ACCOUNTING EQUATION EXERCISES

Exercise 6:
Ezra established an insurance agency on July 1 of the current year and completed the following transactions during
July:
a. Opened a business with an investment of P160,000.
b. Purchased supplies on account, P7,500.
c. Paid creditors on account, P5,600.
d. Received cash from fees earned, P45,350.
e. Paid rent on office and equipment for the month, P45,000.
f. Paid automobile expenses for the month, P5,800 and miscellaneous expenses, P1,600.
g. Paid office salaries, P10,250.
h. Determined that the cost of supplies on hand was P5,250; therefore, the cost of supplies used was P2,250.
i. Billed clients for commissions earned, P32,750.
j. Withdrew cash for personal use, P12,000.

Prepare a table to show the effect of the aforementioned transactions to the accounting equation.

Exercise 7:
Jaz established J Barbers on February 1 of the current year and engaged in the following transactions:
1. Invested P125,000 cash and P15,600 worth of computer equipment.
2. Purchased office furniture of P12,000 on account.
3. Paid ¾ to the creditor.
4. Purchased P4,500 worth of supplies.
5. Paid the following expenses:
Salaries, P13,000
Utilities, P6,500
Miscellaneous, P13,000
6. Withdrew P6,000 for personal use
7. Purchased additional furniture, P6,000.
8. Received P43,000 cash for services rendered to various customers.
9. Rendered P12,000 worth of services to various customers on account.
10. Paid the remaining unpaid liabilities from #s 2 and 3.
11. Received bill for electricity used, P3,000.
12. Received partial payment of P5,000 for the services rendered in #9.

Prepare a table to show the effect of the aforementioned transactions to the accounting equation.

Exercise 8:
Jai put up Jai Realty to serve as real estate agent to potential clients in the Calabarzon on July 1 of the current year.
The following transactions reflect the business activity selected period:
1. Invested P250,000 cash and P34,000 worth of supplies.
2. Purchased office furniture of P4,600.
3. Paid for the office rent and furniture, P12,000.
4. Received water bill, P4,500.
5. Rendered services to various clients and received P23,000 cash as fees.
6. Rendered services on account, P34,000.
7. Paid the water bill.
8. Withdrew P10,000 cash for personal use.

Prepare a table to show the effect of the aforementioned transactions to the accounting equation.