
Medical Equipment 352,000
Office Supplies 3,000
Medical Supplies 92,000
Accounts Payable 64,000
Notes Payable 3,300,000
Dra. Santiago, Capital 1,000,000
Dra. Santiago, drawing 100,000
Fees Earned 592,000
Other income 200,000
Salaries Expense 90,000
Insurance Expense 28,000
Repairs and Maintenance Expense 14,000
Communication Expense 6,500
Dues Expense 4,800
5,156,000 5,156,000
Quiz ABC
A Trial Balance had been prepared for MNO Computer Services Co as of December 31, 2016 is
out of balance

DEBIT CREDIT
Cash 70,000
Accounts Receivable 25,000
Office Equipment 90,000
Accounts Payable 65,000
Lg, Capital 107,500
Fees Income 62,500
Salary Expense 25,000
Rent Expense 5,000
Utilities Expense 1,600
216, 600 235,000
In the process if verifying the amount in the trial balance, the following errors were discovered
1. A debit to P5,000 was not posted to accounts payable
2. A debit to utilities expense for P1,000 was posted P100
3. A debit entry for accounts receivable was posted to the credit side P5,000
4. Fees Income of 2,500 was posted twice
*Use the T-account to solve the errors.
Write your answer:
MNO Computer Services Co.
Trial Balance
December 31, 2016
DEBIT CREDIT
Cash
Accounts Receivable
Office Equipment
Accounts Payable
Lg, Capital
Fees Income
Salary Expense
Rent Expense
Utilities Expense

Answer for quiz ABC

MNO Computer Services Co.

Trial Balance
Debit Credit Debit Credit
Cash 70,000 70000
Accounts Receivable 25,000 35000
Office Equipment 90,000 90000
Accounts Payable 65,000 60000
LG, Capital 107,500 107500
Fees Earned 62,500 60000
Salary Expense 25,000 25000
Rent Expense 5,000 5000
Utilities Expense 1,600 2500
216,600 235,000 227500 227500
DFG Activity
Transactions for the month of September are given as follows:
Beginning balance
CASH 50,000 ACCOUNTS PAYABLE 10,000
ACCOUNTS RECEIVABLE 20,000 RUANO, CAPITAL 60,000
Sept 1 Purchased of office equipment P15,000 on account
1 Received cash from services rendered on account, P8,000
5 Cash collected from customers amounted to P20,000
8 Bought office supplies, P4,000
9 Billed a customer for services rendered amounting P10,000
15 Mr. DFG withdrew P7,000 for his personal use
25 Paid salaries of staff, P5000 and P3,000
30 Paid the following: Utilities P5,400; Rent P3,000
Required:
a) Open T- Accounts showing the beginning balances.
b) Journalize the transactions and post to the ledger accounts.
c) Prepare a Trial Balance as of September 30,2016.