NATIONAL UNIVERSITY

Manila, Philippines
College of Business & Accountancy
Department of Accountancy
SY 2021 -2022
BAINTE1X: Integrated Accounting Fundamentals

ACTIVITY 4: ANALYZING TRANSACTIONS

Accrual: Income is recognized when earned

Expenses is recognized when incurred

Cash: Income is recognized when cash is received

Expenses is recognized when cash is paid.

1. The Philippine Airlines has provided the following information regarding ticket sales and
collections from September to November:

Cash received in September to October flights P5,500,000

Cash received in October for October flights 3,000,000
Cash received in October for November flights 4,000,000
Cash received in November for October flights 4,500,000

a) Using the accrual rule, determine how much revenue should be reported for October
3m + 4.5 = 7.5m
b) Using the cash concept, determine how much revenue should be reported for October.
3m + 4m + 5.5m = 12.5m

2. Bentong Consultancy has provided the following information regarding cash payments to its
employees from May to July:

Salary payments in May for work performed by employees in April P28,000

Salary payments in June for work performed by employees in May 20,000
Salary payments in June for work performed by employees in June 25,000
Salary payments in July for work performed by employees in June 10,000

a) Using the accrual rule, determine salary expense to be reported for June
20k + 10k = 30k
b) Using cash concept, determine the salary expense to be reported for June
25k + 20k =45k
3. Master Music Company had the following transactions in March:
a. Sold music lessons to students for P10,000: received P6,000 in cash and the rest on account.
b. Paid P600 in wages for the month
c. Received a P200 bill for utilities that will paid in April
d. Received P1,000 from customers as deposits on music lessons to be given in April

Complete the following statements in March:

Cash Basis Income Statement Accrual Basis Income Statement

Revenues Revenues
Cash from Music Lessons P 7000 Sales of Music Lessons P 10k
Expenses Expenses
Wages Paid 600 Wages Expenses 600
Utilities Expenses 200
Net Income P6.4k P9.2k

4. During the month of October, High Performance Company has the following transactions:
a. Revenues of P100,000 were earned of which 80% was received in cash
b. Bank loans P25,000 were paid off
c. Equipment of P50,000 was purchased and paid in cash
d. Expenses of P75,000 were incurred but P25,000 was not paid in cash
e. Additional P60,000 cash contribution was made by the owner
f. Owner’s personal expenses paid using cash of the business, P10,000
g. Transfer the net profit to the capital account.

Using the matrix, determine profit, cash, liabilities and equity balances as at October 31

Transaction Revenues Cash Asset other Liabilities Owner’s

(Expenses) Received or than cash Incurred Capital
(Paid) (Paid)
Balances
a) 100,000 80000 20000
b) (25000) (25000)
c) (50k) 50k
d) (75000) (50k) 25k
e) 60k 60k
f) (10K) (10k)
Total - 5k 70K - 50k
25K
75k

Required:
 a) Compare profit and cash. Comment on why the balances are not the same.
b) Prove the accounting equation. Is owner better off at the end of the month? Explain.
.p better now post malone
5. Analyze the following transactions and fill up the given matrix. The answer to the first
transaction is given as an example:
Income
Statement of Financial Position
Statement
Business Transaction + Revenues Total Owner’s
Total Assets
- Expenses Liabilities Equity
1 Owner invested P100000 +100,000 +100,000
cash in business
2 Incurred legal expenses -10k 10-
and paid P10,000
3 Paid cash for employee -15k -15k
wages, P15,000
4 Issued note for cash 300k+ 300k+
borrowed, P300,000
5 Received P50,000 cash +50k +50k
for service provided
6 Bought car P500,000. -250k 250k+
50% down, note for 50% 500k
7 Bought office equipment +180k +180k
on credit, P180,000
8 Provided services to +75k +75k
clients on credit, P75,000
9 Collected 50% on client 37.5k +-
accounts
10 Owner withdrew cash, -5k -5k
P5,000
11 Net Income/Net loss to 125k 925k 405k 395k
Owner’s Equity

a. Get the totals and prove the accounting equation

Yes balance sha 925k yep
b. Out of the total assets, how much is cash?
Marami pa naman
6. On June 1, Nat Luma formed a law firm and showed the following balances on June 30.
Cash P120,000 Personal withdrawals by Luna P33,000
Accounts Receivable 150,000 Consulting fees earned 250,000
Office Supplies 22,500 Rent expense 25,500
Car 360,000 Salaries expenses 60,000
Office equipment 280,000 Telephone expenses 7,200
Accounts Payable 75,000 Advertising expenses 6,800
Owner Investment 800,000 Furniture and Fixtures 60,000

Required:
a) Prepare an income statement and a statement of changes of owner’s equity
b) If properties are depreciated by 2%, what will be the revised net income?

7. The Family Medical Clinic is owned and operated by Galing. Dr. Galing has the following
assets and liabilities when he started the clinic on July 1: Cash, P54,200, medical supplies
(medicine, bandages) P3,850, medical equipment, P75,000, Accounts Payable on medical
equipment P25,000. His business transactions during July are the following:

a. Received cash from patients for services performed, P40,000.

b. Paid amounts owed for medical equipment, P15,000
c. Received cash from account patients P0 10,000 for medical services of P20,000
d. Paid office rent for the month, P15,000
e. Charged patients for services performed, P8,025
f. Purchased medical supplies on account, P12,450
g. Received cash from patients for amounts owing, P13,000
h. Paid the following: salaries expense, P850 ; repairs expense, P250 ; utilities expense, P400
i. Cost of medical supplies used was P3,980
j. Dr. Galing withdrew P10,000 in cash from the clinic for personal use

Required:
a. Determine the amount of owner’s equity (capital) as of July 1 of the current year
b. Analyze the above transactions and determine the balances. Prove total amounts using the
accounting equation.
c. Prepare a statement of comprehensive income for July, and a statement of financial position as
of July 31.

8. Sue Feria opened a travel agency business on April 5, 2015. A month after she was able to
comply with the legal requirements and documents, the business started operation. The following
balances were taken on April 30, 2015:

24-
Account month
Accounts Feria, Explanation
Cash Supplies Furniture Equipment due to Note
Receivable Capital for changes
Ros Due to
BDO
Investment
+100,000 Taxes and
61,000 14,500 50,500 25,000 15,000 50,000 - 8,000 Licenses
- 6,000 Registration
Expenses
The following transactions took place during the month of May:

2 Received P45,000 from the office of Pagcor for the processing of their documents with
the Department of Foreign Affairs. Use the revenue title – Processing Fees
2 Received from various airline companies commission for ticket purchased for clients,
P28,000. Use the revenue title – Commission Income.
5 Paid P10,000 to BDO
8 Paid for supplies bought, P7,250
10 Received P8,000 commission from airline companies for tickets purchased for clients
11 Bought a photocopying machine for P15,000 by paying 50% in cash, the balance on
account
14 Collected service fees of P5,000 from clients for processing of visa and passport
15 Paid cash for salaries, P15,000
18 Billed Moyses Company P12,000 for processing of visa and passport of their offices
20 Mr. and Mrs. Smith paid P1,000 for the processing of their papers
24 Paid P5,000 of the account due to Ros
25 Moyses Company paid 50% of their account
27 Billed PAL P3,500 for commissions accruing on tickets purchased
28 Bills were received from the following: PLDT, P3,500 and Meralco, P5,500
29 Receipts from various clients for services rendered: from tourist and immigrants, P4,500
and airline companies, P7,500
30 Paid cash P7,500 for rent and P15,000 for salaries
31 Supplies used up, P3,500

Analyze the above transactions, start with the balances given on April 30.
a. Present an income statement, statement of changes in owner’s equity, a properly classified
report form of statement of financial position
b. Using the cash column, prepare a working paper of cash flows

9. Fay Fedor started a delivery service, Fed Deliveries, on July 1, 2015. The following
transactions occurred during the month of July.
July 1 She contributed P100,000 cash
2 Purchased a used van for deliveries for P120,000 by paying P20,000 cash and
signed a two-year notes payable for the remaining balance.
3 Paid P15,000 for office rent for the month
5 Delivery services amounted to P44,000, half on account
9 Cash of P2,000 withdrawn by May
12 Purchased supplies for P1,500 on account
15 Received cash of P12,500 for services provided on June 5
17 Purchased gasoline for P7,500 on account
20 Received P15,000 from customers of which P5,000 was for past accounts
23 Made a cash payment of P25,000 on the note payable
26 Received bills for utilities P5,000 but paid only P2,500
29 Paid for the gasoline purchased on account on June 17
30 Paid P30,000 for employee salaries. A third of supplies remained on hand
 Instructions:
a. Show the effect of the above transactions on the accounting equation using the following
format.

Fedor,
Accounts Delivery Notes Accounts Revenues Account
Date Cash Supplies Capital
Receivable Van Payable Payable (Expenses) Title
(Drawings)

b. Prepare an income statement for the month of July

c. Prepare a classified statement of financial position as at July 31, 2015

10. Refer to Problem 9. Look for the cash on the format you did and analyze its movement
(inflow and outflow) in a working paper. Did the cash increase? Explain by citing the net flow of
cash in the operating, financing and investing activities of the business.

11. 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 P20,000cbut
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 the P32,000 cash earned
10 Completed work for a client and sent a bill for P27,000 to be paid within thirty 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 Completed work for another client who paid only P40,000 or 40% of the total
computerized system. The client promised to pay the balance in thirty days
28 Owner withdrew P5,000 cash for personal use
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 headings for
columns: Cash; Accounts Receivable; Office supplies; Equipment; Accounts Payable; Notes
Payable; Utilities Payable; Wong, Capital; Explanation of Changes in Capital. Then use
additions and subtractions to show the effects of the transactions on individual items of the
accounting equation. Show balances after all transactions are recorded.
a. Prepare an income statement for the month of July
b. Prepare a statement of owner’s equity for the month of July
c. Prepare a classified report form of statement of financial position as at July 31.

12. Refer to Problem 11 and look for the cash on the format you did. Analyze the movement
(inflow and outflow) in a working paper. Did the cash increase? Explain by citing the net flow of
cash in the operating, financing and investing activities of the business.