Losañez, Jenny M.

St. John Paul II

FABM 12

TASK NO: 2

Illustrating accounting equation.

On December 1, 2015, Atty. Anton Noble established his legal practice under the name
“Noble Law Office”. He employs you as the bookkeeper for the said entity. During the
month, Noble Law Office had the following transactions:

Dec. 1 Atty. Anton Noble invests P500 000 cash.

Noble Law Office obtains a loan from a bank amounting to P100 000. The loan
bears 6% annual interest payable every December 1, starting December 1, 2016.
The principal is payable in two equal annual installments.

Noble Law Office pays P10 000 for the necessary permits and licenses for its
operation.

Noble Law Office pays P120 000 for the annual rent of the office space. The lease
contract will expire on December 1, 2016 and is renewable annually.

Dec. 2 Noble Law Office renders a legal advice to Silverio Shipping Lines. Noble Law office
bills Silverio for P135 000.

Noble Law Office purchases supplies worth P5 000 on cash basis.

Dec. 8 Noble Law Office renders legal advice to Celba Co. for P37 500, on cash basis.

Noble Law Office purchases a laptop for P36 000 cash. The laptop has an estimated
useful life of 3 years, with no residual value. The company treats purchases during
the first half of the month as a purchase at the start of the month.

Dec. 15 Silverio Shipping pays Noble Law Office.

Dec. 17 Atty. Noble withdraws P25 000 from the law office for his personal use.

Requirement: Prepare an illustration of the accounting equation of each case or

transactions.

FUNDAMENTALS OF ACCOUNTANCY, BUSINESS AND MANAGEMENT 2 | MARLON L. ATIENZA

 ASSET = LIABILITIES + NETWORTH

Cash Capital
P 500, 000 0 P 500, 000
P 100, 000 P 100, 000
P 10, 000 (P 10, 000)
P 120, 000 (P 120, 000)
Account Receivable
P135, 000 P 135, 000
Supplies
P 5, 000 P 5, 000
Cash
P 37, 500 P 37, 500
P 36, 000 P 36, 000
Withdrawals
(P 25, 000) (P 25, 000)
___________________ __________________ __________________
P 788, 000 P 230, 000 P 558, 000

FUNDAMENTALS OF ACCOUNTANCY, BUSINESS AND MANAGEMENT 2 | MARLON L. ATIENZA