Chapter1Introduction

IntroductionProblem:WesternHuluHulo

BalanceSheetforIslaw
Asofthebeginning
Assets:

OwnersEquity:

Seeds
20kilos

AbuSayadsequity

Fertilizer
2

Carabao
206

Total
262

Total

BalanceSheetforFred
Asofthebeginning
Assets:

OwnersEquity:

Seeds
10kilos

AbuSayadsequity

Fertilizer
1

Carabao
40

Land
100

Total
151

Total

BalanceSheetforIslaw
Asoftheend
Assets:

Liabilities:

Seeds
223kilos

PayabletoAbuBakar

Plow
0

Ownersequity:

Carabao
36

AbuSayadsEquity

Land
200

Total
459

Total

BalanceSheetforIslaw
Asoftheend
Assets:

OwnersEquity:

Seeds
105kilos

AbuSayadsequity

Plow
2

Carabao
36

Land
100

Total
243

Total

262kilos

262

151kilos

151

3kilos
456

459

243kilos

243

Requirement1.
Increaseinownersequity:Netearningsfromtheuseoftheland

Islaw: BeginningEquity= 262kilos

Fred: Beg.
151

Endingequity
456

end
243

Earnings

194kilos

earnings
92

No.ofhectares

Earningsperhectare
97

92

Requirement2.
Whichfarmerisabetterfarmer?

Islaw: BeginningEquity= 262kilos

Fred: Beg.
151

Endingequity
456

end
243

Earnings

+194kilos

earnings
92

+withdrawals
20

30

Totalearnings
214

122
No.ofhectares
2

Earningsperhectare107

122

*Fredisthebetterfarmerifyouuseearningsperhectare

Chapter1and2LONGPROBLEMS

1.GumaMela
aJournalentries

May1
Cash

4,000,000

GumaMela,capital

4,000,000
May2
Medicalequipment

25,000

GumaMela,capital

25,000
May3
Medicalequipment

100,000

Cash

80,000

Notespayable

2,000
May5
Medicalsupplies

35,000

Accountspayable

35,000
May8
Cash

15,000

Medicalrevenues

15,000
May10 Laboratoryexpense

5,000

Cash

5,000
May14 Salariesexpense

10,000

Cash

10,000
May18 Accountsreceivable

75,000

Medicalrevenue

75,000
May20 Accountspayable

26,250

Cash

26,250

May21

May25

May26

May27

May28

May28

May29

May30

May30

Medicalfurniture

Accountspayable
Cash

Accountsreceivable
Medicalsupplies

Cash

Accountspayable
Salariesexpense

Cash

Telephoneexpense

Cash

Accountsreceivable

Medicalrevenue

Accountspayable

Cash

GumaMela,withdrawals
Cash

Electricity&Powerexpenses
Cash

45,000

50,000

40,000

10,000

1,000

67,500

20,000

40,000

2,500

45,000
50,000
20,000
20,000
10,000
1,000
67,500
20,000
40,000
2,500

b.
GumaMela
Trialbalance
May31,2005

Debit

Credit

Cash

P3,850,250
Accountsreceivable
92,500
Medicalsupplies

75,000
Medicalequipment
125,000
MedicalFurniture
45,000
Notespayable

P20,000
Accountspayable

53,750
GumaMela,withdrawals 40,000
GumaMela,capital

4,025,000
Medicalrevenue

157,500
Salaryexpense

20,000
Telephoneexpense
1,000
Electricityexpense
2,500
Laboratoryexpense
5,000
Totals

P4,256,250P4,256,250

2.Ayawma

AyawmaBalance,CPA
IncomeStatement
ForthesixmonthsendedJune30,2004

Revenues

Consultingfeesincome

P475,000

Assurancefeesincome

725,000

TaxServiceFeesIncome
200,000

Interestincomebankdeposit
4,500

Interestonshortterminvestments5,000
P1,409,500

Expenses

Salariesexpense

P720,000

Rentexpense

300,000

Officesuppliesexpense

60,000

TaxesandLicensesexpense 15,000
Miscellaneousexpense

24,000
1,119,000

Netincome

P290,500

AyawmaBalance,CPA
StatementofChangesinOwnersEquity
ForthesixmonthsendedJune302004

Initialinvestment

P2,000,000

Additionalinvestment

410,000

Netincome

290,500

Withdrawals

(50,000)

Ayawmabalance,capital,end

P2,650,500

AyawmaBalance,CPA
BalanceSheet
June30,2004

ASSETS

LIABILITIES&OWNERSEQUITY
Cash

P2,330,500 AccountspayableP200,000
Marketablesecurities

200,000 Accruedsalaries

130,000
Officesupplies

40,000 Totalliabilities

330,000
OfficeFurnitureandEquipment 410,000 Ayawma,capital

2,650,500

TotalAssets

P2,980,500Totalliabs&capitalP2,980,500

3.DjangoRepair

DjangoRepairService
IncomeStatement
ForthemonthendedMarch31,xxxx

P1,300

Servicerevenue
Expenses

Professionalfees

Wagesexpense

Rentexpense

Utilitiesexpense

Interestexpense
Netloss

P500
400
300
75
40

1,315
(P15)

DjangoRepairService
StatementofOwnersEquity
ForthemonthendedMarch31,xxx

Initialinvestment

P8,000
NetLoss

(15)
Django,capital

P7,985

DjangoRepairService
BalanceSheet
March31,xxxx

ASSETS

LIABILITIES&OWNERSEQUITY
Cash

P9,310

Accountspayable P1,200
Accountsreceivable
600

Notespayablebank
3,900
Prepaidrent

600

Notespayabletrade
7,400
Truck

8,900

Accruedutilities

75
Officeequipment
700

Deferredrevenue
50
Repairtools

500

Totalliabilities
P12,625

Django,capital

7,985

TotalAssets
P20,610

Totalliabilities
andownersequityP20,610

Cash:
InitialcashInvestment

P8000
Paymentforlegalservices
(500)
Proceedsofbankloan

4000
PartialPaymentonbankloan
(140)
DownPaymentmade
(Purchaseoftruck)

(1500)
SalesRevenue(allcash)

1300
Advancerentalpayments
(900)
Wagespaid

(400)
Deferredincome

50
Cashbalance,end

P9910

4.GoodService
1.Balancesheet
GoodService
BalanceSheet
March3,2003

ASSETS

LIABILITIES&OWNERSEQUITY
Cash
P2,600

Accountspayable

P4,900
Cleaningsupplies 1,200

Notespayable

3,000
Cleaningequipment 6,300

TotalLiabilities

7,900

VCI,capital

2,200
Totalassets P10,100

Totalliabilitiesand
ownersequity

P10,100

GoodService
BalanceSheet
June3,2003

ASSETS

LIABILITIES&OWNERSEQUITY
Cash

P2,790

Accountspayable

P600
Cleaningsupplies 150

Notespayable

3,000
Cleaningequipment 6,300

Totalliabilities

3,600

VCI,capital

5,640
TotalAssets
P9,240

Totalliabilities&ownersequityP9,240

2.Comparethebalancesheets,changesinownersequity:
Beginningcapital,Mar3 P2,200

Cash,beginning

P2,600
Additionalinvestment
1,200

Cash,ending

2,790
Total

3,400

Increaseincash
P190
Capital,June3

5,640
Netincome

P2,240=roe:netincome/aveequity

=2240/4220=39%


5.PeaceAirstrip

PeaceAirstrip
BalanceSheet
December31,xxx

ASSETS

LIABILITIES&OWNERSEQUITY
Cash

P865,000
Accountspayable P35,000
Accountsreceivable 150,000
Loanpayable
400,000
Airplanes

7,500,000
BankLoan/NotesPay4,000,000

Totalliabilities

4,435,000

D.Oreo,capital

4,080,000
Totalassets P8,515,000
Totalliabilitiesand

ownersequity P8,515,000

PeaceAirstrip

StatementofChangesinOwnersEquity

FortheperiodendingDecember31,xxx

Beginningcapital,July1

P3,100,000*(900,000plane+2,2M)
Add:Netincome(?)

1,028,000
Total

4,128,000
Less:Withdrawals

(48,000)
Ending,capital,Dec31

P4,080,000

BegCapital:900,000planr+2,200,000cashportioninbuyingCessnaplane

6.BicycleRYours

BicycleRYours
IncomeStatement
ForsummerendingMay31

Bicyclerental(11,400+600)

P12,000
Expenses

Wagesexpense

P5,000

Rentalexpense

1,800

Oil&Lubications(880+100)
980

Telephoneexpense
190

Insuranceexpense
175

8,145
Netincome

P3,855

BicycleRYours
BalanceSheet
AsofMay31,xxxx

ASSETS

Cash(13,4001,8008,245)
Accountsreceivable
Totalassets

Note:

LIABILITIES&OWNERSEQUITY
P3,355
Accountspayable
P100
600
M,capital

3,855*
P3,955
Totalliabilities&
ownersequity

P3,955

STATEMENTOFCHANGESINOWNERSEQUITY
FORTHESUMMERENDINGMAY31
BeginningCapital

0
Add:Investment

P2000
NetIncome

3885
P5885
Less:Withdrawals

(2000)
Ending,Capital

P3855*