PROBLEM SET 1

Problem 1
a. Purchased equipment for cash at a cost of $3,200
b. Received $900 cash payment from Mr. Tolentino on an account.
c. Purchased an equipment from XYZ company which costs $13,500. The company agreed to pay a
down payment of $3,500 and the balance will be paid after a year.
d. Paid the existing $14,500 balance to Aldub inc.
e. P. Youngblood decided to invest his $15,000 cash in HMC.
f. Purchased equipment for $2,100 on account.

Problem 2
A. JOURNAL ENTRY

Date Transaction Debit Credit

Sept.
01 Cash   5,000  

    Louis Dixon, capital   5,000

Owner invested cash in
the business
Sept.
10 Land   106,000  

  Building   76,400  

    Cash   36,500

    Note Payable   145,900

Purchased Land and
Building for Cash and
Note Payable
Sept.
15 Computer System   4,680

    Cash   4,680
To record purchase of
Computer System for
Cash
Sept.
19 Office Furnishings   5,760  

    Cash   960

    Accounts Payable   4,800

 Purchased Office
Furnishings for Cash and
Accounts Payable
Sept.
26 Accounts Receivable   140  

    Computer System   140

To record the return of
Computer System on
Accounts Receivable
Sept.
28 Accounts Payable   1,600  

    Cash   1,600
Paid cash as an
installment for Office
Furnishings
Sept.
30 Cash   140  

    Accounts Receivable   140

Receive cash against
Accounts Receivable

B. There is a big debt while starting the business. When liabilities are higher than owner’s equity, it
is possible to have a risk in business- where gaining profit in the future will be harder. The
obligations are higher because of buying a lot. However, since lot value is possible to increase, it
can be great investment.

LEDGER

Dates Cash
Sep-01 5000  
Sep-10   36,500
Sep-15   4680
Sep-19   960
Sep-28   1600
Sep-30 140

Dates Louis Dixon Capital

Sep-01   5000
 

Dates Land
 Sep-10 106,000  

Dates Building
Sep-10 76,400  

Dates Note Payable

Sep-10   145900
 

Dates Computer System

Sep-15 4680  
Sep-26   140

Dates Office Furnishings

Sep-19 5760  
 

Dates Acocunts Payable

Sep-19   4800
Sep-28 1600
 

Dates Accounts Receivable

Sep-26 140  

Problem 3
2 a. Accounts Receivable is increased. Increase in assets are recorded by debits. Debit
Account Receivable, $5,620.00
b. Service has been rendered to a client. Revenues are recorded by credits. Credit
Repair Service Revenue, $5,620.00
3 a. The asset cash was increased. Increase in assets are recorded by Debits. Debit
Cash, $2,830.00
b. Service has been rendered to a client. Revenues are recorded by Credits. Credit
Repair Service Revenue, $2,830.00
4 a. Advertisement is an operating Expense. Expenses are recorded by debits. Debit
Advertising Expense, $165.00
 b. Liabilities are increased. Increase in Liabilities are recorded in Credits. Credit
Accounts Payable, $ 165.00
5 a. The asset cash was increased. Increase in assets are recorded by Debits. Debit
Cash, $5,620.00
b. The asset Accounts Receivable was decreased. Decrease in assets are recorded by
Credits. Credit Accounts Receivable, $5,620.00
6 a. The asset cash was increased. Increase in assets are recorded by Debits. Debit
Cash, $400.00
b. The asset Accounts receivable was increased. Increase in assets are recorded by
Debits. Debit Accounts Receivable, $1490.00
c. Service has been rendered to a client. Increase in revenue are recorded by Credits.
Credit Repair Service Revenue, $1,890.00
7 a. Liabilities were decreased. Decreased in liabilities are recorded by Debits. Debit
Accounts Payable, $165.00
b. The asset cash was decreased. Decrease in cash are recorded by Credits. Credit
Cash, $165.00
8 a. Withdrawal of cash decreases owner's equity. Withdrawals are recorded by Debits.
Debit Garwood, Withdrawal $7,600.00
b. The asset Cash was decreased. Decrease in cash are recorded by Credits. Credit
Cash, $7,600.00

Date Transaction Debit Credit

Aug-01 Rent Expense   4,400  

    Cash   4,400
  Paid for rent during August    

Aug-03 Accounts Receivable 5,620  

    Repair Service Revenue   5,620

  Repairs on boat of Michael Fay billed to Kiwi Insurance    

Aug-09 Cash A/C   2,830

    Repair Service Revenue   2,830

  Collected Cash for repairs to Dennis Conner's boat.    

Aug-14 Advertisement Expense 165  

    Accounts Payable   165

  Advertisement in Yachting World, payable in 30 days    

Aug-25 Cash   5,620  

    Accounts Receivable   5,620

  Collected Cash in full from Kiwi Insurance, Inc.    
Aug-26 Cash    
 400

  Accounts Receivable 1,490  

    Repair Service Revenue   1,890

Repairs on independent partial payment received;
  balance due within 30 days.    

Aug-30 Accounts Payable 165  

    Cash   165
To record payment in Cash in full to Yachting World  
Aug-31 Barbra Garwood, Drawing 7600  
    Cash   7600

PROBLEM 4

ADJUSTED ENTRIES

Adjusting    
Supplies
Mar-31 Expense  

    Office Supplies
Depreciation
Expense:
  Building  
Accumulated
    Depreciation: Building
Depreciation
Expense: Office
  Equipment  
Accumulated
Depreciation: Office
    Equipment
Closing    

Income
Mar-31 Summary  
    Advertising Expense
    Automobile Rental
 Expense
    Salaries Expense
    Telephone Expense
    Supplies Expense
Depreciation Expense:
    Building
Depreciation Expense:
    Office Equipment

Commissions
  Earned  

    Income Summary
Income
  Summary  

    M. Valentino, Capital
M. Valentino,
  Capital  

    M. Valentino, Drawing