BMSH2203

RECORDING OF TRANSACTIONS OF A SERVICE BUSINESS

Business Transaction

The following transactions for the first month of the operation of Teddy’s Car Wash business were identified
through the business documents below:

Teddy’s Car Wash

Date Transactions

Nov. 1, Teddy invested cash amounting to P100,000 in Teddy's Car Wash business
2022
2 Paid P5,000 to Mr. Apollo for all the business licenses requirements

5 Purchased office supplies amounting to P2,500 from Athena's Bookstore

6 Paid rent for the month amounting to P10,000 to Mr. Zeus, plus two (2) months advance
rent deposit amounting to P20,000
7 Purchased car wash equipment worth P55,000 from Hera Inc. and paid a 25% down
payment with the balance to be paid in six (6) equal monthly installments subject to 5%
tax.
9 Purchased car wash supplies from Ares Enterprise amounting to P7,500

15 Rendered services to various clients, and per official receipts, the total amount received
amounted to P18,000
16 Paid the salary for the first half of the month amounting to P9,000

22 Rendered car wash services on account worth P12,000

24 Received cash for the services rendered for the week, P5,000

27 Collected P6,000 from a customer who availed of service on account

29 Teddy withdrew P3,000 cash from the business for personal use

30 Paid the salary for the last half of the month amounting to P9,000

30 Office supplies used was only P500, while car wash supplies used amounts to P3,500

30 Paid P4,000 for water and electricity consumption for the month

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General Journal Entries

GENERAL JOURNAL PAGE 1

Teddy’s Car Wash

Date Description PR Debit Credit

Nov. 1, 2022 Cash 101 P100,000
Teddy's Capital 301 P100,000
To record Teddy's initial investment

2 Licenses Expense 551 5,000

Cash 101 5,000
To record payment of licenses

5 Office Supplies 121 2,500

Cash 101 2,500
To record purchased office supplies

6 Rent Expense 501 30,000

Cash 101 30,000
To record payment of rent and rent deposit

7 Car wash equipment 151 55,000

Cash (25% of P55,000) 101 13,750
Accounts payable 201 41,250
To record payment of rent and rent deposit

9 Car Wash Supplies 131 7,500

Cash 101 7,500
To record purchased supplies

15 Cash 101 18,000

Cash Wash Revenue 401 18,000
To record cash received from customers

16 Salary Expense 511 9,000

Cash 101 9,000
To record payment of salary

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GENERAL JOURNAL PAGE 2

Teddy’s Car Wash

Date Description PR Debit Credit

Nov. 22, 2022 Accounts Receivable 111 12,000
Cash Wash Revenue 401 12,000
To record cash revenue on account

24 Cash 101 5,000

Cash Wash Revenue 401 5,000
To record cash received from customers

27 Cash 101 6,000

Accounts Receivable 111 6,000
To record collection of accounts receivable

29 Teddy, Drawing 311 3,000

Cash 101 3,000
To record cash withdrawal by the owner

30 Salary Expense 511 9,000

Cash 101 9,000
To record payment of salary

30 Office Supplies Expense 521 500

Car Wash Supplies Expense 531 3,500
Office Supplies 121 500
Car Wash Supplies 531 3,500
To record office and car wash supplies used

30 Utilities Expense 541 4,000

Cash 101 500
To record payment of water and electricity

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General Ledger Accounts

A. Cash

Account Cash Account No. 101

Balance
Date Item PR Debit Credit
Debit Credit
2022 √
November 1 Balance GJ1 P100,000 P100,000
2 Payment for license GJ1 P5,000 95,000
5 Office supplies fee GJ1 2,500 92,500
6 Rent payment GJ1 30,000 62,500
7 Purchase of equipment GJ1 13,750 48,750
9 Car wash supplies fee GJ1 7,500 41,250
15 Service revenue GJ1 18,000 59,250
16 Salary payment GJ1 9,000 50,250
24 Service revenue GJ2 5,000 55,250
27 Collection from customer GJ2 6,000 61,250
29 Withdrawal GJ2 3,000 58,250
30 Salary payment GJ2 9,000 49,250
30 Payment for utilities GJ2 4,000 P45,250

B. Account Receivable

Account Accounts Receivable Account No. 111

Balance
Date Item PR Debit Credit
Debit Credit
2022 √
November 22 Balance GJ2 P12,000 P12,000
27 Collection from customer GJ2 P6,000 P6,000

C. Office Supplies

Office Supplies Account No. 121

Account
Balance
Date Item PR Debit Credit
Debit Credit
2022 √
November 5 Balance GJ1 P2,500 P2,500
30 Office supplies used GJ2 P500 P2,000

D. Car Wash Supplies

Account Car Wash Supplies Account No. 131

Balance
Date Item PR Debit Credit
Debit Credit
2022 √
November 9 Balance GJ1 P7,500 P7,500
30 Car wash supplies used GJ2 P3,500 P4,000

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E. Car Wash Equipment

Account Car Wash Equipment Account No. 151

Balance
Date Item PR Debit Credit
Debit Credit
2022 √
November 7 Balance GJ1 P55,000 P55,000

F. Accounts Payable

Account Accounts Payable Account No. 201

Balance
Date Item PR Debit Credit
Debit Credit
2022 √
November 7 Balance GJ1 P41,250 P41,250

G. Owner’s Capital

Account Teddy's Capital Account No. 301

Balance
Date Item PR Debit Credit
Debit Credit
2022 √
November 1 Balance GJ1 P100,000 P100,000

H. Owner’s Withdrawal

Account Teddy's Withdrawal Account No. 311

Balance
Date Item PR Debit Credit
Debit Credit
2022 √
November 29 Balance GJ2 P3,000 P3,000

I. Car Wash Revenue

Account Car Wash Revenue Account No. 401

Balance
Date Item PR Debit Credit
Debit Credit
2022 √
November 15 Balance GJ1 P18,000 P18,000
22 Service revenue on account GJ2 12,000 30,000
24 Service revenue on account GJ2 5,000 P35,000

J. Rent Expense

Account Rent Expense Account No. 501

Balance
Date Item PR Debit Credit
Debit Credit
2022 √
November 6 Balance GJ1 P30,000 P30,000

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K. Salary Expense

Account Salary Expense Account No. 511

Balance
Date Item PR Debit Credit
Debit Credit
2022 √
November 16 Balance GJ1 P9,000 P9,000
30 Payment for salary GJ2 P9,000 P18,000

L. Office Supplies Expense

Account Office Supplies Expense Account No. 521

Balance
Date Item PR Debit Credit
Debit Credit
2022 √
November 30 Balance GJ2 P500 P500

M. Car Wash Supplies Expense

Account Car Wash Supplies Expense Account No. 531

Balance
Date Item PR Debit Credit
Debit Credit
2022 √
November 30 Balance GJ2 P3,500 P3,500

N. Utilities Expense

Account Utilities Expense Account No. 541

Balance
Date Item PR Debit Credit
Debit Credit
2022 √
November 30 Balance GJ2 P4,000 P4,000

O. License Expense

Account License Expense Account No. 551

Balance
Date Item PR Debit Credit
Debit Credit
2022 √
November 30 Balance GJ2 P5,000 P5,000

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Trial Balance

Teddy’s Car Wash

Trial Balance
For the month of November 2022

Acct.
No. Account Name Debit Credit
101 Cash P45,250
111 Accounts Receivable 6,000
121 Office Supplies 2,000
131 Car Wash Supplies 4,000
151 Car Wash Equipment 55,000
201 Accounts Payable P41,250
301 Teddy's Capital 100,000
311 Teddy's Withdrawal 3,000
401 Car Wash Revenue 35,000
501 Rent Expense 30,000
511 Salary Expense 18,000
521 Office Supplies Expense 500
531 Car Wash Supplies Expense 3,500
541 Utilities Expense 4,000
551 Licenses Expense 5,000
Total P176,250 P176,250

References

De Guzman, A. (2018) Fundamentals of Accountancy, Business, and Management: A Textbook in Basic Accounting 1.
Manila: Lori Mar Publishing

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