End of Chapter Exercises

Journalizing and Posting to T-accounts

Exercise 5.1 Journalizing Transactions

Prepare journal entries to record each of the following transactions for Thomas Delivery Service. Use the letter
of the transaction in place of the date. Include an explanation for each entry.

a) Invested cash, P 300,000.

b) Purchased trucks by signing a note bearing no interest, P 210,000.
c) Earned service revenue on account, P 4,800.
d) Collected the account receivable resulting from transaction (c), P 4,800.
e) Paid the note payable for the trucks purchased, P 210,000.
f) Paid utilities for the month in the amount of P 1,800.
g) Paid salaries for the month in the amount of P 7,500.
h) Incurred supplies expenses on account in the amount of P 1,920.
i) Purchased another truck for cash, P 48,000.
j) Performed delivery services on account, P 24,000.

Exercise 5.2 Journalizing Transactions

The transactions of Lightning Package Delivery Company for March follow:

Mar. 1 The company was organized and Mr. Lee invested P 300,000 cash.

2 Paid P 6,000 as the rent for March on a completely furnished building.

5 Paid cash for delivery trucks, P 180,000.

6 Paid P 4,000 as the rent for March on two forklift trucks.

9 Paid P 2,200 for supplies received and used in March.

12 Performed delivery services for customers who promised to pay P 27,000 at a later date.

20 Collected cash of P 4,500 from customers on account (see March 12 entry).

21 Received a bill for P 1,200 for advertising in the local newspaper in March.

27 Paid cash for gas and oil consumed in March, P 450.

 31 Paid P 2,400 salaries to employees for March.

31 Received an order for services at P 12,000. The services will be performed in April.

Required: Prepare the journal entries.

Exercise 5.3 Journalizing Transactions

Creative Advertising, owned by Miss Abida Masood, provides advertising consulting services. During January
20x1, the following events occurred:
Jan. 2 Owner contributed P 250,000 and a new computer costing P 20,500 to start her business.
Jan. 4 Office supplies were purchased on account for P 14,000.
Jan. 10 Creative Advertising obtained 12% 5-year loan of P 200,000 from the bank.
Jan. 12 Creative Advertising paid the utility bills for P12,750.
Jan. 15 Paid the P 6,000 in Accounts Payable from the purchase of office supplies on Jan. 4.
Jan. 24 Advertising services completed in January were billed to clients Annies’ Flowers at P 18,300.
Jan. 27 Creative Advertising received P 5,500 from Annies’ Flowers, a client, as payment on account.
Jan. 30 Miss Abida Masood withdrew P 6,000 of cash for personal use.

Required: Prepare the journal entries.

Exercise 5.4 Journalizing Transactions and posting to T- accounts

Prepare the journal entries and post transactions to appropriate T-account. Make Trial Balance with Totals and
Trial Balance with Balances and Totals for ABC Designs as on March 30 th, 20x1:

Ahmed Bajwa, an interior decorator, completed the following transactions during the month of March:

1. Begun his business with Equipment valued at P180,000 and placed Cash P 300,000 in a business Bank
Account.
2. Purchase a used Motor Car costing P 150,000 and paid by check.
3. Completed painting a two-story house and billed the customer, P 24,800.
4. Received cash for painting two rooms, P 15,000. It was kept in cash till.
5. Hired assistant to work with him, to be paid P 300 per day.
6. Purchase supplies for P 14,600 and paid by check.
7. Paid assistant for six days work, P1,800 in Cash.
8. Received cheque for painting five room apartment P 33,600 and check is not deposited.
9. Transfer P 2,000 to personal bank account.

Exercise 5.5 Journalizing Transactions and Posting to T-accounts

Mang Juan began professional practice as a financial consultant on June 1. He plans to prepare a monthly
financial statement. During June, the owner completed these transactions):

July 1 Owner invested P 400,000 cash along with computer equipment that had a market value of P120,000
two years ago but was now worth P 80,000 only.

2 Paid P 12,000 cash for the rent of office space for the month.

4 Purchased P 6,000 of additional equipment on credit (due within 30 days).

9 Completed a work for a client and immediately collected the P 32,000 cash.

11 Completed work for a client and sent a bill for P 18,000 to be paid within 30 days.

12 Purchased additional equipment for P 7,000 in cash.

15 Paid an assistant P 7,500 cash as wages for 15 days.

18 Collected P 15,000 on the amount owed by the client.

25 Paid P 12,000 cash to settle the liability on the equipment purchased.

28 Owner withdrew P 1, 500 cash for personal use.

 31 Paid salary of assistant P 1,000.

31 Received Globelines bill, P 1,250 and BOHECO bill P 3,450.

Required: Prepare the journal entries and T accounts for this business

Exercise 5.6 Journalizing Transactions and Posting to T-accounts

The company started business on June 6, 20x1. The business was started with P300,000. The transactions they
engaged in during their first month of business are below:
Date Transaction
June 7 Collected P200,000 for services rendered to clients.
June 8 An amount of P150,000 was paid for six months of rent.
Equipment costing P80,000 was purchased using P40,000 cash. The remaining amount
June 9
of P40,000 is a one year note with an interest rate of 3.4%
June 10 Office supplies were purchased totaling P18,000 on account.
June 16 Received P29,400 in cash for services rendered to clients.
June 16 Paid the account for office supplies purchased June 10.
P54,500 worth of services were given to clients. Received cash amount of P32,800.
June 20
Clients promised to pay remaining amount.
June 21 Paid employees’ wages for June 8-June 21. Wages totaled P18,500.
June 21 Received P15,200 in cash for services rendered to clients on June 20.
June 22 Received P8,300 in cash as advanced payment from clients.
June 27 Office supplies were purchased totaling P5,300 on account.
June 28 Electricity bill received totaling P2,850.
June 28 Phone bill received totaling P2,450.
June 28 Miscellaneous expenses totaled P5,120.

Required: Prepare the journal entries and T accounts.

Exercise 5.7 Journalizing Transactions, Posting to T-accounts and Preparation of Trial Balance

The following are the transactions for the first month of operations of AB Bookkeeping Services:

Date Transaction
March 1 Invested P3,000,000 cash in the business.
March 3 P200,000 were paid as advanced rent for six months.
March 4 Office supplies were purchased on account totaling P25,000.
March 6 Services were provided to clients, and the firm received P33,000 in cash.
March 7 The accounts payable for office supplies purchased on March 4 was paid.
P200,000 in cash was used to purchase equipment costing P240,000. The remaining
March 7
balance became a one year note payable with interest rate of 4%.
March 9 Office supplies were purchased on account totaling P10,500.
March 12 Services were provided to clients, and the firm received P24,500 in cash.
March 13 The accounts payable for office supplies purchased on March 9 was paid.
March 14 Employees were paid wages for March 3-March 14 totaling P35,600.
 Services were provided to clients totaling P256,720. Clients paid P143,650 with a
March 14
promise to pay P113,070 remaining balance in the future.
March 20 Office supplies were purchased on account totaling P5,400.
Clients paid P100,000 toward the P113,070 remaining balance for services rendered
March 21
March 14.
March 23 The accounts payable for office supplies purchased on March 20 was paid.
March 25 Clients paid P13,070 for services rendered March 14.
March 27 Clients paid P23,000 in advance for services to be received.
March 28 Employees were paid wages for the final weeks of March, totaling P45,360.
March 28 Electricity bill was received totaling P6,750.
March 28 Phone bill was received totaling P8,754.
March 31 Miscellaneous expenses for the month were totaled at P15,450.

Required: Prepare the journal entries, post them to the T accounts and generate the Trial balance.
Exercise 5.8 Journalizing Transactions, Posting to T-accounts and Preparation of Trial Balance G. Bell,
a fitness enthusiast, buys an existing exercise center, Body Firm. The following chart of accounts now applies:

Assets Revenue

111 Cash 411 Income from Services

124 Land

126 Building Expenses

128 Equipment 511 Wages Expense

512 Utilities Expense

Liabilities 513 Advertising Expense

221 Accounts Payable 514 Repair Expense

223 Mortgage Payable 519 Miscellaneous Expense

Owner's Equity

311 G. Bell, Capital

312 G. Bell, Drawing

Apr. 16 Bell deposited P100,000 in a bank account for the purpose of buying Body Firm.

17 Bought the assets of Body Firm for a total price of P188,000. The assets include

equipment, P28,000; building, P96,000; and land, P64,000. Made a down payment

of P89,000 and signed a mortgage note for the remainder.

17 Bought additional equipment from Fitness Supply Co. on account for P3,550, paying P710
down, with balance due in thirty days.

29 Celebrated the grand opening of Body Firm. Advertising expenses were paid in

cash for the following:

 Advertising in newspaper P 314

Announcements mailed to local residents 85

Postage 125

Balloons, ribbons, flowers 126

Food and refreshments 58

30 Received fees for daily use of the facilities, P1,152.

30 Paid wages for the period April 17 through April 30, P833.

30 Received and paid electric bill, P129.

30 Received and paid repair bill, P96.

30 Bell withdrew P600 for personal use.

Required:

1. Record the transactions in the general journal.

2. Post the transactions to the general ledger.

3. Prepare a trial balance as of April 30.