UNIVERSAL COLLEGES OF PARANAQUE, INC.

COLLEGE OF BUSINESS AND ACCOUNTANCY

FINANCIAL ACCOUNTING AND REPORTING 1

PROBLEM 1:
Teddy Fedor a Gold and Driving Range business on July 1, 2014. The following transactions occurred
during the month of July.
1 – He contributed P250,000 cash and borrowed P200,000 more from the bank by issuing a one year
promissory note in the name of the golf range.
2 – Bought the land P100,000, building P200,000 and golf equipment P100,000 of Lyn Golf Course
whose business was closed down.
3 – Hired a manager whose monthly salary will be P25,000 and two ground personnel who will be paid a
monthly salary of P15,000.
5 – Promo materials to advertise the golf range were paid in cash, P10,000
9 – Cash of P25,000 was received for tickets sold to use the golf range. Use the title Ticket Sales Revenue
12 – Purchased supplies for P1,500 on account
15 – Paid the half month salary of the manager and ground personnel
17 – Withdrew cash P5,000 for personal use
20 – Received P35,000 membership fees entitling holders to use the golf range. Use the title Membership
Fees Revenue
23 – Cash of P20,500 was received for tickets sold
26 – Paid P2,500 for the bank loan
29 – Paid P25,000 for the bank loan
30 – Paid for the second half monthly salaries
Instructions:
Show the effects of the above transactions on the accounting equation using the following format
A = L + E + I - Ex

Date Cash Supplies Land Building Equipment Notes Fedor, Changes Account
Payable Capital in Title
Capital
7/1 400,000 200,000 200,000

UNIVERSAL COLLEGES OF PARANAQUE, INC.

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PROBLEM 2:
Mabel Wong began a professional practice as system analyst on July 1. She plans to prepare monthly
financial statements. During July the owner completed these transactions.
1 – Owner invested P50,000 cash along with furniture and fixtures that had a P20,000 market value two
years ago but was now worth P10,000 only.
2 – Paid P25,000 cash for July rent (including P500 water bill) of a fully furnished office space at the
Madrigal Building
4 – Purchased P120,000 worth of state-of-the-art equipment on credit for thirty monthly installment
payments.
6 – Purchased office supplies for cash, P2,500.
8 – Completed work for a client and immediately collected P32,000 cash
10 – Billed a client P25,000 for work completed to be collected within 30 days
15 – Paid an assistant P6,200 cash as wages for 15 days
18 – Collected P15,000 cash on the amount owed by the client
25 – Owner withdrew P5,000 cash for personal use
28 – Paid the first installment to settle the liability on the equipment purchased
30 – Paid salary of assistant
31 – Received PLDT bill, P1,800 and Meralco bill, P3,800
Used up P2,000 worth of supplies

Required:
Analyze the above transactions in an accounting equation table using the following column headings:
Cash; Accounts Receivable; Office supplies; Equipment; Accounts Payable; Notes Payable; Utilities
Payable; Wong Capital; Explanation of Changes in Capital. Then use addition (+) and subtraction (-) to
show the effects of the transactions on the individual accounts of the accounting elements. Show balances
after all transaction are recorded. (Maintain the equality of the accounting equation).

UNIVERSAL COLLEGES OF PARANAQUE, INC.

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PROBLEM 3:
Angel De Jesus, a business graduate student who was working as a mere employee in a company called
Think Computer, decided to become an entrepreneur and put up an internet shop. The following are the
transactions for the start up transactions for March:

1 – Angel started an internet shop called “Playnet.com” by investing her savings of P50,000 and the
proceeds from the sale of her car which amounted to P300,000
5 – Angel hired two workers to assist her in the shop for a monthly salary of P6,000 each worker.
10 – Lessor (owner) of the ship required her to pay two months rent deposit in cash, P10,000
15 – Paid cash of P8,000 for furniture bought from Alexis Furniture Store.
18 – Bought an air con unit for P45,000 payable in installments of P15,000 every month for three months
starting April 18. (Use the title installment payable)
20 - Purchased supplies and paid cash of P1,500
25 – The shop was ready for the installation of computer units. Angel purchased 12 units of computer
hardware from Think PC. She paid 50% in cash P125,000 and a note for the balance payable in 24
monthly installment starting April 25. Use the title notes payable.

Required:
Analyze the transactions using the following accounts for the assets and liabilities: Cash; Supplies, Rent
Deposit, Furniture and Fixtures; Equipment; Installments Payable and De Jesus Capital.

UNIVERSAL COLLEGES OF PARANAQUE, INC.

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PROBLEM 4:
Listed below are several transactions for Jo’s Health Spa for June 2014.

4 – Jo Valdez invested P1,500,000 cash and a vacant lot worth P300,000 in a health clinic called Jo’s
Health Spa
8 – Purchased for cash P900,000 worth of equipment and P15,000 worth of supplies from National Book
Store
10 – Bought furniture and fixtures from a friend at a cost of P150,000 promising to pay after 7 days. Only
P80,000 of these were placed in the clinic, the remaining furniture and fixtures were placed in her newly
built house.
12 – Applied for a P2,500,000 business loan from a bank mortgaging her farm. She plans to use this to
construct the clinic.
14 – Withdrew supplies worth P1,000 for personal use
15 – The loan was approved and the money deposited in the name of the business which Valdez opened
on the same date
17 – Paid cash for one half of the account due on the furniture and fixtures
30 – A two-story clinic was constructed on the vacant lot. The construction cost was P1,500,000 and was
paid out of the cash borrowed from the bank.

Required
Analyze the transactions in an accounting equation.

UNIVERSAL COLLEGES OF PARANAQUE, INC.

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PROBLEM 5:
Given are selected transactions for Lyn Gardner, an interior decorator in January.
2 – Invested P100,000 cash to start an interior decorating business
3 – Paid P6,000 cash for advertising P5,000 and for rent P1,000
9 – Purchased equipment for P70,000. Paid P20,000 and issued a note for the balance
11 – Billed customers P12,300 for services performed
16 – Purchased supplies on account for P7,000
20 – Received P11,000 cash from customers billed on Jan. 11
23 – Paid creditor P4,000 cash on balance owed
25 – Paid P1,200 for food spent in entertaining clients
30 – Cash withdrawn for personal needs, P1,000
31 – Used up P5,000 of supplies purchased

Required
Analyze the transactions in an accounting equation.

UNIVERSAL COLLEGES OF PARANAQUE, INC.

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 PROBLEM 6:

Cas Accounts Office Office Deliver Accounts Deer, Deer, Deliver Rent Wages
h Receivable Supplie Equipment y Van Payable Capital Drawing y Fees Expens Expense
s s Earned e

The June transactions for Reindeer Delivery Service are given below, Use the following accounts;

1 – Max Deer invested P60,000 cash to open a delivery service for the OFWs
2 – Purchased a delivery truck for P250,000 from Hi Ace, on credit
3 – Purchased office supplies for P3,750 cash
5 – Purchased P27,050 of office equipment on credit
6 – Received P15,000 cash as fees for services provided to overseas contract workers
8 – Paid cash to settle 50% of the payable for the office equipment purchased on June 5.
10 – Billed a customer P27,000 as fees for services of the customer
12 – Paid P15,000 cash for the monthly rent
13 – Collected P11,250 cash for the accounts of the customers
15 – Max Deer withdrew P1,000 cash from the company for personal use.

Required
Analyze the transactions in an accounting equation.

UNIVERSAL COLLEGES OF PARANAQUE, INC.

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PROBLEM 7:
Alice Huerto opened her business called Arrow Janitorial and Maintenance Services in October.

1 – Miss Huerto made a cash investment of P200,000

2 – Purchased furniture and fixtures from Bless on account P30,000
8 – Purchased from Avesco office equipment and was required to pay 50% for P15,000, the balance of
50% on account.
12 – Received a bill for the printing of leaflets to advertise her business, P5,000.
20 – Received P30,000 in cash as payment for maintenance contracts
21 – Paid Avesco in full of account
25 – Billings for janitorial services, to date:
M.Y. San for P40,000 in cash
SPUMS P50,000 of which 50% was collected in cash
29 – Paid P17,500 for utilities
30 – Paid for salaries of clerks and janitors, P8,000
31 – Collected from SPUMS 50% of its account balance

Required
Analyze the transactions in an accounting equation.

UNIVERSAL COLLEGES OF PARANAQUE, INC.

LFL
PROBLEM 8:
Dr Ignacio Skin Care Clinic. The following are the transactions during the month of March;

1 – Dr. Ignacio made a cash investment of P500,000 to open a clinic at Horizon Plaza
5 – Purchased medical equipment from Riviera Medical Supplies for P90,000. Terms: 50% cash, balance
payable in two installments, with first installment due at the end of the month.
10 – Purchased supplies for P17,850 and paid cash
12 – Bought office equipment from Delta Equipment P15,000 on credit
15 – Professional Care Fees of P65,000 represented total fees earned. Only P50,000 were received in
cash, the balance is due from Mr. Mateo P6,000 and Ms. Myrasol P9,000.
19 – Paid Delta Equipment one half of the outstanding account
20 – Utility expense paid P8,500
25 – Payment of P25,000 were made for rent, P15,000 and advertising P10,000
27 – Professional care fees each and collected amounted to P45,000 including one third of Ms. Myrasol’s
account
29 – The first installment on the medical equipment bought was paid in cash
30 – Salaries of a nurse and medical intern were paid in cash, P36,000
31 – Supplies used, P13,500
31 – Summary of collection in cash amounted to P30,000 including one half of Mr. Mateo’s account.

Required
Analyze the transactions in an accounting equation.

UNIVERSAL COLLEGES OF PARANAQUE, INC.

LFL