LET’S ANALYZE

Activity 9. Understanding the normal balances is just a guide for you to correctly analyze the effect of
the transactions in the accounting equation. The most crucial part of the accounting process is the
journalizing function which is the recording of transaction in the journal. In this activity you are going to
identify the type of transactions (SA, UA, EA or EC), the value received and parted with,(using the
specific account title); the effect of the transactions and at the same time identify where to place the
increase or decrease of the accounts, is it on the debit? or on the credit side. Again a perfect score is
required so that that you can really prepare correctly the journal entries. The first 2 transactions are
answered for your reference.

TRANSACTIONS TYPE OF Value Received and EFFECT WHAT TO

TRANSAC Value Parted With DEBIT AND
TIONS WHAT TO
CREDIT
Example: On Oct. 1, 2019 SA Increase in Debit Cash
Mr. Reyes invested cash Value Received: Cash Asset (Cash) Credit Capital
into his business to engage Increase in
in an “Internet Café” Value Parted With: Owner’s
Capital Equity
(Capital)
Example: Paid salaries of UA Decrease in Debit Salaries
employees Value Received: OE (Salaries Expense
Salaries Expense Expense) Credit Cash
Decrease in
Value Parted With: Asset (Cash)
Cash

1 Oct. 2, 2019 Paid rental of UA

internet space Value Received: Rent Decrease in Debit Rent
Expense OE (Rent Expense
Expense)
Value Parted With: Credit Cash
Cash Decrease in
Asset (Cash)

2 On Oct. 3, 2019 He bought EA

4 computer units for cash Value Received: Increase in Debit
Computer Asset Computer
Equipment (Computer Equipment
Equipment)
Value Parted With: Credit Cash
Cash Decrease in
Asset (Cash)

3 On Oct. 4, 2019 Paid UA

deposit to Davao Light for Value Received: Decrease in Debit Utilities
the light connection Utilities Expense OE (Utilities Expense
 Expense)
Value Parted With: Credit Cash
Cash Decrease in
Asset (Cash)

4 On Oct. 5, 2019 Paid the UA

business permit and BIR Value Received: Decrease in Debit Taxes
registration Taxes and Licenses OE (Taxes and and Licenses
Licenses)
Value Parted With: Credit Cash
Cash Decrease in
Asset (Cash)

5 On Oct. 5, 2019 Bought SA

supplies for the internet Value Received: Increase in Debit
shop in cash (Asset Computer Supplies Asset Computer
Approach) (Computer Supplies
Value Parted With: Supplies)
Cash Credit Cash
Decrease in
Asset (Cash)

6 On Oct. 6, 2019 He paid UA

one month internet Value Received: Decrease in Debit Internet
connection Internet Expense OE (Internet Expense
Expense)
Value Parted With: Credit Cash
Cash Decrease in
Asset (Cash)

7 On Oct. 7, 2019 Received SA

cash from customers Value Received: Cash Increase in Debit Cash
Asset (Cash)
Value Parted With: Credit Service
Service Income Increase in OE Income
(Service
Income)

8 On Oct. 10, 2019 Bought SA

additional 1 unit computer Value Received: Increase in Debit
on credit Computer Asset Computer
Equipment (Computer Equipment
Equipment)
Value Parted With: Credit
Accounts Payable Increase in Accounts
Liability Payable
(Accounts
 Payable)

9 On Oct. 11, 2019 Cash EA

receipts for 5 days Value Received: Cash Increase in Debit Cash
Asset (Cash)
Value Parted With: Credit
Accounts Decrease in Accounts
Receivables Asset Receivables
(Accounts
Receivables)

10 On Oct. 14, 2019 Billed a SA

loyal customer for 10 days Value Received: Increase in Debit
use of internet Accounts Receivable Asset Accounts
(Accounts Receivables
Value Parted With: Receivables)
Service Income Credit Service
Increase in OE Income
(Service
Income)

11 On Oct. 16, 2019 Paid in SA

full the account made in Value Received: Cash Increase in Debit Cash
Oct. 10 Asset (Cash)
Value Parted With: Credit Service
Service Income Increase in OE Income
(Service
Income)

12 Oct. 18, 2019 Received EA

partial payment from the Value Received: Cash Increase in Debit Cash
customer for his account Asset (Cash)
on Oct. 14 Value Parted With: Credit
Accounts Decrease in Accounts
Receivables Asset Receivables
(Accounts
Receivables)

13 Oct. 25, 2019 Received bill EC

from Davao Light for the Value Received: Decrease in Debit Utilities
month’s light consumption Utilities Expense OE (Utilities Expense
to be paid next month Expense)
Value Parted With: Credit
Accounts Payable Increase in Accounts
Liability Payable
(Accounts
Payable)