Date Account Titles Dr

Cash 2,000,000

1 Owner's Capital

to record the owner’s investment to the business

Equipment 1,000,000

2 Cash
to record the acquisition of equipment for cash

Cash 500,000
3 Notes Payable
to record the bank loan

Prepaid Insurance 160,000

4 Cash
to record the prepayment of insurance

Cash 2,000,000
Accounts Receivable 4,000,000
5
Service Fee
to record service fees

Cash 1,800,000
6 Accounts Receivable
to record collection of accounts receivable

Salaries Expense 1,200,000

7 Cash
to record salaries expense
Utilities Expense 500,000
8 Cash
to record utilities expense
Prepaid Supplies 120,000
9 Cash
to record purchase of supplies

Owner's Drawing 1,400,000

10 Cash
to record owner’s drawings
 Cr REPORT
BS
2,000,000 BS

BS
1,000,000 BS

BS
500,000 BS

BS
160,000 BS

BS
BS
6,000,000 IS

BS
1,800,000 BS

IS
1,200,000 BS

IS
500,000 BS

BS
120,000 BS

BS
1,400,000 BS
I. ASSETS

CASH Accounts receivable

1 2,000,000 5 4,000,000
2 1,000,000 6 1,800,000
3 500,000
4 160,000
5 2,000,000
6 1,800,000
7 1,200,000
8 500,000 BAL 2,200,000
9 120,000
10 1,400,000
BAL 1,920,000

Prepaid Insurance Prepaid Supplies

4 160,000 9 120,000

160,000 120,000

Equipment
2 1,000,000

1,000,000

II. LIABILITIES
Notes Payable
500,000
BAL 500,000

III. EQUITY
Owner's capital Owner's drawings
2,000,000 1,400,000

2,000,000 1,400,000

IV. INCOME

Service Fees
6,000,000

6,000,000

V. EXPENSE
Salaries Expense Utilities Expense
1,200,000 500,000

1,200,000 500,000
 Entity A
Unadjusted Trial Balance
December 31, 20x1

Accounts Debits Credits

Cash 1,920,000
Accounts receivable 2,200,000
Prepaid insurance 160,000
Prepaid supplies 120,000
Equipment 1,000,000
Notes payable 500,000
Owner's capital 2,000,000
Owner's drawings 1,400,000
Service fees 6,000,000
Salaries expense 1,200,000
Utilities expense 500,000
Totals 8,500,000 8,500,000
 Date Account Titles Dr Cr
IS Depreciation expense (1M ÷ 10 yrs.) 100,000
BS (i) Accumulated depreciation 100,000
to record the depreciation expense for the year

IS Interest expense (500K x 12% x 6/12) 30,000

BS (ii) Interest Payable 30,000
to accrue interest expense

IS Insurance expense (160K x 3/12) 40,000

BS (iii) Prepaid insurance 40,000
to recognize insurance expense

IS Supplies expense (120K – 40K) 80,000

BS (iv) Prepaid supplies 80,000
to recognize supplies expense
Principal 500,000.00
Interest rate 12%
Interest 60,000.00
Interest from 30,000.00
 11,450,000

Date Account Titles Dr

Service Fees 6,000,000
Salaries Expense
Utilities Expense
Depreciation Expense
Dec. 31, 20x1 Interest Expense
Insurance Expense
Supplies Expense
Income Summary
to close income and expense accounts to income summary
Income Summary 4,050,000
Dec. 31, 20x1 Owner's Equity
to close the income summary to equity

Owner's Equity 1,400,000

Dec. 31, 20x1 Owner's Drawing
to close the drawings account
11,450,000

Cr

1,200,000
500,000
100,000
30,000
40,000
80,000
4,050,000

4,050,000

1,400,000
 Unadjusted TB Adjustments
Debits Credits Debits
Cash 1,920,000
Accounts receivable 2,200,000
Prepaid insurance 160,000
Prepaid supplies 120,000
Equipment 1,000,000
Notes payable 500,000
Owner's capital 2,000,000
Owner's drawings 1,400,000
Service fees 6,000,000
Salaries expense 1,200,000
Utilities expense 500,000
8,500,000 8,500,000
Adjustments:
Depreciation expense 100,000
Interest expense 30,000
Insurance expense 40,000
Supplies expense 80,000
Accumulated Depreciation
Interest Payable

Total 250,000.00
Income Summary (Profit or Loss)
Adjustments Adjusted TB Income Statement Balance Sheet
Credits Debits Credits Debits Credits Debits
1,920,000 1,920,000
2,200,000 2,200,000
40,000 120,000 120,000
80,000 40,000 40,000
1,000,000 1,000,000
500000
2000000
1,400,000 1,400,000
6000000 6000000
1,200,000 1,200,000
500,000 500,000

100,000 100,000
30,000 30,000
40,000 40,000
80,000 80,000
100,000 100000
30,000 30000

250,000.00 8,630,000 8,630,000 1,950,000.00 6,000,000.00 6,680,000

4,050,000.00
6,000,000.00 6,000,000.00 6,680,000
Balance Sheet Closing entries Post closing entries
Credits Debits Credits Debits Credits
1,920,000
2,200,000
120,000
40,000
1,000,000
500,000.00 500000
2,000,000.00 2,650,000 4,650,000
1,400,000 0
6,000,000.00
1,200,000
500,000

100,000
30,000
40,000
80,000
100,000.00 100,000.00
30,000.00 30,000.00

2,630,000 6,000,000.00 6,000,000.00 5,280,000 5,280,000

4,050,000.00
6,680,000
 Entity A
Balance Sheet
As of December 31, 20x1

ASSETS
Cash ₱1,920,000
Accounts receivable 2,200,000
Prepaid insurance 120,000
Prepaid supplies 40,000
Equipment 1,000,000
Accumulated depreciation -100,000
TOTAL ASSETS ₱5,180,000

LIABILITIES
Notes payable 500,000
Interest payable 30,000
TOTAL LIABILITIES 530,000

EQUITY
Owner's equity 4,650,000
TOTAL EQUITY 4,650,000

TOTAL LIABILITIES & EQUITY ₱5,180,000

 Entity A
Income Statement
For the month ended December 31, 20x1

INCOME
Service Fees ₱6,000,000

EXPENSES
Salaries expense 1,200,000
Utilities expense 500,000
Depreciation expense 100,000
Interest expense 30,000
Insurance expense 40,000
Supplies expense 80,000
TOTAL EXPENSES 1,950,000

PROFIT FOR THE PERIOD ₱4,050,000

 Changes in Owner's Equity
As of December 31, 20x1

Owner's Capital 2,000,000

Owner's Drawing -1,400,000
Net Income 4,050,000
Owner's Equity 4,650,000