ASSET = LIABILITES + CAPITAL
Business Transaction
Service Business:
1 Putting capital into the business, either cash & non-cash assets
June Makabayan put-up a men salon shop by investing the
following into his business:
Cash - P50,000
Equipments - P170,000
Furnitures - P60,000
2 Purchasing supplies needed in the business
June made cash purchase of supplies - P5,000
June purchased supplies on account - P3,0000
3 Recording service income
June Makabayan received cash of P20,000 from a group of clients.
June billed and amount of P15,000 for service rendered to a wedding event.
4 Recording of expenses
June recorded rent expense P6,000 to be paid at the end of the month.
June paid salaries amounting to P7,000.
5 Collection of receivables
June collected full amount from the wedding event.
6 Payment of payables
June paid 50% of supplies purchased on account.
Principles
Asset = Liabilities + Capital
Increase in Asset = Increase in Liabilities
Decrease in Asset = Decrease in Liabilities
Increase in one asset/ decrease in another = zero
Increase in Asset = Increase in Capital
Decrease in Asset = Decrease in Capital
Increase in Liabilities & Decrease in Capital = zero
AMOUNT ASSET = LIABILITIES +
Account Title (Owned) Account Title (owe)
50,000 Cash 50,000 =
170,000 Equipments 170,000 =
60,000 Furnitures 60,000 =
5,000 Supplies 5,000 =
Cash -5,000
3,000 Supplies 3,000 = Accounts Payable 3,000
20,000 Cash 20,000 =
15,000 Accounts Receivable 15,000 =
6,000 0 = Accrued Rent 6,000
7,000 Cash -7,000 =
15,000 Cash 15,000 =
Accounts Receivable -15,000
3,000 Cash -3,000 = Accounts Payable -3,000
308,000 6,000
308,000 308,000
Purchase on account or Expense incurred on account
Payment of liabilities
Purchase of asset paying cash
investment by owner or receive income
Withrawals by owne or incurring expenses
Incurring expenses on account
+ CAPITAL
Account Title (net worth)
J. Makabayan, Capital 50,000
J. Makabayan, Capital 170,000
J. Makabayan, Capital 60,000 280,000
Shop Revenue 20,000
Shop Revenue 15,000
Rent Expense -6,000
Salaries Expense -7,000
302,000
Chap 3 Ex 5
Business Transaction
Service Business: AMOUNT
Account Title
Balances Cash
Cash 60k; ap 100k
Accounts receivable 10,000 Accounts receivable
Car 120,000 Car
Equipment & Car from Notes P. 500,000 Equpment
Payment of Notes 250,000 Cash
Cash
Accounts Receivable
Car
Equipment
ASSET = LIABILITIES + CAPITAL
(Owned) Account Title (owe) Account Title (net worth)
200,000 Capital 200,000
Accounts P. 100,000
10,000
120,000
380,000 Notes Payable 500,000
-250,000 Notes Payable -250,000
60,000 Accounts Payable 100,000
10,000 Notes Payable 250,000
120,000 Red Capital beg 200,000
380,000 Increase in capital 20,000
Red Capital end 220,000
570,000 570,000
Chapter 3 - # 14 & Chapter 4 ex 8
Chapter 3 - # 14
Cash Supplies Rent Deposit
March 1 350,000
5 N/A
10 -10,000 10,000
15 -68,000
20 -1,500 1,500
25 -150,000
120,500 1,500 10,000
Account
Chapter 4 ex 8 Cash Receivable Supplies Rent Deposit
March 31 120,500 1,500 10,000
April 2 -300
5 -2,815
8 -500
12 -5,750
18 -1,500
20
25 -5,000
30 18,500 500
30 -10,000
30 -750
113,135 500 750 10,000
Net
Fr Operation Financing Investing
Income
Taxes & Licenses -3615 -3,615
Communication -5750 -5,750
Salaries -10000 -10,000
Rent -5000 -5,000
Utilities -800 -
Supplies -750 -750
Internet & LAN
19,000 18,500
Games
-6915
Operating -6,615
Investment 350,000
Drawings -1,500
Rent deposit -10,000
Leasehold
-15,000
Improvement
Furniture &
-8,000
Fixtures
Supplies -750
Equipment -195,000
Total -7,365 348,500 -228,000
Cash balance end 113,135
0
Leasehold
Furniture and Fixture Equipment Improvement Notes payable
8,000 45,000 15,000
300,000 150,000
8,000 345,000 15,000 0 150,000
500,000 500,000
Leasehold Accounts
Furniture and Fixture Equipment Improvement Notes payable Payable
8,000 345,000 15,000 0 150,000
800
8,000 345,000 15,000 0 150,000 800
492,385 492,385
0
Playnet Com
Income Statement
For the month of April
Internet, On-line and Lan Games Fees 19,000
Less Operating Expenses:
Taxes & Licenses Expenses 3,615
Communication Expenses 5,750
Utility Expenses 800
Rent Expense 5,000
Salaries Expense 10,000
Supplies Expense 750 25,915
Net income (loss) -6,915
Playnet Com
Statement of changes in capital
For the month of April
De Dios, Capital beg. 350,000
Withrawals -1,500
Net Income (loss) -6,915
De Dios, Capital end 341,585
Playnet Com
Balance Sheet
As of April 30
ASSETS LIABILITIES AND OWNER'S EQUITY
Cash 113,135 Current Liabilities:
Account Receivable 500 Notes payable
Supplies 750 Accounts Payable
Rent Deposit 10,000
Total Current Assets 124,385 Total Liabilities
Furniture and Fixture 8,000
Equipment 345,000
Leasehold Improvement 15,000 De Dios Capital, end
Total Noncurrent Assets 368,000
TOTAL ASSETS 492,385 TOTAL LIABILITIES & OWNER'S EQUITY
De Dios Capital
350,000
350,000
Explanation of
De Dios Capital Changes
350,000 in Equity
-300 Taxes & Licenses Expenses
-2,815 Taxes & Licenses Expenses Internet, On-line and Lan Games Fees
-500 Taxes & Licenses Expenses Less Expenses:
-5,750 Communication Expenses Salaries Expense
-1,500 De Dios, Withrawals Taxes & Licenses Expenses
-800 Utility Expenses Communication Expenses
-5,000 Rent Expense Rent Expense
19,000 Internet, On-line and Lan Games Fees Utility Expenses
-10,000 Salaries Expense Supplies Expenses
-750 Supplies Expense Net Income (loss)
341,585
Cash 113,135
Account Receivable 500
Supplies 750
Rent Deposit 10,000
Total current assets 124,385
Furniture and Fixture 8,000
Equipment 345,000
Leasehold Improvement 15,000
Total Noncurrent
assets 368,000
Total Assets 492,385
150,000
800
150,800
341,585
492,385
0
19,000
10,000
3,615
5,750
5,000
800
750 25,915
-6,915
Accounts Payable 800
Notes payable 150,000
Total Liabilities 150,800
De Dios Capital,
beg. 350,000
De Dios, withrawals -1,500
Net Loss -6,915
De Dios Capital, end 341,585
492,385
Exercise
Chano. 5
Customer/Client Supplier/Service Provider
1 PAL BOEING
2 Unnamed client NOKIA
3 Unnamed customer TELECOM
4 Condotel Ayala Corp.
Exercise 7 ASSET
Accounts
Cash Receivable Medical Supplies
BEG BAL 54,200 3,850
A 40,000
B. -15,000
C. 10,000 10,000
D. -15,000
E. 8,025
F. 12,450
G. 13,000 -13,000
H. -850
-250
-400
I. -3,980
J. -10,000
75,700 5,025 12,320
Service income
Rent expense
Salaries expense
Repair expense
Utility expense
Medical Supplies expense
Owners equity
Less withrawals
Net income
Value of Delivery Truck
Depreciation Expense - for 1 year
Depreciation Expense - for 1 month
Depreciation Expense - to be recognized
Balance Sheet ( Dec 31, 2020)
Delivery Truck
Less accumulated depreciation
Net book value
Income statement
Recognize
Depreciation expense
After a year (Dec 31, 2021)
Income statement
Recognize
Depreciation expense
Balance Sheet
Delivery Truck
Less accumulated depreciation
Net book value
31
Obligation Contract price Downpayment Balance Agreement
manufacture and deliver AircP156 M 31 Million P125M; 80% 20% dp, bal 5 equal instal
build IT system P10 Million Payment as work progress
deliver 90 computer set in 3 P13 Million P6.5 M P6.5 M 50% DP, balance upon full delivery
build 30 floor condominion anP300 Million; P15M Allocated price between th
= LIABILITIES + CAPITAL
Accounts Dr Galing
Medical Equipment Payable Capital
75,000 25,000 108,050
40,000 Service Income
-15,000
20,000 Service Income
-15,000 Rent expense
8,025 Service Income
12,450
-850 Salaries expense
-250 Repair expense
-400 Utility expense
-3,980 Medical Supplies expense
-10,000 Dr. Galing, withrawals
75,000 22,450 145,595
168,045 168,045
68,025 Cash 75,700
Accounts
15,000 Receivable 5,025
Medical
850 Supplies 12,320
Medical
250 Equipment 75,000
400 Total Assets 168,045
Accounts
3,980 20,480 Payable 22,450
Dr Galing
47,545 Capital 145,595
168,045
108,050 0
-10000
47,545
145,595
1,500,000
150,000 1 year
12,500 12 months
75,000 July 1 -Dec 31; 6months
1,500,000
75,000
1,425,000
75,000
150,000
1,500,000
225,000
1,275,000
Revenue recognition
Boeing in time upon delivery
Nokia, overtime upon ownership or control, work can be measured progressively using input measure such as cost to cost me
ce upon full delivery
Work in progress cost method; cost to cost method
e such as cost to cost method.
