Occidental Mindoro State College

College of Business, Administration, and Management

Basic Accounting

Name: Date:
Section: Score:

Problem #1A
Elements of Financial Statements
Assets Liabilities Owner’s Equity
a. 760, 000 360, 000 400, 000
b. 860, 000 268, 000 592, 000
c. 868, 000 108, 000 760, 000
d. 626, 600 376, 200 250, 400
e. 700, 000 800, 000 (100, 000)

Required: Fill in the amount of the missing element of financial position.

Problem #1B

a. Jimmy Delgado Pest Control has assets of P600, 000 and owner’s equity of P450, 000.
Liabilities P150, 000
b. Margie Clavano Realtors has liabilities of P530, 000 and owner’s equity of P410, 000.

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Assets P940, 000
c. Marco Fuentes Plumbing Contractor has assets of P473, 000 and liabilities of P153, 700.

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Owner’s Equity P626, 700. eH w
d. Ryan Morales Acting Studio has liabilities of P147, 000 and owner’s equity of P236, 500.

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Assets P383, 500.
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e. Fely Monarca Dance has assets of P624, 000 and liabilities of P237, 000.
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Owner’s Equity 387, 000.

Required: Compute the amount of the missing element of financial position.

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Problem #1C
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a. At the beginning of the year, the assets of Cleofe Arib Services were P360, 000 and its owner
equity was P250, 000. During the year, assets increase by P120, 000 and liabilities increased by
P20, 000. What was the owner’s equity at the end of the year? P350, 000
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b. At the beginning of the year, Cora Gabayan Calling Station had liabilities of P100, 000 and
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owner’s equity of P96, 000. If assets increased by P40, 000 and liabilities decreased by P30, 000,
what was the owner’s equity at the end of the year? P166, 000.

c. The liability of Lenore loqueloque Company equal one-third of the total assets, and owner’s
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equity is P240, 000. What is the amount of liabilities? P120, 000

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Required: Use the accounting equation to answer each of the question above.

Problem #2A
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Income and Expenses

Income Expenses Profit (Loss)
a. 840, 000 480, 000 360,000
b. 2, 400, 000 1, 860 000 540, 000
c. 1, 300, 000 860, 000 440, 000
d. 2, 720, 000 2, 000, 000 720, 000
e. 1, 400, 000 1, 800, 000 (400, 000)

Problem #2B
a. Small accounting firm has income of P325, 000 and expenses of P237, 000.
Profit P88, 000
b. An advertising agency has expenses of P163, 000 and profit of P42, 000.
Income P205, 000
c. A computer-training outfit has expenses of P153, 000 and loss of P27, 500.
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 Income P125, 500
d. A medical practitioner has income of P737, 000 and profit of P168, 000.
Expenses P569, 000
e. An environment consultant has income of P362, 000 and loss of P20, 000.
Expenses P382, 000

Required: In each of the preceding five situations, determine the amount of the missing element of
performance.

Problem #3
Transaction Effects on the Basic Accounting Model
The following are some transactions of Juanita Pineda Laundry Services:
A L OE
a. Received cash as additional investments ___+__ __0___ __+__
b. Purchase supplies on account. ___+__ __+___ __0__
c. Charges customers for services made on account. ___+__ __0___ __+__
d. Rendered services to cash customers. ___+__ __0___ __+__
e. Paid cash for rent on building. ___-__ __0___ ___-__
f. Collected on account receivable in full. ___0__ __0___ __0__
g. Paid cash for supplies ___0__ __0___ __0__
h. Returned supplies purchased on account. __-___ __-___ __0__

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i. Paid cash to settle accounts __-___ __-___ __0__

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j. Paid cash to owner for personal use. __-___ __0___ __-__

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Required: For each transaction, indicate whether the assets (A), Liabilities (L) or Owner’s Equity (OE)
increased (+), decreased (-) or did NOT change (0) by placing the appropriate sign in appropriate column.

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Problem #4
Transaction Effects on the Basic Accounting Model

Transaction A L OE
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a. Bought equipment, paying cash __0___ ___0__ __0__

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b. Paid the monthly rent expense __-___ ___0__ __-__

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c. Purchased supplies on credit __+___ ___+__ __0__

d. Maid an additional investment in the company. __+___ ___0__ __+__
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e. Charged customers for services provided on account __+___ ___0__ __+__

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f. Paid creditor on account. __-___ __-___ __0__

g. Received payment from customers on account __+___ __+___ __0__
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h. Received cash for services rendered today __+__ __0___ __+__

i. Acquired equipment, paying 50% down
payment, the balance due in 30 days. __+___ __+___ __0__
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j. Paid salaries for the week __-___ __0___ __-__

k. Permanently reduced his investment
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in the business by taking out cash. ___-__ ___0__ __-__

Required: For each transaction, indicate whether the assets (A), Liabilities (L) or Owner’s Equity (OE)
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increased (+), decreased (-) or did NOT change (0) by placing the appropriate sign in appropriate column.

Problem #5
Transactions in a Completed Worksheet

Asuncion Alcala, to be able to guide the accountancy students in their pursuits for CPA glory, established
the AA Tutorial Services. On May 1, 2019, she contributed P70, 000 as investment to start the business.
During the month, she entered into several transaction. Note that she made withdrawals during the month.
The following is transaction worksheet prepared by her student-assistant.

Accounts Office Accounts Notes Alcala,

Cash + Receivable + Equipment = Payable + Payable + Capital

1. +70, 000 +70, 000

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 3. + 30, 000 +10, 000 +20, 000
4. +18, 000 +18, 000
5. -5, 000 -5, 000
6. +7, 000 +7, 000
7. -10, 000 -10, 000
8. +15, 000 +15, 000
9. -7, 000 -7, 000

Required:
1. Describe each of the above transactions. Kayo na bahala magimagine class, imagination nyo
ang limit.
2. If these transactions represent the operations of AA Tutorial Services during the month of May,
what was the amount of profit or loss before depreciation? P13, 000

Problem #6
Owner’s Equity Transactions
___I___ A. Received cash for rendering services.
__OW__ B. Withdrew cash for personal expenses.
__NO__ C. Received cash from a customer who have been rendered service on account.
__OI___ D. Transferred personal assets to the business.
__E____ E. Paid a service station for gasoline for a business service vehicle.
__I_____ F. Performed a service and received a promise of payment.

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__NO___ G. Paid Cash to acquire equipment.

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__E_____ H. Paid cash to an employee for services rendered.

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Required: Identify the foregoing transactions by identifying each as either one of the following: Owner’s
Investment (OI), Owner’s Withdrawal (OW), Income (I), Expense (E) or not an Owner’s Equity

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Transaction (NO).
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Problem #7
Classification of Events
a. SA Received cash investment from the owner.
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b. UA Paid cash on accounts payable

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c. EA Collected cash from accounts receivables

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d. UA Made cash distribution to the owner

e. UA Paid cash for rent expense
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f. EA Invested cash in time deposit

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g. EA Purchased land with cash

h. SA Performed services for clients on account.
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i. EC Incurred operating expenses on account

j. SA Performed services for cash
Required: Indicate whether each of the above transactions is a Source of Assets (SA), Use of Assets
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(UA), Exchange of Assets (EA), or Exchange of Claims (EC) transaction.

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Problem #8
Classification of events as to Source, Use or Exchange of Assets
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Selected transactions:
a. Set-up a salon business with cash investment from owner.
b. Hired an experienced salon general manager and five all-around staff.
c. Paid rent deposit and advance rent on the Dasmarinas, Cavite salon space.
d. Received cash proceeds of clean loan from the Bank of the Philippines Islands.
e. Finalized plans with the architect for the salon physical set-up and renovations.
f. Paid for 50% of the renovation costs.
g. Bought salon equipment with cash
h. Renovations completed. Balance payable within 30 days from actual completion.
i. Purchased salon supplies with cash
j. Proved services for cash.
k. Owner withdrew cash for personal use.
l. Paid for operating expenses.
m. Bought a commercial condominium near Paseo de Sta. Rosa for future expansion; 30% cash
down, balance
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 n. Received cash for services that have been performed.
o. Paid part of the clean loan.

Required: Identify each of the above unrelated events as a source, use or exchange of assets
transaction. Some events may not be recordable under current accounting practice. In this case, classify
the events as not applicable (n/a). Also for each event, indicate whether total assets will increase,
decrease or remain unchanged.

Type of Event Effect on Total Assets

A Source of assets Increase
B N/A Remain Unchanged
C Exchange of assets Remain Unchanged
D Source of Assets Increase
E N/A Remain Unchanged
F Exchange of Assets Remain Unchanged- If treated as
Fixed Assets
G Exchange of Assets Remain Unchanged
H Source of Assets Increase
I Exchange of Assets Remain Unchanged
J Source of assets Increase
K Use of Assets Decrease
L Use of Assets Decrease
M Source of Assets Increase

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And Exchange of Assets

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N Source of assets Increase

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O Use of Assets eH w Decrease

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Problem #9
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Recording transactions in a Financial Transaction Worksheet
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Rochelle Ramirez is the owner of the Olongapo Repair Specialist. On Jan. 1, 2019, the assets, liabilities
and proprietor’s capital of the business were: Cash, P25, 000; Accounts Receivable, P4, 000; Supplies,
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P5, 000; Equipment, P60, 000; Accounts Payable, P9, 000; Ramirez, Capital, P85, 000. The transactions
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for the month of January were as follows:

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Cash + Accounts Supplies + Equipment = Accounts Ramirez,

Receivable + Payable + Capital
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Jan. 1 P25,000 + P4, 000 + P5, 000 + P60, 000 = P9, 000 + P85, 000
Balance
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A Bal. 25, 000 9, 000

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(3, 000) (3, 000)

Bal. 22, 000 P4, 000 + P5, 000 + P60, 000 = 6, 000 P85, 000
B Bal. 22, 000 4, 000
1, 000 (1, 000)
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Bal. 23, 000 3, 000 P5, 000 + P60, 000 = P 6, 000 P85, 000
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C 5, 000 6, 000
+ 2, 500 + 2, 500
Bal. 23, 000 P3, 000 7, 500 P60, 000 = 8, 500 P85, 000
D Bal. 23, 000 60, 000
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12, 000 (12, 000)

Bal. 35, 000 P3, 000 P7, 500 48, 000 P8, 500 P85, 000
E Bal. 35, 000 8, 500
10, 000 + 10,000
Bal. 45, 000 P3, 000 P7, 500 P48, 000 18, 500 P85, 000
F Bal. 45, 000 18, 500
(2, 000) (2, 000)
Bal. 43, 000 P3, 000 P7, 500 P48, 000 16, 500 P85, 000
G Bal. 43, 000 48, 000 16, 500
(2, 000) 10, 000 + 8,000
Bal. 41, 000 P3, 000 P7, 500 58, 000 24, 500 P85, 000
H Bal. 41, 000 7, 500
(1, 650) + 1 650
Bal. 39, 350 P3, 000 9, 150 P58, 000 P24, 500 P85, 000
I Bal. 39, 350 85, 000
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 Bal. 41, 850 P3, 000 P9, 150 P58, 000 P24, 500 87, 500

a. Paid P3, 000 of the outstanding accounts payable.

b. Received P1, 000 on account (part payment) from customers.
c. Purchased P2, 500 worth of supplies on account (on credit).
d. Returned a defective piece of equipment that was purchased last month and received a cash
refund of P12, 000.
e. Borrowed P10, 000 cash from a supplier, to repay the loan in 30 days.
f. Paid creditor P2, 000 on account (part payment).
g. Purchased equipment for P10, 000 giving P2, 000 cash and Promising to pay the balance in 60
days.
h. Bought supplies, paying P1, 650 cash.
i. Received a P2, 500 check from customer on account.

Required: Record the transactions using a financial worksheet.

Problem #10
Effect of Transactions on the Accounting Equation

Liwayway Ables, after receiving her degree in computer science, started her own business, Bicol
Technologies. She completed the following transactions during the month:

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May 2 Deposited P90, 000 in the bank and contributed a systems library valued at P39, 000 to start the

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business.

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3 Paid office rent for the month, P3, 600.
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9 Acquired computer equipment for cash, P70, 000.
10 Purchased computer supplies on credit.

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11 Received payment from a client for programming done, P28, 000.
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12 Billed a client on completion of a programming project, P7, 100.

May 16 Paid salaries, P8, 000.
23Received a partial payment from the client billed on May 12, P6, 100
27Withdrew P2, 500 for personal expenses.
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30 Made a partial payment on the supplies purchased, P3, 000.

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Required:
1. Established the following accounts in Financial Transaction Worksheet: Cash; Accounts
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Receivable; Computer Supplies; Compuetr Equipemnt; Systems Library; Accounts Payable; and
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Ables. Capital.
2. Record in the worksheet the transactions listed above. Be able to identify each owner’s equity
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transaction by type.

Problem #11
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Entering Initial Balances and Recording Transactions

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Presented below is the balance sheet for the Leopoldo Medina Nursing Home:

Leopoldo Medina Nursing Home

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Balance Sheet
As of December 31, 2018

Assets

Cash P 16, 000

Accounts Receivable 165, 000
Supplies 21, 000
Land 90, 000
Nursing Home 350, 000
Nursing Equipment 160, 000
Total Assets P 802, 000
Liabilities and Owner’s Equity

Liabilities
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 Accounts Payable P 47, 000
Notes Payable 350, 000
Total Liabilities 397,000
Owner’s Equity
Medina, Capital 405, 000
Total Liabilities and Owner’s Equity P 802, 000

During the month of January 2011, the following transactions took place:

January 2 Acquired supplies on account, P17, 500.

6 Collected P82, 000 from patients for services provided in 2018.
10 Acquired nursing equipment on account, P35, 000.
11 Billed patients P167, 000 for nursing fees.
12 Paid P31, 000 on accounts payable.
17 Paid nursing salaries, P24, 000.
20 Paid utilities expense, P9, 000.
25 Medina withdrew P10, 000 from the business.
27 Received a bill from Ryan Morales Ad Company for P12, 500 for advertising expense
incurred during the month.
31 Paid P15, 000 of the notes payable.
Required:

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1. Enter the Dec. 31, 2018 financial transaction worksheet.

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2. Record the transactions for the month of January 2011.

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REFERENCE:
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Name of Book: BASIC ACCOUNTING- Made Easy

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Authors: WIN BALLADA, CPA, MBA and SUSAN BALLADA, CPA
Edition: 2010 Issue- 15th Edition
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