Accounting Equation
Charlotte made cash investment amounting to P300,000.
Increase in Owner's Equity & Asset
(+) OE, (+) Asset
Owner invested his savings worth P8,500,00 into the business and bought P1,500,000 worth of equipment with it.
Debit: Equipment & Machinery
Credit: Owner's Capital, Cash
Cash ₱ 100,000
Office Equipment 45,000
Accounts Payable 70,000
Hagrid, Capital 50,000
Hagrid, Drawing 15,000
How much is the company’s total assets?
₱145,000
Sewing supplies purchased amounting P2,500
Increase in Asset (Sewing Supplies); Decrease in Asset (Cash)
Rendered services to clients worth P600,000 with terms 50% downpayment, balance on account
Debit: Cash & Accounts Receivable
Credit: Service Income
At the end of 2020, Jacque Co. has liabilities worth ₱45,000, income and expenses amounting to ₱ 12,000 and ₱ 8,000 respectively, and owner’s investments worth ₱ 50,000.
How much capital should Jacque Co. report at year-end?
= (L) ₱45,000
= (I) ₱12,000
= (E) ₱8,000
= (OE) ₱50,000
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= (OE) ₱50,000 + (I) ₱12,000 - (E) ₱8,000
= (OE) ₱50,000 + ₱4,000
= (OE) ₱54,000
Cash proceeds of a loan taken from LBB Bank, P50,000.
Received utility bills worth P10,000.
Debit: Utilities Expense
Credit: Utilities Payable (Accrued Expense)
At the end of 2020, Jacque Co. has liabilities worth ₱45,000, income and expenses amounting to ₱ 12,000 and ₱ 8,000 respectively, and owner’s investments worth ₱ 50,000.
What amount of assets should Jacque Co. report at year-end?
= (L) ₱45,000
= (I) ₱12,000
= (E) ₱8,000
= (OE) ₱50,000
-------------------------------------
= (OE) ₱50,000 + (I) ₱12,000 - (E) ₱8,000
= (OE) ₱50,000 + ₱4,000
= (OE) ₱54,000
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ASSET = (L) ₱45,000 + (OE) ₱54,000
ASSET = ₱99,000
Additional investment in form of tables and chairs amounting to P12,000.
Billed customers and received cash payment amounting to P95,000 for services rendered.
Debit: Cash
Credit: Service Revenue
M&P Co. has ₱ 312,220 total owner's equity and ₱125,600 total assets. During the year, its assets increased by ₱ 254,000 and liabilities decreased by ₱ 64,450.
How much is M&P Co. liabilities at the beginning of the year?
Solution:
Liabilities = Asset - Owner's Equity
= ₱312,220 - ₱125,600
= ₱186,620
Received an advance payment from Mary for 100 pcs blouses to be delivered next week.
Increase in Asset, Increase in Liability
Consumed 50% of the office supplies purchased last month worth P10,000.
Debit: Supplies Expense
Credit: Office Supplies
M&P Co. has ₱ 312,220 total owner's equity and ₱125,600 total assets. During the year, its assets increased by ₱ 254,000 and liabilities decreased by ₱ 64,450.
How much is M&P Co.’s owner’s equity at the end of the year?
Solution:
Owner's Equity = Asset - Liabilities
a. ₱125,600 + ₱ 254,000 = ₱379,600 Asset
b. ₱186,620 - ₱64,450 = ₱122,170 Liabilities
= ₱379,600 - ₱122,170
= ₱257,430 OWNER'S EQUITY