"DEBIT and CREDIT"

~~~~~~~~~~~~~~~~~~~~~~~~~~

ASSETS:
Cash, Accounts Receivable, Prepaid Rent, Prepaid Insurance, Office Supplies.
Office Building, Office Equipment, Furniture and Fixture.

LIABILITIES:
Accounts Payable, Mortgage Payable

CAPITAL (Owner's Equity):

De Asis Capital, De Asis Drawing

REVENUES:
Service Income

EXPENSES:
Salaries and Wages Expense, Repairs and Maintenance Expense, Taxes and Licenses
Expense

~~~~~~~~~~~~~~~~~~~~~~~~~~

#JOURNALIZING

1. Francis "opened an account " with BPI under the Assisi Business Agency's name
and deposited 850000 CASH. He also "invested" his two personal COMPUTERS which he
acquired a year ago for 20000 each but with a fair market value of 15000 each.

DEBIT: Cash 850000

DEBIT: Office Equipment 30000 (15000 x 2)
CREDIT: De Asis, Capital 880000 (850000+30000)

.........................................

2. PAID barangay and municipal TAXES, 3500.

DEBIT: Taxes and Licenses Expense 3500

CREDIT: Cash 3500

.........................................

3. Bought a small office CONDOMINIUM for 500000, giving 250000 CASH and signing a
MORTGAGE payable in 10 years for the balance.

DEBIT: Office Building 500000

CREDIT: Cash 250000
CREDIT: Mortgage Payable 250000 (500000-250000)

.........................................

4. HIRED a secretary with monthly salary of 8500.

"No Entry"

.........................................

5. Bought office TABLES AND CHAIRS on CREDIT from Mansion, Inc., 40000
DEBIT: Furniture and Fixture 40000
CREDIT: Accounts Payable 40000

.........................................

6. BILLED a client for SERVICES rendered, 20000.

DEBIT: Accounts Receivable 20000

CREDIT: Service Income 20000

.........................................

7. Purchases computer INK, COUPON BOND PAPER and BALLPENS to be used in the office;
terms: CASH basis, 4500.

DEBIT: Office Supplies 4500

CREDIT: Cash 4500

.........................................

8. PAID fifty percent of the amount OWED to Mansion, Inc. (See #5)

DEBIT: Accounts Payable 20000 (40000 x 50%)

CREDIT: Cash 20000

.........................................

9. Francis "WITHDREW" "CASH" of 50000 and two reams of BOND PAPER worth 1000 for
personal use.

DEBIT: De Asis, Drawing 51000 (50000 + 1000)

CREDIT: Cash 50000
CREDIT: Office Supplies 1000

.........................................

10. PAID 400 for the REPAIR of one of the computers

DEBIT: Repairs and Maintenance Expense 400

CREDIT: Cash 400

.........................................

11. RECEIVED 5000 as payment for the SERVICES rendered to one of their clients.

DEBIT: Cash 5000

CREDIT: Service Income 5000

.........................................

12. COLLECTED one half of the AMOUNT DUE FROM CLIENT on #6 (see #6)

DEBIT: Cash 10000

CREDIT: Accounts Receivable 10000 (20000 x 1/2)

.........................................

13. PAID "ONE YEAR RENT" for a special machine to be used in business operations,
30000.
DEBIT: Prepaid Rent 30000
CREDIT: Cash 30000

.........................................

14. PAID "ONE YEAR INSURANCE" of the office condominium, 25000.

DEBIT: Prepaid Insurance 25000

CREDIT: Cash 25000

.........................................

15. PAID one half of the SALARY of the secretary (see #4)

DEBIT: Salaries Expense 4250 (8500 x 1/2)

CREDIT: Cash 4250

~~~~~~~~~~~~~~~~~~~~~~~~

#GENRAL LEDGER Balances

DEBIT BALANCE = Debits > Credits

CREDIT BALANCE = Debits < Credits

Cash (All debits, minus all credits)

= 477350 Debit Balance

Accounts Receivable
= 10000 Debit balance

Prepaid Rent
= 30000 Debit balance

Prepaid Insurance
=25000 Debit balance

Office Supplies
= 3500 Debit balance

Office Building
= 500000 Debit balance

Office Equipment
=30000 Debit balance

Furniture and Fixture

=40000 Debit balance

Accounts Payable
=20000 Credit balance

Mortgage Payable
=250000 Credit balance

De Asis Capital
=880000 Credit balance

De Asis Drawing
= 51000 Debit balance

Service Income
= 25000 Credit balance

Salaries and Wages Expense

= 4250 Debit balance

Repairs and Maintenance Expense

= 400 Debit balance

Taxes and Licenses Expense

= 3500 Debit balance

~~~~~~~~~~~~~~~~~~~~~~~~~~~~

#TRIAL BALANCE
(same balances from General Ledger)

Total DEBITS: 1,175,000

Total CREDITS: 1,175,000

#ThankYou
#TheAccountant

"RULE OF 72" (by Albert EINSTEIN) :)

~kailan DODOBLE ang PERA mo?

(isa ding paraan para malaman kung SCAM ang isang investment)

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

FORMULA:
72 / RATE of return = YEARS (to double your money)

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

EXAMPLE:

A. Average Annual RATE OF RETURN = 4%

72 / 4 = "18 YEARS"
*Disregard %
(money doubles every 18 years)

~For a 20 YEAR OLD individual, with P100,000 today...

20 + "18 YEARS" = 38 years old

38 + "18 YEARS" = 56 years old

20 years old = P100,000

38 years old = P200,000
56 years old = P400,000

.....................

B. Average Annual RATE OF RETURN = 24%

72 / 24 = "3 YEARS"
*Disregard %
(money doubles every 3 years)

~For a 20 YEAR OLD individual, with P100,000 today...

20 + "3 YEARS" = 23 years old

23 + "3 YEARS" = 26 years old

20 years old = P100,000

23 years old = P200,000
26 years old = P400,000

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

PROOF:
(using your scientific calculator)

A. 4%
72 / 4 = 18 years

Future Value of Ordinary annuity

1.04^18 years = "2" (money doubles)

....................

B. 24%
72 / 24 = 3 years

Future Value of Ordinary annuity

1.24^3 years = "2" (money doubles)

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

"BASIC RULE"

1.
"The higher the RISK"
"The higher the RETURN"

-EQUITY Securities(Stocks), Real Properties, etc

2.
"The lower the RISK"
"The lower the RETURN"

-Bank time deposits, Government bonds, Treasury bills, Commercial paper, and other
DEBT securities/issues by corporations or governments.

Contributed by: Mr. Michael Velardo

#FinancialLiteracy
#TheAccountant