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Problem 1

XYZ Excavating Co., owned by Patrick Lopez, began operations in July and completed these
transactions during that first month:
July

1
2
3

P. Lopez invested P60,000 cash in the business as its initial capital.


Rented office space and paid P500 cash for the July rent.
Purchased excavating equipment for P4,000 by paying P800 cash and agreeing to pay
the P3,200 balance in 30 days.
Purchased office supplies for P500 cash. (Office Supplies)
Completed work for a customer and immediately collected P2,200 cash for the work.
Purchased P3,800 of office equipment on credit.
Completed work for a customer on credit in the amount of P2,400.
Purchased P1,920 of office supplies on credit. (Office Supplies)
Paid P3,800 cash for the office equipment purchased on July 10.
Billed a customer P5,000 for work completed; the balance is due in 30 days.
Received P2,400 cash for the work completed on July 15.
Paid an assistants salary of P1,260 cash for this month. (Salary Expense)
Paid P260 cash for this months utility bill.
P. Lopez withdrew P1,200 cash for personal use.

6
8
10
15
17
23
25
28
30
31
31
Required:
1. Analyze the transactions and indicate the effects on the elements of the accounting equation
using the table below. Indicate (+) for increases and (-) for decreases

2. Journalize the following transactions and post them to their individual ledgers using the
following accounts Cash; Accounts Receivable; Office Supplies; Office Equipment;
Excavating Equipment; Accounts Payable; P. Lopez Capital; P. Lopez, Withdrawals; Revenues;
and related expense accounts. Omit explanations on the ledgers.
3. Prepare the trial balance.
Problem 2
Parisha Sharma started a new business, Elegant Solutions, that completed the following transactions
during its first year of operations:
a. P. Sharma invests P95,000 cash and office equipment valued at P20,000 in the business.
b. Purchased a P120,000 building to use as an office. Moody paid P20,000 in cash and signed a
c.
d.
e.
f.
g.
h.
i.
j.
k.

note payable promising to pay the P100,000 balance over the next ten years.
Purchased office equipment for P20,000 cash.
Purchased P1,400 of office supplies and P3,000 of office equipment on credit.
Paid a local newspaper P400 cash for printing an announcement of the offices opening.
Completed a financial plan for a client and billed that client P1,800 for the service.
Designed a financial plan for another client and immediately collected a P2,000 cash fee.
P. Sharma withdrew P5,000 cash from the company bank account for personal use.
Received P1,800 from the client described in transaction f.
Made a P2,000 cash payment on the equipment purchased in transaction d.
Paid P2,000 cash for the office secretarys wages.

Required:

1. Analyze the transactions and indicate the effects on the elements of the accounting equation
using the table below. Indicate (+) for increases and (-) for decreases

2. Journalize the transactions and post them to the individual ledgers using the following
accounts: Cash; Accounts Receivable; Office Supplies; Office Equipment; Building; Accounts
Payable; Notes Payable; P. Sharma Capital; P. Sharma Withdrawals; Service Income; Advertising
Expense and Wages Expense.
3. Prepare a trial balance in good form.
Problem 3. Shelton Engineering completed the following transactions in the month of June.
a. Shania Shelton, the owner, invested P105,000 cash, office equipment with a value of P6,000,
and P45,000 of drafting equipment to launch the business.
b. Purchased land worth P54,000 for an office by paying P5,400 cash and signing a long-term
note payable for P48,600.
c. Purchased a portable building with P75,000 cash and moved it into the land acquired in b.
d. Paid P6,000 cash for the premium on an 18-month insurance policy.
e. Completed and delivered a set of plans for a client collected P5,700 cash.
f. Purchased P22,500 of additional drafting equipment by paying P10,500 cash and signing a
long-term note payable for P12,000.
g. Completed P12,000 of engineering services for a client. This amount is to be received in 30
days.
h. Purchased P2,250 of additional office equipment on credit.
i. Completed engineering services for P18,000 on credit.
j. Received a bill for rent of equipment that was used on a recently completed job. The P1,200
rent must be paid within 30 days.
k. Collected P7,200 cash in partial payment for the client describe in transaction g.
l. Paid P1,500 cash for wages to a drafting assistant.
m. Paid P2,250 cash to settle the account payable created in transaction h.
n. Paid P675 cash for minor repairs to the drafting equipment.
o. Sheldon withdrew P9,360 cash for personal use.
p. Paid P1,500 cash for wages to a drafting assistant.
q. Paid P3,000 cash for advertisements in the local newspaper during June.
Required:
1. Prepare general journal entries to record these transactions (use the account titles listed in
part 2).
2. Open the following accounts --- their account numbers are in parenthesis (use the balance
column format ): Cash (101); Accounts Receivable (106); Prepaid Insurance (108); Office
Equipment (163); Drafting Equipment (164); Building (170); Land (172); Accounts Payable
(201); Notes Payable (250); S. Shelton, Capital (301); S. Shelton, Withdrawals (302);
Engineering Fees Earned (402); Wages Expenses (601); Equipment Rental Expense (602);
Advertising Expense (603); an Repairs and Expense (604). Post the journal entries from part
1 to the accounts and enter the balance after each posting.
3. Prepare a trial balance as of the end of this months operations.

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