INTRODUCTION TO ACCOUNTING

Practice Exercises

Exercise 1: The Accounting Equation

Problem 1.1

ASSETS LIABILITIES EQUITY

a. P50,000 P30,000

b. P132,560 P45,781

c. P230,856 P1,231,980

d. P36,000 P234,974

e. P1,376,079 P453,960

f. P1,906,785 P1,004,564

g. P2,543,786 P1,008,971

h. P800,001 P1,987,865

i. P1,890,675 P934,980

j. P789,005 P456,075

Problem 1.2

ASSETS LIABILITIES EQUITY

a. P2,560,000 P345,879

b. P3,786,370 30% of Asset 70% of Asset

c. P560,000 25% of Asset

d. P872,000 60% of Asset

e. P456,000 (40% of Asset)

f. P384,750 (135% of Equity)

g. P202,725 (45% of Equity)

 INTRODUCTION TO ACCOUNTING:
Practice Exercises
By Sydie Vern P. Estaniol
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h. P287,161 (70% of
Liabilities)

i. P237,756 (60% of Asset)

j. 1,457,300 (125% of
Liabilities)

Problem 1.3

EQUITY INVESTMENT REVENUE EXPENSE DRAWINGS

a. P3,450,760 P2,456,765 P1,706,865 P340,000

b. P4,500,657 P2,455,765 P1,567,035 P1,500,000

c. P5,670,322 P2,394,706 P3,706,800 P567,000

d. P3,768,985 P3,450,086 P5,450,005 P1,007,005

e. P2,564,912 P5,000,541 P1,043,765 P2,300,543

Problem 1.4

ASSET LIABILITIES EQUITY(end) INVESTMENT REVENUE EXPENSE

a. P2,450,000 P345,000 P1,567,000 P234,345

b. P398,765 P1,907,907 P459,801 P234,806

c. P2,387,777 P1,235,750 P1,590,000 P345,000

d. P3,675,980 P2,576,250 P560,877 P230,547

e. P3,876,991 P4,564,876 P1,800,400 P1,877,943

Problem 1.5
a. George opened a laundry shop business, named Summa Cum Laundry. She invested
P300,000 worth of cash from her personal savings.
b. She bought five washing machines, each costing P15,000, from the cash she invested.
c. She also bought supplies, like detergents and fabric conditioners worth P10,500.
d. George received a revenue worth P30,400 from her laundry services.
e. At the same time, she paid the business’ expenses, costing P10,000.

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 INTRODUCTION TO ACCOUNTING:
Practice Exercises
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Problem 1.6
a. Faye started a computer shop business on January 1. She invested P570,000 worth of
cash, of which 50% is from the loan she obtained from the bank.
b. Aside from the cash mentioned above, she also invested P500,000 worth of computers.
c. On January 12, she bought office supplies worth P12,000 on account.
d. On the same date, Faye bought another set of computers worth P25,000 also on account.
e. On January 15, she then paid 25% of the office supplies purchased on January 12 with
cash.
f. On January 23, Faye paid the remaining balance of the office supplies purchased on
January 12.
g. On January 29, the business used P5,000 worth of office supplies.
h. The computer shop received cash for the revenue totaling P75,000 for the month of
January.
i. In line with this, the business paid expenses totaling P23,000, which includes utilities,
maintenance, and salaries.
j. Faye withdrew P10,000 for her personal use.

Problem 1.7
a. On February 3, Ed Seran started a beauty salon business. He named it Cutting Class. He
invested P540,000 worth of cash, P450,000 worth of equipment, and P150,000 worth of
furniture.
b. On February 4, he bought salon supplies worth P42,000 and paid immediately.
c. On February 5, he bought another set of furniture worth P35,000 on account.
d. On February 7, Karen walked to the salon and set a rebonding appointment on February
16. She immediately paid cash worth P7,000 to set the deal.
e. Because it’s Valentine's Day, the salon created the promo, “Kulot Now, Bayad Later”. All
of its customers didn’t pay cash that day, amounting to P76,000.
f. On February 15, Ed Seran, the owner, paid the full amount of the furniture he bought on
February 5.
g. On February 16, the salon rendered rebonding service to Karen who set an appointment
on February 7.
h. On February 18, Ed Seran decided to take a loan from Rich Bank worth P500,000 for the
expansion of his business.
i. All of his customers from Valentine’s Day went to the salon to pay their balances for the
“Kulot Now, Bayad Later” promo.
j. Ed Seran counted all the salon supplies and there are P15,000 worth remaining.
k. The business received billing statements for their utilities expense totaling P28,000.
l. Ed Seran paid P50,000 for the loan he took from the bank on February 18.
m. At the end of the month, Ed withdrew P50,000 for his personal use.

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 INTRODUCTION TO ACCOUNTING:
Practice Exercises
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Exercise 2: Journal Entries and T-Account

Problem 2.1
a. George opened a laundry shop business, named Summa Cum Laundry. She invested
P300,000 worth of cash from her personal savings.
b. She bought five washing machines, each costing P15,000, from the cash she invested.
c. She also bought supplies, like detergents and fabric conditioners worth P10,500.
d. George received a revenue worth P30,400 from her laundry services.
e. At the same time, she paid the business’ expenses, costing P10,000.

Problem 2.2
a. Faye started a computer shop business on January 1. She invested P570,000 worth of
cash, of which 50% is from the loan she obtained from the bank.
b. Aside from the cash mentioned above, she also invested P500,000 worth of computers.
c. On January 12, she bought office supplies worth P12,000 on account.
d. On the same date, Faye bought another set of computers worth P25,000 also on account.
e. On January 15, she then paid 25% of the office supplies purchased on January 12 with
cash.
f. On January 23, Faye paid the remaining balance of the office supplies purchased on
January 12.
g. On January 29, the business used P5,000 worth of office supplies.
h. The computer shop received cash for the revenue totaling P75,000 for the month of
January.
i. In line with this, the business paid expenses totaling P23,000, which includes utilities,
maintenance, and salaries.
j. Faye withdrew P10,000 for her personal use.

Problem 2.3
a. On February 3, Ed Seran started a beauty salon business. He named it Cutting Class. He
invested P540,000 worth of cash, P450,000 worth of equipment, and P150,000 worth of
furniture.
b. On February 4, he bought salon supplies worth P42,000 and paid immediately.
c. On February 5, he bought another set of furniture worth P35,000 on account.
d. On February 7, Karen walked to the salon and set a rebonding appointment on February
16. She immediately paid cash worth P7,000 to set the deal.
e. Because it’s Valentine's Day, the salon created the promo, “Kulot Now, Bayad Later”. All
of its customers didn’t pay cash that day, amounting to P76,000.
f. On February 15, Ed Seran, the owner, paid the full amount of the furniture he bought on
February 5.
g. On February 16, the salon rendered rebonding service to Karen who set an appointment
on February 7.

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h. On February 18, Ed Seran decided to take a loan from Rich Bank worth P500,000 for the
expansion of his business.
i. All of his customers from Valentine’s Day went to the salon to pay their balances for the
“Kulot Now, Bayad Later” promo.
j. Ed Seran counted all the salon supplies and there are P15,000 worth remaining.
k. The business received billing statements for their utilities expense totaling P28,000.
l. Ed Seran paid P50,000 for the loan he took from the bank on February 18.
m. At the end of the month, Ed withdrew P50,000 for his personal use.

Problem 2.4
Napakaputing Ina Laundry Company entered into the following transactions in September:

September 1 Invested cash from personal savings, P400,000.

September 3 Paid rent for three months, starting September, on laundry equipment rented,
P15,000 per month.
September 6 Performed laundry services for P22,250 cash.
September 8 Secured an order from a customer for laundry and ironing services of P7,200. The
services are to be performed next month.
September 13 Performed laundry services for P16,350 on account for various customers.
September 15 Received and paid a bill for P4,300 for supplies to be used in operations.
September 23 Cash collected from customers on account, P12,600.
September 30 Paid P22,400 salaries to employees for September.
September 30 Received the electric and gas bill for September, P38,500, but did not pay it at this
time.
September 30 Incurred rent expense for the month on the laundry equipment.

Problem 2.5
The transactions listed below are those of Jhepoy Dizon Computer Repair for May 2020:

May 1 Cash of P1,500,000 was received from the owner’s personal investment.
May 3 Office supplies were purchased by cash, P9,500.
May 6 Furniture and Fixtures were purchased for P556,000 by cash.
May 7 Office equipment was purchased on account from Baba Company for P576,800.
May 14 Salaries for the first two weeks were paid, P22,000.
May 15 P298,000 was received for services performed.
May 18 An invoice was received from Roger’s Gas Station for P4,350 for gas and oil used
during May.
May 23 A note was arranged with the bank for P80,000. The cash was received, and a
note promising to return the P80,000 on May 31, 2021, was signed.
May 29 Office supplies decreased by P3,500.
May 30 Salaries for the remainder of May were paid, P22,000.

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Practice Exercises
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Problem 2.6
Ms. Inocencia Magdiwang has finally put up her dream repair business on the first day of
December 2019. She named it Sparks Electric Repair Services. Below are the following
transactions of the business.

a. On December 1, 2019, Ms. Inocencia Magdiwang started Sparks Electronic Repair

Services by investing P90,000.
b. On December 5, Sparks Electronic Repair Services paid registration and licensing fees
for the business, P15,000.
c. On December 6, the shop acquired tables, chairs, shelves, and other fixtures for a total of
P33,000. The entire amount was paid in cash.
d. On December 7, the company acquired service equipment for P23,000. The company
paid a 50% down payment and the balance will be paid after 60 days.
e. Also on December 7, Sparks Electronic Repair Services purchased service supplies on
account amounting to P11,500.
f. On December 9, the company received P21,900 for services rendered.
g. On December 12, the company rendered services on account, P14,250. As per agreement
with the customer, the amount is to be collected after 10 days.
h. On December 14, Ms. Magdiwang invested an additional P53,200 into the business.
i. Rendered services to a big corporation on December 15. As per agreement, the P23,400
amount due will be collected after 30 days.
j. On December 22, the company collected from the customer in Transaction G.
k. On December 23, the company paid some of its liability in Transaction E by issuing a
check. The company paid P5,500 of the P11,500 payable.
l. On December 25, the owner withdrew cash due to an emergency need. Ms. Magdiwang
withdrew P17,000 from the company.
m. On December 29, the company paid rent for December, P12,500.
n. On December 30, the company acquired a P50,000 short-term bank loan; the entire
amount plus a 10% interest is payable after 1 year.
o. On December 31, the service supplies decreased to P5,000.
p. On December 31, the company paid salaries to its employees, P23,500.

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 INTRODUCTION TO ACCOUNTING:
Practice Exercises
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Exercise 3: Trial Balance

Problem 3.1
Gregorio Macalintal started an auditing and accounting service business that he named Papa
Audit Accounting Firm. On the first day of the year, he put up cash worth P550,000 into the
business, of which 65% is from the loan he obtained from the bank.

Jan 2 An amount of P36,000 was paid as advance rent for three months.
Jan 3 Paid P60,000 cash on the purchase of equipment costing P80,000. The
remaining balance was recognized as a one year note payable with an
interest rate of 12%.
Jan 4 Purchased office supplies costing P17,600 on account.
Jan 13 Provided services to its clients and received P28,500 in cash.
Jan 13 Paid the accounts payable on the office supplies purchased on January 4.
Jan 14 Paid wages to its employees for the first two weeks of January, aggregating
P34,100.
Jan 18 Provided P54,100 worth of services to its clients. They paid P32,900 and
promised to pay the remaining amount.
Jan 23 Received P15,300 from customers for the services provided on January 18.
Jan 25 Received P4,000 as an advance payment from clients.
Jan 26 Purchased office supplies costing P5,200 on account.
Jan 28 Paid wages to its employees for the third and fourth week of January:
P34,100.
Jan 31 Incurred one month worth of rent from the prepaid rent.
Jan 31 Received an electricity bill of P2,470.
Jan 31 Received a telephone bill of P1,494.
Jan 31 Miscellaneous expenses paid during the month totaled P3,470

Problem 3.2
Kiko Halimuyak set up a massage parlor in May 2020, named Halimuyak Massage Services. He
initially invested P400,000, where 50% came from the loan he obtained from First Bank.

May 3 P50,000 were paid as advance rent for five months.

May 4 Office supplies were purchased on account totaling P16,000.
May 6 Services were provided to customers, receiving P58,000 in cash.
May 7 The accounts payable for office supplies purchased on May 4 was paid.
May 7 P100,000 in cash was used to purchase equipment costing P360,000. The
remaining P260,000 became a one year note payable with interest rate of 5.2%.
May 9 Office supplies were purchased on account totaling P23,500.

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May 12 Services were provided to customers, receiving P42,500 on account.

May 13 Forty percent of the accounts payable for office supplies purchased on May 9 was
paid.
May 14 Employees were paid wages for May 3-May 14 totaling P56,000.
May 14 Services were provided to customers totaling P226,320. Customers paid P63,680
with a promise to pay P162,640 remaining balance in the future.
May 20 The remaining balance of the accounts payable for office supplies purchased on
May 9 was paid.
May 27 Customers paid P43,000 in advance for services to be received next month.
May 28 The company incurred wage expenses for the final weeks of May, totaling
P56,000, to be paid next month.
May 28 Electricity bill was received totaling P36,750.
May 28 Phone bill was received totaling P28,755.
May 31 Miscellaneous expenses for the month paid were totaled at P15,340.
May 31 Rent expense was incurred for the month.
May 31 The remaining office supplies totaled P10,000 at the end of the month.
May 31 The company estimated that 10% of the remaining accounts receivable balance
will not be collected.

Problem 3.3
Coco Macapuno has been fired from her previous job and decided to put up a printing business.
On July 1, she established Coco-pon Bond Printing Services. The following are the business’
transactions for the month of July:

1. On July 3, 2020, Coco invested P240,000 cash from the separation pay he received.
2. On July 5, 2020, he purchased equipment on account for P130,500, payment due within
the month. It is estimated to have five years of useful life with no salvage value.
3. On July 9, 2020, the business received P24,000 cash in advance from a customer for
services not yet rendered.
4. On July 10, 2020, he provided P15,500 in services to a customer who asks to be billed for
the services.
5. On July 12, 2020, the business paid a P7,300 utility bill with cash.
6. On July 14, 2020, Coco withdrew P23,000 cash for his son’s tuition fee.
7. On July 17, 2020, he received P12,800 cash from a customer for services rendered.
8. On July 18, 2020, Coco paid in full for the equipment purchased on July 5.
9. On July 20, 2020, the business paid P23,600 cash in salaries expense to employees.
10. On July 23, 2020, he received cash payment in full from the customer on the July 10
transaction.
11. On July 27, 2020, he provided P11,200 in services to a customer who asked to be billed
for the services.
12. On July 30, 2020, he purchased supplies on account for P4,500, payment due within three
months.

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13. On July 31, 2020, the company incurred depreciation expense for the month.

Problem 3.4
Biba Raketera Advertising Company started its operations in November 2020. Viva Rocketeer,
the owner, invested P700,000 worth of cash. The following are the transactions occurred during
its first month:

November 8 An amount of P120,000 was paid for six months of rent of the building.
November 9 Equipment costing P200,000 was purchased in cash. It was estimated to have
eight years of useful life with no salvage value.
November 10 Office supplies were purchased totaling P36,000 on account.
November 16 Received P169,400 in cash for services rendered to customers.
November 16 Paid the account for office supplies purchased June 10.
November 20 P263,900 worth of services were given to customers. Received cash amount of
P143,700. Customers promised to pay the remaining amount of P120,200.
November 21 Paid employees’ salaries for November 8-21. Salaries totaled P73,500.
November 21 Received P120,200 in cash for services rendered to customers on November 20.
November 22 Received P56,300 in cash as advance payment from customers.
November 24 Services were rendered amounting to P240,000 to be paid in the near future
November 27 Office supplies were consumed, with P15,450 worth remaining.
November 28 Electricity bill received totaling P25,850.
November 28 Phone bill received totaling P12,950.
November 28 Miscellaneous expenses paid totaled P42,320.
November 29 Rent expense incurred for the month of November.
November 30 Depreciation expense for the month of November is incurred.
November 30 It was estimated that 5% of the accounts receivable will remain uncollectible.

Problem 3.5
Zootopia Pet Grooming Shop opened on the first day of January 2020. Cookie Zubiri, the owner,
invested P1,960,000.

January 2 Rent was paid in advance for a full year totaling P120,000.
January 3 Equipment costing P500,000 was purchased. It has an estimated life of 10 years,
with no residual value. P310,000 was paid in cash, and the remaining amount of P190,000 was
a one year note payable with an interest rate of 5.3%.
January 3 Office supplies were purchased on account totaling P340,000.
January 4 Services were provided to customers, and the company received P570,000 in
cash.
January 6 The accounts payable for office supplies purchased on January 3 was paid.
January 7 Services were rendered totaling P375,000. Customers paid P135,000 in cash and
promised to pay the remaining balance in the future.
January 9 Office supplies were purchased on account totaling P65,000.

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January 10 Customers paid P140,000 for services made on January 7, leaving a balance of
P100,000.
January 11 Employees were paid salaries totaling P48,750 for the first two weeks of January
2020.
January 12 The accounts payable for office supplies purchased on January 9 was paid.
January 15 Customers paid P50,000 for services made on January 7, leaving a balance of
P50,000.
January 17 Office supplies were purchased in cash for P75,000.
January 21 Customers paid P35,000 for sales made on January 7, leaving a balance of
P15,000.
January 22 Services were rendered, and the company received P225,000 in cash.
January 24 Customers paid P65,000 in advance for services to be rendered.
January 25 Employees were paid salaries totaling P48,750 for the third and fourth weeks of
January 2020.
January 26 Customers paid the balance made on January 7.
January 28 Office supplies were expensed, decreased by P215,000.
January 30 Services were provided to customers worth P765,000 to be paid in the future.
January 31 Depreciation expense was incurred for the month.
January 31 Rent expense was incurred for the month.
January 31 Miscellaneous expenses for the month were paid totaled to P750,000.
January 31 The company estimated that only 90% of the remaining accounts receivable will
be collected.

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