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BS Accountancy 1 – ACD

AEC 12 – Financial Accounting and Reporting

Problem

Date Transaction
Sept 1 Niko Ong invested P500,000 in setting up his art gallery.
1 Acquired transportation equipment to be used for delivery worth P300,000. Paid in cash.
1 Rented office space and paid two month rent in advance, P30,000.
2 Niko Ong issued a promissory note for a P200,000 loan from Metro Bank. The note carrier a 12% interest per
annum. The interest and the principal are payable after one year.
4 Paid Insular Life Insurance Co. P18,000 for one year insurance of the art gallery.
5 Acquired office equipment from Abenson’s worth P50,000, paying P20,000 in cash and the balance at the end
of the month.
8 Purchased P12,000 worth of art supplies from Enriquez Art Supplies on account.
10 Paid Enriquez Supplies P5,000 of the amount owed on purchase of art supplies.
11 Painted the portrait of Don Enrique Zobel, receiving P200,000 cash for the completed portrait.
15 Paid secretary’s salary for half month, P2,500.
17 Received P250,000 cash for a contract to paint the portrait of Doña Susana.
21 Delivered and billed Mr. Sy P150,000 for a landscape painting.
23 Niko Ong withdrew P30,000 for personal use.
23 Received bill from PLDT, P900.
25 Received P100,000 from Mr. Sy as partial payment for landscape painting delivered last Sept 21.
30 Paid electricity bill for the month, P4,000.
Chart of Accounts

Niko Ong Art Gallery


Chart of Accounts

Balance Sheet Accounts


Assets Liabilities
110 Cash 210 Accounts Payable
120 Accounts Receivable 220 Notes Payable
130 Art Supplies 230 Salaries Payable
140 Prepaid Rent 240 Utilities Payable
150 Prepaid Insurance 250 Interest Payable
160 Transportation Equipment 260 Unearned Painting Revenue
165 Accumulated Depreciation
170 Office Equipment
175 Accumulated Depreciation Owner’s Equity
310 Ong, Capital
320 Ong, Drawing
330 Income Summary

Income Statement Accounts


Income Expenses
410 Painting Revenue 510 Salaries Expense
520 Art Supplies Expense
530 Rent Expense
540 Insurance Expense
550 Utilities Expense
560 Depreciation Expense – Transportation Equipment
570 Depreciation Expense – Office Equipment
Journal Entries

Date Account Titles and Explanation P.R. Debit Credit


Sept 1 Cash P 500,000
Ong, Capital 500,000
Initial investment

1 Transportation Equipment 300,000


Cash 300,000
Purchased transportation equipment in cash

1 Prepaid Rent 30,000


Cash 30,000
Paid two months rent in advance

2 Cash 200,000
Notes Payable 200,000
Borrowed money from the bank issuing a promissory note

4 Prepaid Insurance 18,000


Cash 18,000
Paid one year insurance premium

5 Office Equipment 50,000


Cash 20,000
Accounts Payable 30,000
Bought office equipment paying cash and the balance on account

8 Art Supplies 12,000


Accounts Payable 12,000
Purchased art supplies on account

10 Accounts Payable 5,000


Cash 5,000
Made partial payment of liability

11 Cash 200,000
Painting Revenue 200,000
Received cash for painting a portrait

15 Salaries Expense 2,500


Cash 2,500
Paid secretary’s half month salary

17 Cash 250,000
Unearned Painting Revenue 250,000
Received cash for painting services to be rendered

21 Accounts Receivable 150,000


Painting Revenue 150,000
Landscape painting for Mr. Sy on account

23 Ong, Drawing 30,000


Cash 30,000
Niko Ong withdrew cash for personal use
Date Account Titles and Explanation P.R. Debit Credit
Sept 23 Utilities Expense 900
Utilities Payable 900
Received bill from PLDT

25 Cash 100,000
Accounts Receivable 100,000
Received cash as partial collection from Mr. Sy

30 Utilities Expense 4,000


Cash 4,000
Paid electric bill for the month
Ledger

Cash Accounts Payable


Debit Credit Debit Credit
9/1 P 500,000 9/1 P 300,000 9/10 P 5,000 9/5 P 30,000
9/2 200,000 9/1 30,000 9/8 12,000
9/11 200,000 9/4 18,000 5,000 42,000
9/17 250,000 9/5 20,000 Bal P 37,000
9/25 100,000 9/10 5,000
9/15 2,500
9/23 30,000
9/30 4,000 Notes Payable
1,250,000 409,500 Debit Credit
Bal. P 840,500 9/2 P 200,000
Bal. P 200,000

Accounts Receivable Utilities Payable


Debit Credit Debit Credit
9/21 P 150,000 9/25 P 100,000 9/30 P 900
Bal. P 50,000 Bal. P 900

Art Supplies Unearned Painting Revenue


Debit Credit Debit Credit
9/8 P 12,000 9/17 P 250,000
Bal. P 12,000 Bal. P 250,000

Prepaid Rent Ong, Capital


Debit Credit Debit Credit
9/1 P 30,000 9/1 P 500,000
Bal. P 30,000 Bal. P 500,000

Prepaid Insurance Prepaid Insurance


Debit Credit Debit Credit
9/4 P 18,000 9/23 P 30,000
Bal. P 18,000 Bal. P 30,000

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