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Illustrative Problem

Alibaba deposited cash and furniture totaling P650,000 as initial investment in the company. Throughout various transactions, the company rendered tutorial services, paid expenses, collected receivables and withdrew cash. At the end, a trial balance was prepared to check the equality of debits and credits.

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Kim Patrick Victoria
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884 views7 pages

Illustrative Problem

Alibaba deposited cash and furniture totaling P650,000 as initial investment in the company. Throughout various transactions, the company rendered tutorial services, paid expenses, collected receivables and withdrew cash. At the end, a trial balance was prepared to check the equality of debits and credits.

Uploaded by

Kim Patrick Victoria
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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T1 Alibaba deposited P 600,000 in the account of the company.

He also invested a furniture valued at P 50,000

Cash 600,000.00
Furniture and Fixtures 50,000.00
Alibaba, Capital 650,000.00
(To record Alibaba's Initial Investment)

T2 Bought P 5,000 supplies from National Bookstore on account.

Supplies Expense 5,000.00


Accounts Payable 5,000.00
(To record supplies bought on account)

T3 Tutorial services rendered to Ms. Ta Lino on account, P 15,000.

Accounts Receivable 15,000.00


Service Income 15,000.00
(To record services rendered on account)

T4 Tutorial services rendered to various clients for cash, P 180,000

Cash 180,000.00
Service Income 180,000.00
(To record services rendered paid in cash)

T5 Paid account with National Book Store

Accounts Payable 5,000.00


Cash 5,000.00
(To record payment of supplies bought on account)

T6 Hired a bookkeeper for his business worth P 10,000.00

NO ENTRY

T7 Collected P 5,000.00 from Ms. Talino

Cash 5,000.00
Accounts Receivable 5,000.00
(To record collection of services rendered on account)

T8 Received water bill, P 400

Utilities Expense 400.00


Utilities Payable 400.00
(To record water bill expense on account)

T9 Paid electricity for the month, P 4,480


Utilities Expense 4,480.00
Cash 4,480.00
(To record payment of electricity in cash)

T10 Paid water bill.

Utilities Payable 400.00


Cash 400.00
(To record payment of utilities expense on account)

T11 Paid the bookkeeper for the service rendered

Salaries Expense 10,000.00


Cash 10,000.00
(To record payment of salaries in cash)

T12 Paid rental expense for the month P 15,000

Rent Expense 15,000.00


Cash 15,000.00
(To record payment of rent expense in cash)

T13 Withdraw P 30,000 for personal use

Alibaba, Drawing 30,000.00


Cash 30,000.00
(To record Alibaba Drawing)
Analysis (Debit Credit Rule)

invested a furniture valued at P 50,000

Increase in Asset
Increase in Asset
Increase in Equity

Increase in Expense
Increase in Liability

Increase in Asset
Increase in Income

Increase in Asset
Increase in Income

Decrease in Liability
Decrease in Asset

There is no exchange of transactions like render of services


or payment. It is only a contractual obligation between
two parties

Increase in Asset
Decrease in Asset

Increase in Expense
Increase in Liability
Additional Note: Unlike T6 there is an already an exchange
in transaction - the water company has already provide its
services (which is to supply water) the bill is their proof of
service.

Increase in Expense
Decrease in Asset

Decrease in Liability
Decrease in Asset

Additional Note: We have already recorded the expenses


for this transaction (T8), recording this as an expense will
result in additional expense.

Increase in Expense
Decrease in Asset

Increase in Expense
Decrease in Asset

Decrease in Equity ( We call this as an contra equity account)


Decrease in Asset
Cash Furniture and Fixtures
T1 600,000.00 5,000.00 T5 T1 50,000.00
T4 180,000.00 4,480.00 T9
T7 5,000.00 400.00 T10
10,000.00 T11
15,000.00 T12
- 30,000.00 T13
785,000.00 64,880.00
720,120.00

Office Supplies Accounts Payable


T2 5,000.00 T5 5,000.00 5,000.00 T2

- -
5,000.00 5,000.00
-

Accounts Receivable Utilities Expense


T3 15,000.00 5,000.00 T7 T8 400.00 T11
T9 4,480.00

- - -
15,000.00 5,000.00 4,880.00
10,000.00

Rent Expense Alibaba, Drawing


T12 15,000.00 T13 30,000.00 T10
Alibaba, Capital Name of the Company
650,000.00 T1 Unadjusted Trial Balance
As of (Date)

Cash
Accounts Receivable
Furniture and Fixtures
Alibaba, Drawing
Alibaba, Capital
Service Revenue
Service Revenue Utilities Expense
15,000.00 T3 Salaries Expense
180,000.00 T4 Rent Expense
Office Supplies
TOTAL

-
195,000.00

Salaries Expense
10,000.00

Utilities Payable
400.00 400.00 T8

-
400.00
USER:
This is the
Name of the Company standard heading
Unadjusted Trial Balance of the Trial
As of (Date) Balance, take note
on this in the quiz
and assignment. It
Debit Credit has points.
720,120.00
10,000.00
50,000.00
30,000.00
650,000.00
195,000.00
4,880.00
10,000.00
15,000.00
5,000.00 -
845,000.00 845,000.00

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