EXERCISE 1

On April 5, ABC established an interior decorating business, ABC Company. During the remainder of the
month, ABC completed the following transactions related to the business:

April 5 ABC invested cash to be used for the business. P500,000 and a building which costs
P8,000,000.

April 5 Paid annual premiums on property insurance, P120,000 (asset method was used.)

April 6 Paid equipment rental for the period of April 6 to the end of the year, P90,000 (asset
method was used.)

April 7 Purchased office equipment on account, P150,000.

April 8 Purchased a used machinery by paying P700,000 cash , which represents 125% of the
amount on credit. ABC Company prepared notes payable for the remaining balance with
annual interest of 6%.

April 10 Purchased supplies for cash, P131,500.

April 12 Received cash for job completed, P730,000.

April 23 Recorded job completed on account and sent invoices to customers, P495,000.

April 24 Received an invoice for machinery expense, to be paid next month, P45,000.

April 25 Received cash P150,000, payment in advance from a customer for a service to be
rendered starting this month up to the following month.

April 29 Paid utilities expense, P75,000

Paid miscellaneous expense, P21,000

April 30 Received cash from customers who owe, P220,000

Paid salaries of employees, P30,000

Paid creditor a portion of the amount owed for machinery purchased on April 8,
P180,000

Withdrew cash for personal use, P55,000

Required: All journal entries, T-Accounts and Trial Balances

*Prepare the necessary journal entries of the transactions below in order to arrive with the unadjusted
trial balance. Right after, make the necessary adjusting journal entries in order to arrive
with the adjusted trial balance
 ABC COMPANY
Unadjusted Trial Balance
April 30, 2018

DEBIT CREDIT
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Prepaid Rent
Office Equipment
Machinery
Building
Accounts Payable
Notes Payable
Unearned Revenue
Accrued Machinery Expense
ABC, Capital
ABC, Drawing
Service Revenue
Salaries Expense
Utilities Expense
Miscellaneous Expense
Machinery Expense
TOTAL