yr POSTING PROCEDURE ILLUSTRATED. GENERAL JOURNAL DEBIT DATE Accounts & Explanation 2011 March | Cash Cars Gome2> (B) CASH Date Explanations Ref Credit March 1 Investment by Gomez, Ted ‘A. Based on the first debit entry in the journal, look for the account in the general ledger B. On the debi ide date column, copy the date. C. Copy the amount in the debit column extend the balance in the last column D. Insert the journal page number in the folio column or posting reference column of the ledger E, Insert the ledger account number in the folio column or posting reference of the journal, F, The next account to be posted is the Cars account. Repeat steps A to E. The third account tobe posted is the capital account and so on until all the accounts have been posted or transfer from the journal to the ledger. Steps D and E, called cross reference, facilitates the tracing of an entry to and from the journal and ledger. Also, if the F columns of the journal and the ledger are both filled up, i signifies that an entry has already been posted. The folio column in the journal will be gradual filled up as the postings are made, 104ea ‘The general ledger of Happy Four will completely appear as follows: CASH ACCOUNT NO. 101 aon Expl | Ret} Debit Credit Balance TMarch 1 | Investment by G \ aq 50 000 ‘30000 00 3. | Loan from CitiBank iN 00 150.000 00 7 | Payment to Blim Ji | 10000000} 45 00000} 105 000 00 1g | Personal drawing of Gomez | 31 5.000 00} 100.000 00 20 | Payment for liability uN 5500000) 45 000.00 21 | Collection from customer | Ji 60 000 00 22 | Payment for expenses Ji | 1500000) 1 s0000] 58 s00.00 25 | Payment for expenses 2 500.00 58.000 00 30 | Collection from customers | 32 66 000 00 31 | Payment for expenses 800000) 1900000 | 4700000 ACCOUNTS RECEIVABLE ACCT NO 102 | | pate Explanation Ref | Debit Credit Balance | Fan Mar 24 Ji | 1600000 16 000 00 n JZ | 2000000 36 000 00 | 30 s2 800000 | 2800000 | CARS. ACCT NO 201 | Date Explanation Ref Debit Credit Balance "+ I | 2011 {| Mart JI | 750.000 00 750 000 00 | EQUIPMENT ACCT NO 202 | Date Explanation Ref | Debit Credit | Balance maa! Sa temo eed | 2011 | | Mario JI | 55.000 00 55.000 00 i | 105FURNITURE & FIXTURES ACC] Ss CCTNg ation Ret Debit Credit ai | 45.000 00 $5 000% ACCOUNTS PAYABLE Date Explanation Ref Debit | Credit _| Balance 2011 a 7 WW 35,000.00 | 35099 Mar 10 i | 33.000 00 % 20 LOANS PAYABLE ACCT NO 30) Date Explanation Ref | Debit c Balance 2011 Mar 3 J 100 000 00 | 100 000 09 GOMEZ, CAPITAL ACCT NO 50) Date Explanation Ref | Debit | Credit Balance 2011 Mar | J 800 000 00 | 800 00000 J GOMEZ DRAWINGS ACCTNO S02 Date Explanation Ref | Debit Credit. | Balance {| 2011 Mar 18 si} 5.00000 5.000000 SERVICE INCOME ‘CT NO Oil AC! Explanation Ref | Debit Credit. | Balance | 1so0000 | 15000 ‘ 1600000 | 310004 2000000 | 51900 106GAS & OIL EX! PENSE = ACCT NO 701 : Explanation Ref el 5 pate | = explens Ret | debit | Credit Balance ee _ J 500.00 500.00 RENT EXPENSE ACCT NO 702 | Explanatio of a Date planation | Ref | Debit Credit | Balance 2011 Mar3l : J2 | 1000000 10 000 00 REPAIR EXPENSE ACCT NO 703 Date Ref | Debit Credit | Balance 2011 Mar 22 Ji} 1.000 00 1.00000 SALARIES EXPENSE ACCT NO 704 | Date Explanation” Ref. Debit Credit | Balance 2011 Mar 31 42 | 9.00000 9.000 00 UTILITIES EXPENSE ACCT NO 705 Date Explanation Ref | Debit Credit | Balance 2011 Mar 25 Hi 500 00 500 00 Note: Trace each entry from the journal to the ledger to better appreciate the posting procedure. Postings may be done daily, weekly or monthly depending on the business needs, kinds of journals and equipment used. Balance of each account is determined after every posting made. TRIAL BALANCE Atthis point we should establish again the equality ofthe debits and credits by using another tool called the trial balance, Figure 5.6. The double entry bookkeeping rule extends to the trial balance - ensure that the debit is the same as the credit total, A trial balance is @ list of accounts with ledger balances, Assets; owner's drawing and expenses have normal balances on the debit side while fabititis, owner's capital and revenue have normal balances on the credit side. The tial bakince of Happy ‘Tour will appear as follows: 107HAPPY TOUR & TRAVEL TRIAL BALANCE March 31.2011 ____y ec 7 __ Debit redit Acct. No. at Tith | = a ~ “Tp a7 000 00 ae 28 000 00 i Seon Receivable naa 00 202 | Equipment 55 bed 7 203 Furniture & Fixtures 45 301 Accounts Payable io 302 Loans Payable 800 ooo . 301 Gomez, Capital Sonor "0 502 Gomez, Drawing 5 oe 60! Service Income at 00 701 Gas & Oil Expenses oon 0 702 | Rent Expense 10600 703 Repair Expense 1 000 00 704 Salaries Expense 9 000 00 705 ies Expense 500 00 Totals P951_ 000 00 | P9St 000 09 Figure 5.6 Trial Balance Observe the following rules in preparing the trial balance: i 2. Hea ng consists of three lines: Name of the business Title of the report Date Account titles are arranged in the following order: Assets, Liabil Expenses, 5, Capital, Revenue and Note that even the accounts payable, although iti zero still appears in the trial balance, lim be omitted but the readers may wonder what happened to this account. ‘The peso sign is placed only on the frst debit amount, first credit amount and on the tots. ‘The totals are ruled (one horizontal line drawn under the last amounts of the debit and cet columns) and double ruled (two horizontal lines are drawn under the total figures) {tthe total debit do not equal the total credit, then error should be located before ruling and doubl following errors may have been committed s) must have been committed which le ruling the totals. It is possible that any of th Posting from the journal tothe ledger on the wrong side Posting a wrong amount (cash debit P40,000 Ledger footing (debit or credit side) is wrong, Wrong balances were copied from the general ledger, (cash debit posted to cash credit) Posted to cash debit P400,000)LOCATING ERRORS Ihe total debit amount does not tally with the total ered amount, the difference usually gives a clue to the kind of error committed: 1A difference of ten would indicate probably an error in add columns of the trial balance again, If th credit columns of the ledgers. 2 Mihe ditference is divisible by two, then the error probably i in Posting to the wrong side, like a debit balance in the ledger is copied on the credit side of the trial balance or a debit entry in the journal was posted to the eredit side ofthe ledger. 3. IF ihe difference is divisible by 9 ora multiple of 9 the error Probably is in transposition, fat the order of the digits are interchanged, say an amour or 29,560 was copied as Dor cnt hat isthe decimal point is misplaced, say an amount of P290,000 was copied as P29,000, ‘on. Add the debit and credit 1e error is 20 further and re-add the debit and not there, 29,650. Or an error in transpla For errors 2 and 3, trace all postings from the Journal to the ledger, taking note of the posting side and the amount Recall that the double entry bookkeeping system foll received there is an equal value parted; for every debit th girried out correctly, total debit balances should equal the total ened balances when you prepare FenpPulance. Even if the tral balance proves the duality of the totals, it does not necessarily follow that errors were not committed. The following errors could have been made which the trial balance would not be able to identify lows the duality concept that for a value 'ere is an equal credit. If this system is 41. Failure to record a transaction, 2. A transaction is journalized but not posted. Anerroneous amount is debited and credited for an entry, for example a P2,500 rental payment 's debited to rent expense and credited to cash as P2,000, i . A recorded transaction is posted twice. An amount is posted to the correct side but to the w ‘surance expense was posted to the debit side of salary expense Wrong account tite in recording the transaction. For example, a Purchase on account was credited to notes payable instead of accounts payable. ong account. For example, a debit to ‘You must therefore exercise care in recording transactions and posting them to the ledger. ‘There is a waste of time and effort When you trace back what you have done to locate the error. 109ae Se. ca SUBSIDIARY LEDGERS AND CONTROL ACCOUNTS A business has a number ofaccount cuftomers and creditors. I'an account is main h. the general ledger would be very crowded. more postings will be made, the ral by be longer. and it will be more difficult to locate erors. Inthe Happy Tour and Travel pee although there are two account customers only one accounts receivable is maintained inthe ge ledger. The same rule is applicable for accounts payable. You may have five or ten eredigg only one accounts payable is maintained in the general ledger. The accounts receivayy accounts payable in the general ledger are called control accounts. How do you keep track gt of your customer's account or of each of your supplier's account? An individual record iskepit cach one of them called subsidiary ledger or customer's card and creditor's card, where thega of their accounts are entered ‘ ea Using the statement of account or sales invoice, the accountant will post this on the dg side of the customer's eard. Using the official receipt representing collection from the custome! the accountant will post this on the credit side of the customer's card. In other words, posting; done twice: 1) from the business paper to the journal then to the general ledger and from the business paper to the subsidiary ledger. 2) then again The same rul liability, using the s are applicable for the account of a ereditor/supplier, except that since thisisg pPlier’s invoice this will be posted on the credit side of the suppliers car, and then when payment is made, using the check voucher this will be posted on the debit side The folio column in the journal is divided into two parts. The upper part of the slant isfy the account number to indicate that it has been posted to the general ledger. The lower par of te slant is checked to indicate that it has been. posted to the subsidiary ledger. From the balances coming from the cards, a schedule of accounts receivable or accounis payable will be prepared, the total of which should reconcile with the balance of the contr account found in the general ledger . Using the Happy Tour illustration, postings to the gener ledger and subsidiary ledgers as well as the schedule of accounts receivable will appear as in Figure 5.8 below JOURNAL SUBSIDIARY LEDGERS 1 Date [Aesounts& Explanation] F | Debt | Cred | name. Ac vier | Adds. 1234 Wilson St. Som 24 | Accounts Reoenabe ~~ [owe [tem | Fa Ta Seruce Income 16000 Toad == — — tats aalt eetie ‘ 2 | sanot PH 16000 00 veo ‘Srvc lneoee wwyoo] 30 forrest fir | O beswom | suet, 30 | can ~ | f= ‘Accounts Receite 8000S —- ae Tame 1 Aires aut Suan Ah GENERAL LDGEE Dine Teun STF [Det Cie] BS Account Ma ea | Dae [Tem TF Baws | 27 | savor — | Prommeo | 0 — | 200 ‘Marsh i 11 | wax000 1.90009 ' ” 22 | wane 36 00000 % 2 800000 | 2800000 Figure 5.7. Postings from the Journal to the Ledger 110HAPPY TOUR & TRAY} FL SCI-DULE OF ACCOUNTS R /NTS RECE] March 31,201) 7 'VABLE Ador Gray Faculty Club of P 8,000 Total 20.000 ; P 28,000 the total should be the same amount as the bak ledger on page 105. ee Of the control account in the Accounts Receivable gener GUIDE QUESTIONS 1. What is the simplest form of analytical tool used to n the accounts representing the accounting values? What is a chart of accounts? 3, The term debit means increase and cre Explain why or why not 4, State the rules of debit and credit for assets, revenue and expense. 5. Explain what is double entry bookkeeping, Identify the business papers supporting the following transactions: a. cash collected from client bs, cash paid for rent c. rendered service on account 4d, received service from PLDT record changes taking place in the each of means decrease. Do you agree with this statement? fiabilities, owner's capital, owner's drawing, 7. What is a journal and what is its use in business? 8. With the journal there is no need for the ledger. Do you agree? Why or why not? 9, What are the items contained in a journal entry? : 10. What order is usually followed in arranging the accounts in the general ledger? 1. Assuming tuition income is account no. 401, discuss how the credit entry (recorded in general journal page 2) will be posted to the general ledger: Date ‘Accounts and Explanation F Debit Credit] July 12 | Accounts Receivable 2750 000 Tuition Income 2.750000 2 2. What is a cross reference? Discuss the procedure. 13. What is a trial balance? What is its purpose? 4. What is the relevance of a subsidiary ledger? 'S. Ifaccounts receivable were maintained for each custome bea need for subsidiary ledgers? Explain why the use of the combination journal, compared to the general journal, would make the the general ledger, will there work of he accountant lighter.& Complete the matrix by entering cither debit or & ome EXERCISE: ‘dit in each cell: _| Increases” | “Decreases Accounts Recei 2. St a) interest income b) accounts payab| ©) salary expense d) notes receivable ©) Nava, Capital f) cash g) Nava, Drawing Advances from Cli fate whether the following accounts have debit balances or credit balanc ivable i) office supplies le j) rent expense k) rent income 1) rent payable m) building n) accumulated depreciation ©) depreciation expense h) supplies expense p) bad debts 3. Selected transactions for T. follows: Jan. 2 9 " ; 16 20 23 28 30 Instructions: Analyze the transactions and elements affected, the effect and given to facilitate your analysis: Account Basic [ses Element | Account | Carter. an interior decorator forthe first month of busines, ae Invested P50,000 cash to start the business, Paid P5,000 cash for advertising and P1,000 for rent, Purchased equipment for P7,000 cash Billed customers P2.300 for services performed Purchased supplies on account for P700 Received P!.100 cash from customers billed on Jan, 11 | Paid creditor P400 cash on balanced owed | Withdrew P1.200 for food spent in entertaining friends. } Used up P200 of the supplies purchased Using double entry bookkeeping, indicate the accous whether they should be debited or credited. A tableis Debited _ unt Credited ae Specific TT Nommal | Account | PME | palace 50,08 Caner [Tnerease vily | Capital |4. Alice Huerto opened her business valled Arrow Janitorial the transactions given below as to what vale \d whether the siecount and Maintenance Services. Analyze re allected, whether the ould be debited or ere, effect is an increase or Hed. See to it that there should at least be two accounts involved following the Venetian Model Fer example, to illustrate Oct | Oct.1 Asset increase, debit cash P200,000 Owner's Equity increase, credit Huerto, Capital P200,000 (You should analyze for the debit side first) Oct. 1 Miss Huerto made a cash investment of P200,000 2 Purchased furniture and fixtures ftom Bless on account, P30,000, 8 Purchased from Avesco office equipment and was required to pay 50% for P15,000, the balance on account 12 Borrowed P100,000 from Philippine Bank and :d a 90-day note. 15 Paid for salaries of clerks and janitors, P80,000 in cash, 18 Received a bill for printing of leaflets to promote het business, P5,000 20 Received P30,000 in cash as payment for maintenance contracts 21 Paid Avesco in full of account. Billings for janitorial services, to date: M. Y. San for P50.000 25 __ Billings for janitorial services, to date: SPUM PS0,000 of which 30% was collected. 26 Paid P17.500 for utilities 30 Paid for salaries of clerks and janitors. 31 SPUM paid 50% of the balance owing to Huerto, Use the following accounts: Cash, Accounts Receivable, Furniture & Fixtures, Office Equipment, Accounts Payable, Notes Payable, Huerto, Capital, Huerto, Drawing, Janitorial and Maintenance Service Fees, Advertising Expense, Salaries and Wages, Uiilities Expense. 5. The Ignacio Professional Care Center is a home for the elderly. The following are the transactions during the month of March 2011. 1 Miss Ignacio made a cash investment of 100,000. 2 Fumiture and fixtures for the living room were purchased on account, P50,000. 5 Purchased wood P20,000 and hired carpenters to make beds, P2,000. 10 Purchased supplies for cash, P17,850. 12 Bought office equipment from Delta Equipment and paid P15,000 in cash, 15. Professional Care, Fees of P65,000 represented total fees but only P50,000 were collected from the families for the first half of the month. 15. Salaries of two nurses and a doctor-consultant were paid, P18,000. 19. The outstanding accounts were collected in full. 20 Utility expenses paid, P8,500, 25 Supplies used, P1350. 28 30% of the account due from the furniture were paid in cash, 29 Paid for rent, P1 5,000 (P5,000 was for the canteen ofthe owner) and advertising P5,000, 30 Professional care fees collected for the second half of March amounted to P45,000 only. Salaries were paid in cash 3) Analyze the above transactions for the Center using T accounts for the following: Cash, Accounts Receivable, Supplies, Equipment, Furniture and Fixtures, Accounts Payable, Ignacio, Capital, Ignacio Drawings, Professional Care Fees Income, Advertising Expense, 13(Aa | id Supplies Expense, Rent Expense, Utilities Expense, Salaries Expense te b) Extract the balances, verify if fundamental ent still maine by Prep balance, a nened by Marcie Castille la 6. Marcie's Computer and Celfon Repair Center was opened by Ma loon May ps.000. Addit 125 + with a cash investment of P150,000 and furniture worth P5.000. Additional tng the month follow aid 3. Signed a contract of lease and made a deposit of Pl 5,000. 4 Paid for the construction of display counters, P25.000. 5 Bought repair supplies for cash, P7.500. 6 Bought and paid for furniture and fixtures, P45.000. : 8 Bought repair equipment worth P15,000 from XYO Co. for use in the store Paid 50% in cash with the balance on credit for 30 days. 9 Collected P1,500 for cell phone repair services. : 10 Billed Madison Corp. P3500 for computer repair services rendered 13 Paid for salaries of clerks, P5,000. 14 Summary of cash received P4,000 and a promissory note for P2,000 for compu, repair services, 15 Signed a contract with Telecom System for the repair work to be done on thy computers, P15,000 16 Paid for telephone, light and water, P3,800. 18 Sent a bill to Telecom System for repair work done. 22. Total cell phone repair work collected in cash, P8,500. 25 Repair supplies used amounted to P2.200. 30 Payments for: Salaries, P5,000; Rent, P5,000. 31 Marcie Castillormade a cash withdrawal of P2,500. Instruction: a) Analyze the above transactions and record using T accounts for the folloving 1 Cash 41 Castillo, Capital 2 Accounts Receivable 42 Castillo, Personal 3 Notes Receivable 51 Repair Fees Revenue 4 Repair Supplies 61” Repair Supplies Used 11 Office Furniture 62 Rent Expense 12 Repair Equipment 63 Salaries Expense 21 Deposit for Rent 64 Utilities Expense 31 Accounts Payable +) Extract the balances and prepare a trial balance. 7. The T accounts below summarize the ledger of Rachel’s Landscapii atthe end of its first month of operations. Se Cash u e ai 30,000 | 4715 5,000 a De 421,200] 451,600 429 900 | 430 1,400 | | 114Pee Ga ae a9 8 30000 Supplies 44 900 2,900 1,200 Accounts Payable a ries Exp 1,600 | 4/4 1,900 4S 5.000 Required: a). Prepare the complete general journal entries (including explanation) from which the cash postings were made b) Prepare a trial balance at April 30, 2012 based on the above postings. 8. The following are the transactions of Joy Davila Consultancy Office for January for its first month of operation: 1 Joy invested P100,000 cash and P75,000 office equipment 2 Signed a contract of lease for a monthly rental of P15,000. 2 Bought furniture and fixtures for P10,000 and paid in cash. 3 _ Bought office supplies trom Goodwill Bookstore for cash, P5000. 7 Received P50,000 cash for the cost system installed for a manufacturing company. 14. Paid salary of secretary and two clerks for the first half of January, P12,500. 16 Billed a client, Megaball, for audit work rendered P40,000. 17 Dolly's Modeling School was billed P15,000 for accounting services rendered. 20 Megaball paid one-half of its account. 21 Bought a second hand car for business use, P230,000. Gave a down payment of P75,000 and issued a note for the balance. : 24 Dolly's Modeling Schoo! paid PS.000. 24 Joy took P6,000 cash for personal use. 25. Paid for rent and salary. Received utility bills for P3,750. 31 P4,500 supplies were used up, Required: Identify the business papers supporting each transaction. b. Analyze the above transactions and record in a two-column general journal. Use the following accounts: Cash, Accounts Receivable, Office Supplies, Fumiture and Fixtures, Office Equipment, Automobile, Notes Payable, Utilities Payable, Joy Davila , Capital, Joy 1, Drawings, Professional Fees, Rent Expense, Salaries Expense, Supplies Expense, es Expense. ©. Make simultaneous postings to the accounts receivable subsidiary ledgers. 4. Open a Chart of Accounts. Use account nos. 1 10.10 for current assets, 11 to 20 for non- ‘current assets, 21 to 30 for current liabilities, 31 to 40 for non-current liabilities, 41 and 42 for the owner's capital and drawing accounts, 43 for the revenue account, 44 to 50 for the expense accounts. © Open the general ledger and post the journal entries. Prepare a trial balance. Prepare a schedule of accounts receivable and compare this to the balance of the control Account found in the general ledger, 1S<< 9. 10. The trial balance of the Sterling Investigative Servi Dr. Tom Cruz opened the Makati Diagnostic Center. a laboratory where the overs, 'S Cop workers of Cruz Manpower Services (owned also by Dr. Tom bee i for lay fxamination as well as the applicants and employees of Hotel Intemational and Nay, yy, He made the following investments: cash of P150,000. taby Deda OFPL sug lt land of P250,000, and building of P2,500,000. The follow onal transagi for October: ‘ 3. Purchased furniture and fixtures for cash, P15.000. 4 Purchased office equipment worth P75,500 on account from Olympia Whose gyn, friend of Dr. Cruz. 5 Bought office supplies and paid cash of P15.000, 7 Bought laboratory supplies and paid cash of P30.000. 8 Received cash of P14,500 from various patients for laboratory work done, 0 Placed an ad in the Philippine Star to run for three Sundays starting onthe 14%, one third for P18,000. 14 Billed the following establishments for laboratory examinations done: jy, International P16,000 and New World, P18,000. 18 Paid for semi-monthly salaries, P25,750. 19 Paid Olympia PS0,000. 20 Collected P10,000 from Hotel International and P14,000 from New World, 23 _ Billed Cruz Manpower Services for laboratory examinations of contract workers, P1509) 25 Received bills from - PLDT, P3,000 and Meralco, P2,500. 27 Returned defective equipment to Olympia and received a reduction of P1,500 from ie outstanding account. 28 Paid half of the balance owing to Philippine Star. 29 Paid for semi-monthly salaries. 30 Received cash from various patients for laboratory examinations, P7,500. 31 Collected in full from Cruz Manpower Services. Used up half of the laboratory supplies and P5,000 of the office supplies. Required: a) Go over the transactions first and create account no.101 for current assets, 201 liabilities, 401 for capital, 501 for revenue, and 601 for expenses, >) Jouralize using a 2 column general journal, post simultaneously to the accouns receivable and accounts payable subsidiary ledgers, ©) Post to the general ledger, extract the balances and prepare a trial balance. 4d) Prepare a schedule of accounts receivable and accounts payable and reconcile against he control accounts found in the general ledger (or inthe trial balance) your own chart of accounts, Start wil for non-current assets, 301 for current ices shown next page does not balance. You review of the general ledger reveals that each account has a normal balance. You a discovered the following errors, a. The totals of the debit sides o}Trial Balance May 31, 2012 Debit Cash P55,800 Accounts Receivable Rent Deposit 7,000 Equipment 80,000 Accounts Payable Silver, Capital Professional Fees 66,900 Salaries Expense "42,000 Advertising Expense Representation Expense 8,000 259,700 Required: Prepare a correct trial balance Credit 27,500 45,000 10,300 117,000 11,000 210,800 11, The trial balance as of July 31, 201 Iwas prepared by the secretary of Bayanihan Modeling Agency. The following errors were discovered: a) The cash footing in th jeneral ledger was overstated on the credit side by P4,500. b) A payment ofa note for P5,000 was jouralized but the debit to notes payable was not posted. ©) A debit to utility expense for P1,500 was posted as P1,000. d) Salary expense of P3,000 was posted to transportation expense. Moreno, Capital. | | | Interest Expense was overlooked in the ledger, P740. Particulars Debit Cash P 43,000 Accounts Receivable 18,400 Supplies Unused 5,084 Prepaid Insurance 3,000 Equipment 58,786 ‘Accumulated Depreciation Notes Payable ‘Accounts Payable Pitoy Moreno, Capital Pitoy Moreno, Drawing 2,000 Talent Fees Salaries Expense 46,500 Rent Expense 6,000 Advertising Expenses 12,100 Utilities Expenses 5,920 Depreciation Expense 5,000 Insurance Expense 7,000 Transportation Expenses 16.400 P229,190 Totals Required: Prepare a correct trial balance. ‘A debit of P500 for the drawing account of Moreno was posted to the credit ‘A debit entry for accounts receivable, was posted to the credit side, P6,000. Credit P 15,000 14,000 5,650 73,000 145,280 P252,930 it side of | 117a taboratory where the over, 9, Dr-Tom Cruzopened the Makati Dizznosti Cente 9/0000 Cruz) go for nny pr kere of Cruz Manpower Services (owned 380 PD rn i ratang nytt! eamination aswel asthe applicants and ee a cuipment of a Bene the following investments: cash of PLS0.000, rn ational ig ty and of P250,000, and building of P2,300,000. THis 1 = for October: orcas, P15.000 3 areas Fumie and Fa fom OlyMP Whos yy 4. Purchased office equipment worth P75.° ry friend of Dr. Cruz. Bought office supplies an 1d paid cash of P15,000 f 0. Bought laboratory supplies and paid cash of 30,00 5 ¥ 8 Received cash of P14,500 from various path (0. Placed an ad in the Philippine Star to run Tor three ‘one third for P18,000. 14 Billed. the following establishments for laboratory eX International P16,000 and New World, P18,000. 18 Paid for semi-monthly salaries, P25,750. 19 Paid Olympia P50,000. 30. Collected P10,000 fiom Hote! international and P14,000 from New World 33 Billed Cruz Manpower Services fr laboratory examinations of contract workers, P15. 25 Received bills from - PLDT, P3,000 and Meralco, P2,500. 27 Retummed defective equipment to Olympia and received a reduction of P1500 from ty outstanding account, 28 Paid half of the balance owing to Philippine Star. 29 Paid for semi-monthly salaries. 30 Received cash from Various patients for laboratory examinations, P7,500. 31 Collected in full from Cruz Manpower Services. Used up half of the laboratory supplies and P5,000 of the office supplies. Required: ) Go over the transactions first and create your own chart of accounts. Start wi y account no.101 for current assets, 201 for non-current assets, 301 for cura liabilities, 401 for capital, 501 for revenue, and 601 for expenses. b) Journalize using a 2 column general journal, post simultaneously to the accouns § receivable and accounts payable subsidiary ledgers. i ©) Post to the general ledger, extract the balances and prepare a trial balance | 4d). Prepare a schedule of accounts receivable and accounts payable and reconcile against control accounts found in the general ledger (or in the trial balance) ents for laboratory work done, Sundays starting on the 1p, ations done: Hg ! 10, The trial balance of the Sterling Investigative Services shown next page does not balance. Your review of the general ledger reveals that each account has a normal balance. You ab? discovered the following errors. b a. . The totals of the debit sides of Rent Deposit, Acc } Ut tation Expense were each understated P1,000. etal aged b. Transposition errors were made in Accounts Receivable and Service Revenue i __ bad on Posing ade, the correct balances were P25,700 and P69,600, respect ‘ment for P9,400 was properly record: ‘ prope M { the accountant filed to post to the debit isco eg The tral balance shows some accounts are not on theis epee cre es. 116Sterling Investigative Services Trial Balance May 31, 2012 Debit Credit Cash PS5,800 Accounts Receivable P27,500 Rent Deposit 7,000 Equipment 80,000 Accounts Payable 45,000 Taxes Payable 10,300 Silver, Capital 117,000 Professional Fees Salaries Expense Advertising Expense Representation Expense 11,000 P210,800 Required: Prepare a correct trial balance, M1, The tral balance as of July 31, 201 was prepared by the secretary of Bayanihan Modeling, } Agency. The following errors were discovered: | @ The cash footing in the general ledger was overstated on the credit side by P4,500. | _)- payment ofa note for P5.000 was joumalzed but the debit to notes payable was not posted. | ©) A debit to utility expense for P1,500 was posted as P1,000, 4) Salary expense of P3,000 was posted to transportation expense. | ©) A debit of P500 for the drawing account of Moreno was pested to the eredit side of Moreno, Capital, f) Interest Expense was overlooked in the ledger; P740, 8) A debit entry for accounts receivable, was posted to the credit side, P6,000. Particulars Debit Credit Cash P 43,000 Accounts Receivable 18,400 Supplies Unused 5.084 Prepaid Insurance 3,000 Equipment 58,786 Accumulated Depreciation P15,000 Notes Payable 14,000 Accounts Payable 5,650 Pitoy Moreno, Capital 73,000 Pitoy Moreno, Drawing 2,000 Talent Fees 145,280 Salaries Expense 46.500 Rent Expense 6,000 Advertising Expenses 12,100 Utilities Expenses 5,920 Depreciation Expense 5,000 Insurance Expense 7,000 Transportation Expenses 16.400 Totals P222.190 Required: Prepare a correct trial balrr PROBLEMS inthe following trans 1. Eagle Travel Service, owned by Benjo Pascual engaged hn th ACtIONS fy, month of July of P22,500. enjo invested eash of" P100,000 and farniture a P30,000. a 5. Paid PS,000 for business brochures and callie Sa 6 Bought offie equipment on account P1250 8 Bought office supplies and paid cash of PI. 10 Collected 3,000 from Mr and Mrs. Adamis for the processing of their travel py, 11 Paid P1.200 for passport and other document 12 Arranged a Palawan trip for Mr. mn ia Bry P5,000 in cash from the airline and hotel 3 Signed amagreement with Golden Talent Agency forthe processing ofthe travel pay, of their talents al 14 Billed DLSU professors P15,000 for the processing of thelr tr avel papers 15. Arranged a pilgrim trip forthe DLSU prolessors. Billed Philippine Airlines P10,099,, commission, 16 Paid for the salaries of employees, P12,500. : 18 Paid P1500 as transportation expenses for the processing of papers to and from DF, National Census and the airline companies. 19. Benjo withdrew P1,300 in anticipation of profits to be earned. 20 Paid for passports and other document fees, P7,500. 24 Collected P5,000 from Philippine Air Lines. 27 Billed Golden Talent Agency for processing of papers, P10,000, 30 Paid P3,000 to PLDT and P4,500 to Meralco. Paid P12,500 for salaries. fees. an Adams. Collected a commission Required: Journalize the above transactions using a two-column general journal. 2. The April 2011 transactions of Budget Driving Institute owned and managed by Crisis Rosales are listed below: 2. Rosales invested P250,000 cash and P15,000 furniture and fixtures. 4 Two second hand cars were purchased and a 50% down payment of P150,000 ws made. Issued a promissory note for the balance. 5 Bought office equipment for cash, P12,000. 6 Two student drivers filled up an application form stating, among others, that they wee willing to pay P2,000 each for a one-week lesson, 7 Paid P2,000 for gas and oil. 8 Paid P10,000 foran advertisement that was posted along the highway business 11 The two student drivers paid in full ene eee enone te 14 Another two student drivers were billed for P4,000 but onl h. 15. Salaries were paid forthe first half of April amounting to P4300 19. Ms. Rosales made a cash withdraval of PI 500, : riving Fees of P7,000 were billed to various eli e 27. Utility bills paid in cash, P4,500, E7500) 30 Salaries were paid for the second half of April, 1184: a) Open a chart of account. Revenue Title should be Driving Fees. Start with 101 iepauent assets, 201 for non current asses, 301 fer curses pa 401 for non-current liabilities, 501 for capital 6ol fee oo 01 for soles ; revenues, 701 for b) Record the above transactions in a two-column ge ) Re transact general journal, {rfowing account titles: Cash, Accounts Receivable, Furniture & Pstqt'® Office Equipment, Cars, Accounts Payable, Rent Payable. Notes Payable, Rosales, Capital, Rosales, Drawings, Driving Fees: Revenue Advertising Expense, Gas and Oil Expense, Salaries Expense, Rent Expense. Uline Expense, ©) Open the general ledger, make posti 2 Paid for the rent bill. 3 Received a bill from Cifra Motors for P3,500 repair work done on the ear. 4 The owner invested two taxi units costing P500,000, 5 Paid for insurance P1,500 and for taxes and licenses P2,500, 6 Hired two drivers for the taxi units. 7 Total revenues collected, P8,100 of which P3,600 came from the boundary fees of the taxi units 8 Paid P4,500 for gas and oil. 9 Installed an aircon unit in the office for P12,500 payable after three months. 12 The account customers paid in ful 18 Paid for the semi-monthly salaries, 20 A summary of revenues showed a total of P7,500 for the driving lessons but P1,000 is still uncollected. : 21 Paid Cifra Motors in full of account. 27 Total boundary fees collected amounted to P 12,000. 28 Paid P4,500 for gas and oil and repair of taxi units for P2,500. 31 Paid for rental and salaries. Required: a) Continue recording the above transactions. Use an additional revenue account for Boundary Fees and additional expense accounts for Repairs, Insurance and Taxes and Licenses. b)' Make postings to the general ledger and prepare a cumulative trial balance for two months ending May 31, 2011. Alice Vergel opened the Mega Theatre by investing cash of P500,000 on December 1. The following transactions took place during December: 3. Purchased the equipment used by Cine Theatre which was closed down by the goverment. Terms: P200,000 down, balance covered by one year promissory note for P300,000. 4 Signed a contract of lease with Alabang Realty. Gave a deposit of P100,000 for rent. 5 Paid cash of P15,000 for advertising the theatre and for the purchase of billboards. 6 Furniture and fixtures worth P 150,000 were constructed by Engineer Gonzales. Gave a 50% down payment, balance to be paid within 90 days. ~ 8 Opened the theater with a gala premiere that brought in cash receipts of P20,000. 11 Additional cash receipts for the week, P14,500, 12 Received a bill for P15,000 from LVM Productions for the rental of film, 16 Leased out part of the lobby for the operation of a canteen at a monthly rental of P7,500. 18 Cash receipts for the week, P15,000. !9. Paid P1,500 for taxes and licenses. 23 Paid P10,000 to LVM Productions. 119