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Accounting Cycle - Part I - Problems

This document contains 4 problems related to accounting transactions for a maintenance services business. The first problem lists accounts and asks to analyze transactions, assigning them to debit or credit columns. The second problem asks about accounting elements and whether increases or decreases are debited or credited for different accounts. The third problem provides transactions for a new plumbing business and asks to record them in T-accounts and prepare a trial balance. The fourth problem asks to prepare adjusting entries for different situations at year-end.

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290 views

Accounting Cycle - Part I - Problems

This document contains 4 problems related to accounting transactions for a maintenance services business. The first problem lists accounts and asks to analyze transactions, assigning them to debit or credit columns. The second problem asks about accounting elements and whether increases or decreases are debited or credited for different accounts. The third problem provides transactions for a new plumbing business and asks to record them in T-accounts and prepare a trial balance. The fourth problem asks to prepare adjusting entries for different situations at year-end.

Uploaded by

Wenjun
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Name: Date:

Instructor: Score:

Problem 1

The following accounts are used by Geofredo Cadelina Maintenance Services:


1. Cash 6. Notes Payable 11. Rent Expense
2. Accounts Receivable 7. Accounts Payable 12. Repairs Expense
3. Supplies 8. Cadelina, Capital
4. Prepaid Insurance 9. Cadelina, Withdrawals
5. Equipment 10. Service Revenues

Cadelina Maintenance Services completed the following transactions:


Debit Credit
a. Paid for supplies purchased on account last month. ____________ ____________
b. Billed customers for service performed. ____________ ____________
c. Paid the current months’ rent. ____________ _____________
d. Purchased supplies on credit. ____________ ____________
e. Received cash from customers for services performed. _____________ ____________
f. Acquired equipment on account. ____________ ____________
g. Received a bill for repairs. ____________ _____________
h. Returned part of the equipment purchased in (f) for credit. ____________ ____________
i. Received cash from customers previously billed. ____________ ____________
j. Paid the bill received in (g). ____________ ____________
k. Booked an appointment for services. ___________ ____________
l. Paid for repairs with cash. ___________ ____________
m. Made cash withdrawals. ___________ ____________

Required: Analyze each transaction and show the accounts affected by entering the
corresponding numbers in the appropriate debit or credit column. Indicate no entry, if
appropriate.

Problem 2

Complete the following table by stating the accounting element of each account, and whether
increases and decreases in the accounts are represented by a debit or credit entry. For example:
Accounts Element Increase Decrease
Supplies Asset Debit Credit

Accounts Element Increase Decrease


a. Service Revenues
b. Withdrawals
c. Utilities Expense
d. Unearned Rent income
e. Cash in Bank
f. Trade Payables
g. Salaries Expense
h. Accrued interest expense
i. Fixtures and Fittings
j. Interest Expense
k. Loans Payable
l. Accrued Income

Problem 3
May Omotot opened a plumbing service, Alabang Plumbing. Operations began on April 1,
2021, and the following transactions were completed during the month:
Withdrew P67,000 from a personal savings account and used it to open a new
April 1
account in the name of Alabang Plumbing.
Acquired a service vehicle costing P81,000. A payment of P17,500 in cash was
2
made and a note payable given for the P63,500 remainder.
3 Paid rent for the month, P7,150.
6 Acquired plumbing supplies on account P15,700.
Paid for three months of advertising and recorded Prepaid Advertising in the
7
amount of P6,000.
8 Cash in the amount of P18,350 was received for plumbing services rendered.
9 Acquired additional plumbing supplies for cash, P8,050.
11 Paid salaries, P11,600.
15 Rendered plumbing services and billed the customer, P42,200.
16 Paid P5,700 of the amount owed from the transaction of April 6.
19 Paid miscellaneous expenses, P4,300.
20 Collected P21,000 from the customer on the April 15 transaction.
21 Withdrew P14,500 from the business.
22 Paid salaries, P14,100.
24 Paid the first installment of the note payable, P3,850.
25 Paid telephone expense, P1,250.
27 Billed the Clement Resort for plumbing services rendered, P14,150.

Required:
1. Establish the following T-accounts: Cash; Accounts Receivable; Plumbing Supplies; Prepaid
Advertising; Service Vehicle; Notes Payable; Accounts Payable; Omotot, Capital; Omotot,
Withdrawals; Plumbing Revenues; Salaries Expense; Rent Expense; Telephone Expense; and
Miscellaneous Expense.
2. Record the transactions directly into the T-accounts using the dates of the transactions to
identify each transaction.
3. Prepare a trial balance.

Problem 4

Prepare the adjusting entry for Christine Gamba Cargo under each of the following for the year
ending December 31, 2020:
a. Paid P24,000 for a 1-year fire insurance policy to commence on September 1. The amount
of premium was debited to Prepaid Insurance.
b. Borrowed P100,000 by issuing a 1-year note with 7% annual interest to Century Savings
Bank on October 1, 2020.
c. Paid P160,000 cash to purchase a delivery van (surplus) on January 1. The van was
expected to have a 3-year life and a P10,000 salvage value. Depreciation is computed on
a straight-line basis.
d. Received an P18,000 cash advance for a contract to provide services in the future. The
contract required a 1-year commitment, starting April 1.
e. Purchased P6,400 of supplies on account. At year-end, P750 of supplies remained on
hand.
f. Invested P90,000 cash in a certificate of deposit that paid 4% annual interest. The
certificate was acquired on May 1 and carried a 1-year term to maturity.
g. Paid P78,000 cash in advance on September 1 for a 1-year lease on office space.

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