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    Accounting

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    Anne Alag
    1) The document provides 10 journal entries recording various business transactions including the owner's initial capital contribution, purchase of inventory and equipment, sales, expenses, and adjustments. 2) The accounting equation is updated after each transaction showing the effect on assets, liabilities, and equity. 3) Additional journal entries are provided for a plumbing business that record initial investment, purchases, income from services, and an expense. 4) The transactions are posted to T-accounts to update ledger accounts and prepare an unadjusted trial balance.

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    Accounting

    Uploaded by

    Anne Alag
    55 views4 pages
    1) The document provides 10 journal entries recording various business transactions including the owner's initial capital contribution, purchase of inventory and equipment, sales, expenses, and adjustments. 2) The accounting equation is updated after each transaction showing the effect on assets, liabilities, and equity. 3) Additional journal entries are provided for a plumbing business that record initial investment, purchases, income from services, and an expense. 4) The transactions are posted to T-accounts to update ledger accounts and prepare an unadjusted trial balance.

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    1) The document provides 10 journal entries recording various business transactions including the owner's initial capital contribution, purchase of inventory and equipment, sales, expenses, and adjustments. 2) The accounting equation is updated after each transaction showing the effect on assets, liabilities, and equity. 3) Additional journal entries are provided for a plumbing business that record initial investment, purchases, income from services, and an expense. 4) The transactions are posted to T-accounts to update ledger accounts and prepare an unadjusted trial balance.

    Copyright:

    © All Rights Reserved
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
    55 views4 pages

    Accounting

    Uploaded by

    Anne Alag
    1) The document provides 10 journal entries recording various business transactions including the owner's initial capital contribution, purchase of inventory and equipment, sales, expenses, and adjustments. 2) The accounting equation is updated after each transaction showing the effect on assets, liabilities, and equity. 3) Additional journal entries are provided for a plumbing business that record initial investment, purchases, income from services, and an expense. 4) The transactions are posted to T-accounts to update ledger accounts and prepare an unadjusted trial balance.

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    Practice Exercises on Business Transactions and their Analysis and Posting to the Ledger

    I. Journal Entries and Accounting Equation


    A. Journal Entry:
    1. Cash 600,000
    Owner’s Capital 600,000
    To record owner’s contribution to the business.

    2. Cash 400,000
    Notes Payable 400,000
    To record loan obtained by the owner.

    3. Inventory 200,000
    Cash 200,000
    To record purchase of inventory on cash basis.

    4. Inventory 500,000
    Accounts Payable 500,000
    To record purchase of inventory on account.

    5. Accounts Receivable 900,000


    Sales 900,000
    To record sales of inventory on account.

    Cost of Sales 400,000


    Inventory 400,000
    To record cost of goods sold of inventory.

    6. Accounts Payable 400,000


    Cash 400,000
    To record payment of accounts payable.

    7. Cash 500,000
    Accounts Receivable 500,000
    To record collection of accounts receivable.

    8. Equipment 480,000
    Cash 480,000
    To record purchase of equipment on cash basis.
    9. Owner’s Drawing 10,000
    Cash 10,000
    To record withdrawal of cash by owner.

    10. Interest Expense 5,000


    Cash 5,000
    To record payment of interest.

    B. Effect on Basic Accounting Equation

    ASSETS = LIABILITIES + EQUITY

    1. Cash 600,000 Owner’s Capital 600,000

    2. Cash 400,000 Notes Payable 400,000

    3. Inventory 200,000
    Cash (200,000)

    4. Inventory 500,000 Accounts Payable 500,000

    5. Accounts Receivable Sales 900,000


    900,000
    Inventory (400,000) Cost of Sales (400,000)

    6. Cash ( 400,000) Accounts Payable


    (400,000)

    7. Cash 500,000
    Accounts
    Receivable (500,000)

    8. Equipment 480,000
    Cash (480,000)

    9. Cash (10,000) Owner’s Drawings


    (10,000)

    10. Cash ( 5,000) Interest Expense (5,000)

    Totals P 1,585,000 = P 500,000 + P 1,085,000

    II. Posting and Unadjusted Trial Balance


    A. Journal Entries:
    Date Particulars Debit Credit
    March 1 Cash 20,000
    Owner’s Capital 20,000
    To record initial investment of owner.

    2 Equipment 10,000
    Cash 10,000
    To record acquisition of tools on cash basis.

    4 Prepaid Supplies 2,000


    Cash 2,000
    To record purchase of supplies.

    25 Cash 40,000
    Service Fee 40,000
    To record cash received for plumbing services rendered.

    26 Accounts Receivable 20,000


    Service Fee 20,000
    To record income earned on account for plumbing services rendered.

    31 Advertising Expense 2,000


    Cash 2,000
    To record payment on advertising.

    B. Posting to the Ledger: ( T- accounts )


    ASSETS

    Cash Accounts Receivable


    3/1 20,000 10,000 3/2 3/26 20,000
    2,000 ¾
    3/25 40,000 2,000 3/31
    Bal. 46,000 Bal. 20,000

    Prepaid Supplies Equipment


    ¾ 2,000 3/2 10,000

    Bal. 2,000 Bal. 10,000

    EQUITY

    Owner’s Capital
    20,000 3/1
    20,000 Bal.

    INCOME

    Service Fee
    40,000 3/25
    20,000 3/26
    60,000 Bal.

    EXPENSES

    Advertising Expense
    3/31 2,000

    Bal. 2,000

    C. Unadjusted Trial Balance:

    The Good Plumber


    Unadjusted Trial Balance
    March 31, 20x1

    Account Debit Credit


    Cash P46,000
    Accounts Receivable 20,000
    Prepaid Supplies 2,000
    Equipment 10,000
    Owner’s Capital P20,000
    Service Fee 60,000
    Advertising Expense 2,000
    Totals P80,000 P80,000

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