NATIONAL UNIVERSITY

Manila, Philippines
College of Business & Accountancy
Department of Accountancy
SY 2021 -2022
BAINTE1X: Integrated Accounting Fundamentals

ACTIVITY 4: ANALYZING TRANSACTIONS

1. The Philippine Airlines has provided the following information regarding ticket sales and
collections from September to November:

Cash received in September to October flights P5,500,000

Cash received in October for October flights 3,000,000
Cash received in October for November flights 4,000,000
Cash received in November for October flights 4,500,000

a) Using the accrual rule, determine how much revenue should be reported for October.
ANSWER: ₱13,000,000
b) Using the cash concept, determine how much revenue should be reported for October.
ANSWER: ₱7,000,000

2. Bentong Consultancy has provided the following information regarding cash payments to its
employees from May to July:

Salary payments in May for work performed by employees in April P28,0

00
Salary payments in June for work performed by employees in May 20,00
0
Salary payments in June for work performed by employees in June 25,00
0
Salary payments in July for work performed by employees in June 10,00
0

a) Using the accrual rule, determine salary expense to be reported for June
ANSWER: ₱35,000

b) Using cash concept, determine the salary expense to be reported for June
ANSWER: ₱45,000
3. Master Music Company had the following transactions in March:

. b. Paid P600 in wages for the month

c. Received a P200 bill for utilities that will paid in April
d. Received P1,000 from customers as deposits on music lessons to be given in April

Complete the following statements in March:

Cash Basis Income Statement Accrual Basis Income Statement

Revenues Revenues
Cash from Music Lessons P6,000 Sales of Music Lessons P11,000

Expenses Expenses
Wages Paid (P600) Wages Expenses (P600)
Utilities Expenses (P200)
Net Income P5,400
P10,200

4. During the month of October, High Performance Company has the following transactions:
a. Revenues of P100,000 were earned of which 80% was received in cash
b. Bank loans P25,000 were paid off
c. Equipment of P50,000 was purchased and paid in cash
d. Expenses of P75,000 were incurred but P25,000 was not paid in cash
e. Additional P60,000 cash contribution was made by the owner
f. Owner’s personal expenses paid using cash of the business, P10,000
Using the matrix, determine profit, cash, liabilities and equity balances as at October 31

Transaction Revenues Cash Asset other Liabilities Owner’s

(Expenses) Received or than cash Incurred Capital
(Paid) (Paid)
Balances P75,000 150,000 P80,000 ₱145,000
a) 80% ₱100,000 ₱80,000 ₱20,000
received by
cash
Bank loans (₱25,000) (₱25,000)
Purchased (₱50,000) ₱50,000
equipment
expenses (₱75,000) (₱50,000) ₱25,000
Contribution ₱60,000 ₱60,000
of owner
Withdrawal (₱10,000) (₱10,000)
for personal
 use
TOTAL ₱25,000 ₱80,000 ₱220,000 ₱80,000 ₱195,000

g. Transfer the net profit to the capital account.

ANSWER: The total amount is ₱220,000
Net Profit = ₱25,000
Capital = ₱195,000

Required:
a) Compare profit and cash. Comment on why the balances are not the same.
ANSWER: The profit is 25,000 dollars, and the cash is 80,000 dollars. They are not in
balance because there is a $75,000 beginning cash balance.

Prove the accounting equation. Is owner better off at the end of the month? Explain.
ANSWER: The owner is doing better in October than last month since the equity and
assets of the owner have increased, while the liability has remained unchanged,
increasing by $75,000 in October.
ASSETS = LIABILITIES + OWNER’S EQUITY
ASSETS LIABILITIES OWNER’S EQUITY
BALANCES ₱225,000 ₱80,000 ₱145,000
OCTOBER ₱300,000 ₱80,000 ₱220,000

5. Analyze the following transactions and fill up the given matrix. The answer to the first
transaction is given as an example:
Income
Statement of Financial Position
Statement
Business Transaction + Revenues Total Owner’s
Total Assets
- Expenses Liabilities Equity
1 Owner invested P100000 +100,000 +100,000
cash in business
2 Incurred legal expenses -10,000 -10,000
and paid P10,000
3 Paid cash for employee -15,000 -15,000
wages, P15,000
4 Issued note for cash +300,000 +300,000
borrowed, P300,000
5 Received P50,000 cash +50,000 +50,000
for service provided
6 Bought car P500,000. +500,000 / +250,000
50% down, note for 50% -250,000
 7 Bought office equipment +180,000 +180,000
on credit, P180,000
8 Provided services to +75,000 +75,000
clients on credit, P75,000
9 Collected 50% on client +37,500
accounts -37,500
10 Owner withdrew cash, -5,000 -5,000
P5,000
11 Net Income/Net loss to ₱100,000 ₱925,000 ₱730,000 ₱95,000
Owner’s Equity

a. Get the totals and prove the accounting equation

ANSWER: No, because their monthly revenue is less than their monthly expenses.

ASSETS: ₱925,000
LIABILITIES: ₱730,000
OWNER’S EQUITY & REVENUE: ₱195,000

ASSETS = LIABILITIES + OWNER’S ₱925,000 = ₱730,000 + ₱195,0000

EQUITY

b. Out of the total assets, how much is cash?

ANSWER: ₱120,000

6. On June 1, Nat Luma formed a law firm and showed the following balances on June 30.
Cash P120,000 Personal withdrawals by Luna P33,000
Accounts Receivable 150,000 Consulting fees earned 250,000
Office Supplies 22,500 Rent expense 25,500
Car 360,000 Salaries expenses 60,000
Office equipment 280,000 Telephone expenses 7,200
Accounts Payable 75,000 Advertising expenses 6,800
Owner Investment 800,000 Furniture and Fixtures 60,000

Required:
a) Prepare an income statement and a statement of changes of owner’s equity
 Nat Luma Law Firm
Income Statement
For the month ended June 30, 2020

Service Income ₱250,000

Less: Rent expense ₱25,500

Salaries expense ₱60,000
Telephone expenses ₱ 7,200
Advertising expenses ₱ 6,800 ₱99,500
NET INCOME: ₱150,500

Nat Luma Law Firm

Statement of Owner’s Equity
For the month ended June 30, 2020

Owner, Capital October 1 ₱800,000

Add: Net Income ₱150,500
TOTAL ₱950,500
Less: Drawings ₱ 33,000
Owner Capital, October 31 ₱917,500
b) If properties are depreciated by 2%, what will be the revised net income?
ANSWER: The revised net income will be ₱136,500
 CAR, OFFICE EQUIPMENT, and TOTAL
FURNITURE & FIXTURES
₱150,500 - ₱14,000 = ₱136,500
₱360,000 + ₱280,000 + ₱60,000 = ₱700,000 x 2% ₱14,000

7. The Family Medical Clinic is owned and operated by Galing. Dr. Galing has the following
assets and liabilities when he started the clinic on July 1: Cash, P54,200, medical supplies
(medicine, bandages) P3,850, medical equipment, P75,000, Accounts Payable on medical
equipment P25,000. His business transactions during July are the following:

a. Received cash from patients for services performed, P40,000.

b. Paid amounts owed for medical equipment, P15,000
c. Received cash from account patients P10,000 for medical services of P20,000
d. Paid office rent for the month, P15,000
e. Charged patients for services performed, P8,025
f. Purchased medical supplies on account, P12,450
g. Received cash from patients for amounts owing, P13,000
h. Paid the following: salaries expense, P850 ; repairs expense, P250 ; utilities expense, P400
i. Cost of medical supplies used was P3,980
j. Dr. Galing withdrew P10,000 in cash from the clinic for personal use

Accounts Equipmen Accounts Wong, Wong,

Letter Cash Supplies Expenses Revenues
Receivable t Payable Capital Drawing
Balance 54,200 3,850 75,000 25,000 108,050
A 40,000 40,000
B (15,000) (15,000)
C 10,000 10,000 20,000
D (15,000) 15,000
E 8,025 8,025
F 12,450 12,450
G 13,000 (13,000)
H (1,500) 1,500
I (3,980) 3,980
J (10,000) (10,000)
TOTA ₱108,050
₱75,700 ₱18,025 ₱12,320 ₱90,000 ₱20,480 ₱37,450 (₱10,000) ₱81,025
L
Required:
a. Determine the amount of owner’s equity (capital) as of July 1 of the current year
OE = A – L
? = ₱108,050 - ₱25,000
ANSWER: ₱83,050

b. Analyze the above transactions and determine the balances. Prove total amounts using the
accounting equation.
ANSWER:
ASSETS: ₱196,045
LIABILITIES & OWNER’S EQUITY: ₱196,045

ASSETS = LIABILITIES + OWNER’S ₱196,045 = ₱16,970 + ₱179,075

EQUITY

c. Prepare a statement of comprehensive income for July, and a statement of financial position as
of July 31.

The Family Medical Clinic

Income Statement
For the month ended June 30, 2020
Service Income ₱81,025
Less: Rent Expense ₱15,000
Salaries Expense ₱ 850
Repairs Expense ₱ 250
Utilities Expense ₱ 400
Supplies Expense ₱ 3,980 ₱20,480
NET INCOME: ₱60,545
 The Family Medical Clinic
Statement of Financial Position
For the month ended June 2020

Assets:
Cash ₱75,700
Supplies ₱12,320
Equipment ₱90,000
Accounts Receivable ₱18,025
TOTAL ASSESTS: ₱168,045

Liabilities:
Accounts Payable ₱ 22,450

Owner’s Equity:
Galing, Capital ₱108,050
Galing, Drawing (₱ 10,000)
ADD: Net Income 47,545
TOTAL LIABILITIES & OWNER’S EQUITY ₱145,945
 8. Sue Feria opened a travel agency business on April 5, 2015. A month after she was able to
comply with the legal requirements and documents, the business started operation. The following
balances were taken on April 30, 2015:
Account 24month Accounts
Account Note
s Payable Explanation
Cash Supplies Furniture Equipment due to Due to Feria, Capital
Receivab for changes
Ros
Date le BDO
Investment
+100,000 Taxes and
61,000 14,500 50,500 25,000 15,000 50,000 - 8,000 Licenses
- 6,000 Registration
Expenses
02 Received fees
45,000 45,000 from
PAGCOR
02 Received
28,000 28,000 from various
companies
05 Paid to BDO
(10,000) (10,000)

08 Bought
(7,250) 7,250 supplies

10 Received
commission
8,000 8,000 from airline
companies
11 Bought
photocopy
machine &
7,500
(7,500) 15,000 paid 50% in
cash and the
balance on
account
14 Collected
5,000 5,000 service fee

15 Paid salaries
(15,000) (15,000)

18 Billed Moyses
12,000 12,000 Company

20 Received
1,000 1,000 processing
fees
24 Paid the
(5,000) (5,000) balance Ros

25 Received 50%
6,000 6,000 payment from
Moyses Co.
27 Billed PAL
3,500 3,500

28 Received bills
9,000 from
(9,000) MERALCO
& PLDT
29 Received
12,000 12,000 from various
clients
30 Paid the rent
(22,500) (22,500) & salaries

31 Used
(3,500) (3,500) Supplies

TOT
AL ₱98,750 ₱9,500 ₱18,250 ₱50,500 ₱40,000 ₱10,000 ₱40,000 ₱16,500 ₱150,500

The following transactions took place during the month of May:

2 Received P45,000 from the office of Pagcor for the processing of their documents with
the Department of Foreign Affairs. Use the revenue title – Processing Fees
2 Received from various airline companies commission for ticket purchased for clients,
P28,000. Use the revenue title – Commission Income.
5 Paid P10,000 to BDO
8 Paid for supplies bought, P7,250
10 Received P8,000 commission from airline companies for tickets purchased for clients
11 Bought a photocopying machine for P15,000 by paying 50% in cash, the balance on
account
14 Collected service fees of P5,000 from clients for processing of visa and passport
15 Paid cash for salaries, P15,000
18 Billed Moyses Company P12,000 for processing of visa and passport of their offices
20 Mr. and Mrs. Smith paid P1,000 for the processing of their papers
24 Paid P5,000 of the account due to Ros
25 Moyses Company paid 50% of their account
27 Billed PAL P3,500 for commissions accruing on tickets purchased
28 Bills were received from the following: PLDT, P3,500 and Meralco, P5,500
29 Receipts from various clients for services rendered: from tourist and immigrants, P4,500
and airline companies, P7,500
30 Paid cash P7,500 for rent and P15,000 for salaries
31 Supplies used up, P3,500

Analyze the above transactions, start with the balances given on April 30.
a. Present an income statement, statement of changes in owner’s equity, a properly classified
report form of statement of financial position

Sue Feria Travel Agency

Income Statement
For the month ended May 31, 2020
Service Revenue ₱114,500
Less: Salaries expense ₱35,000
Rent expenses ₱ 2,500
Utilities expense ₱ 9,000
Supplies expense ₱ 3,500 ₱50,000
NET INCOME: ₱64,500

Sue Feria Travel Agency

Statement of Owner’s Equity
For the month ended May 31, 2020

Owner, Capital October 1 ₱86,000

Add: Net Income ₱64,500
TOTAL ₱150,500
Less: Drawings ₱0.00
Owner Capital, October 31 ₱150,500

Sue Feria Travel Agency

Statement of Financial Position
For the month ended May 31, 2020
ASSETS:

Current Assets:
Cash ₱98,750
Supplies ₱18,250
Accounts Receivable ₱ 9,500
Total Current Assets: ₱126,500

Non-Current Assets
Furniture ₱50,500
Equipment ₱40,000
Total Current Assets: ₱90,500
TOTAL ASSESTS: ₱217,000

LIABILITIES:

Current Liabilities:
Accounts Payable ₱16,500
Notes Payable ₱40,000
Total Current Liabilities: ₱56,500

Non-Current Liabilities:
Account due to Ros ₱10,000
Total Non-Current Liabilities: ₱10,000

OWNER’S EQUITY:
De Dios, Capital ₱150,500
TOTAL LIABILITIES & OWNER’S EQUITY ₱217,000

b. Using the cash column, prepare a working paper of cash flows

Sue Feria Travel Agency

Statement of Cash Flow
For the month ended May 31, 2020

Cash Flow of Operating Activities

Cash received from fees ₱45,000
Cash received from commission ₱28,000
 Cash payments to suppliers (₱ 7,250)
Cash received from commission ₱ 8,000
Cash received from fees ₱ 5,000
Cash payments to employees (₱15,000)
Cash received from fees ₱ 1,000
Cash received from customer ₱ 6,000
Cash received from customer ₱12,000
Cash payments to employees (₱22,500)
Net Cash Flow provided by Operation Activities ₱60,250
Cash Flow of Investing Activities
Cash payments to acquire office equipment (₱7,500)
Cash loans made to other parties (₱5,000)
Net Cash Flow provided by Investing Activities (₱12,500)
Cash Flow of Financing Activities
Cash payments for 24 months note from BDO (₱10,000)

Net Cash Flow provided by Investing Activities (₱10,000)

Net Change in Cash
₱37,750
Cash & Cash Equivalents, Beginning ₱61,000
Cash & Cash Equivalents, Ending ₱98,750
9. Fay Fedor started a delivery service, Fed Deliveries, on July 1, 2015. The following
transactions occurred during the month of July.
July 1 She contributed P100,000 cash
2 Purchased a used van for deliveries for P120,000 by paying P20,000 cash and
signed a two-year notes payable for the remaining balance.
3 Paid P15,000 for office rent for the month
5 Delivery services amounted to P44,000, half on account
9 Cash of P2,000 withdrawn by May
12 Purchased supplies for P1,500 on account
15 Received cash of P12,500 for services provided on June 5
17 Purchased gasoline for P7,500 on account
20 Received P15,000 from customers of which P5,000 was for past accounts
23 Made a cash payment of P25,000 on the note payable
26 Received bills for utilities P5,000 but paid only P2,500
29 Paid for the gasoline purchased on account on June 17
30 Paid P30,000 for employee salaries. A third of supplies remained on hand

Instructions:
 a. Show the effect of the above transactions on the accounting equation using the following
format.

Fedor,
Accounts Delivery Notes Accounts Revenues
Date Cash Supplies Capital
Receivable Van Payable Payable (Expenses)
(Drawings)
01 100,000 100,000
02 (20,000) 120,000 100,000
03 (15,000) (15,000)
05 22,000 22,000 44,000
09 (2,000) (2,000)
12 1,500 1,500
15 12,500 (12,500)
17 7,500 (7,500)
20 15,000 (5,000) 10,000
23 (25,000) (25,000)
26 (2,500) 2,500 (5,000)
29 (7,500) (7,500)
30 (30,000) (1,000) (31,000)
TOTAL 47,500 4,500 500 120,000 75,000 4,000 98,000 (4,500)

b. Prepare an income statement for the month of July

Wong Consulting Firm

Income Statement
For the month ended July 31, 2020
Service Revenue ₱54,000
Less: Salaries & Supplies expense ₱31,000
Rent expenses ₱15,000
Utilities expense ₱ 5,000
Gas expense ₱ 7,500 ₱58,500
NET LOSS: (₱4,500)
c. Prepare a classified statement of financial position as at July 31, 2015

Wong Consulting Firm

Statement of Financial Position
For the month ended July 31, 2020

ASSETS:

Current Assets:
Cash ₱47,500
Supplies ₱ 500
Accounts Receivable ₱ 4,500
Total Current Assets: ₱52,500

Non-Current Assets
Delivery Van ₱120,000
Total Non-Current Assets: ₱120,000

TOTAL ASSESTS: ₱172,500

LIABILITIES:

Current Liabilities:
Accounts Payable ₱ 4,000
Notes Payable ₱75,000

OWNER’S EQUITY:
Wong, Capital ₱95,500
Wong, Drawing (₱2,000)
TOTAL LIABILITIES & OWNER’S EQUITY ₱172,500

10. Refer to Problem 9. Look for the cash on the format you did and analyze its movement
(inflow and outflow) in a working paper. Did the cash increase? Explain by citing the net flow of
cash in the operating, financing and investing activities of the business.
 Wong Consulting Firm
Statement of Cash Flow
For the month ended May 31, 2020

Cash Flow of Operating Activities

Cash payments to rent expense (₱15,000)
Cash received from delivery service ₱22,000
Cash received from delivery service ₱12,500
Cash received from customer ₱15,000
Cash payments to utilities (₱ 2,500)
Cash payments to gas expense (₱ 7,500)
Cash payments to employees (₱30,000)
Net Cash Flow provided by Operation Activities (₱5,500)
Cash Flow of Investing Activities
Cash payments to acquire delivery van (₱20,000)
Net Cash Flow provided by Investing Activities
(₱20,000)
Cash Flow of Financing Activities
Cash withdraws of owner (₱2,000)
Cash payments for notes payable (₱25,000)
Net Cash Flow provided by Investing Activities (₱27,000)
Net Change in Cash
(₱52,500)
Cash & Cash Equivalents, Beginning ₱100,000
Cash & Cash Equivalents, Ending ₱47,500

11. Mabel Wong began a professional practice as system analyst on July 1. She plans to
prepare monthly financial statements. During July the owner completed these transactions:
 1 Owner invested P50,000 cash along with furniture and fixtures that had a P20,000 market
value two years ago but was now worth P10,000 only
2 Paid P25,000 cash for July rent (including P500 water bill) of a fully furnished office
space at the Madrigal Building
4 Purchased P120,000 worth of state of the art equipment on credit for thirty monthly
installment payments
6 Purchased office supplies for cash, P2,500
8 Completed work for a client and immediately collected the P32,000 cash earned
10 Completed work for a client and sent a bill for P27,000 to be paid within thirty days
15 Paid an assistant P6,200 cash as wages for 15 days
18 Collected P15,000 cash on the amount owed by the client
25 Completed work for another client who paid only P40,000 or 40% of the total
computerized system. The client promised to pay the balance in thirty days
28 Owner withdrew P5,000 cash for personal use
30 Paid salary of assistant
31 Received PLDT bill, P1,800 and Meralco bill P3,800.
Used up P2,000 worth of supplies

Date Cash Accounts Supplies Furniture & Equipment Accounts Capital Revenue
Receivable Fixtures Payable (Drawing) (Expense)
01 50,000 10,000 60,000

02 (25,000 (25,000)
)
04 120,000 120,000
06 (2,500) 2,500
08 32,000 32,000
10 27,000 27,000
15 (6,200) (6,200)
17
18 15,000 (15,000)
25 40,000 60,000 100,000
28 (5,000) (5,000)
30 (6,200) (6,200)
31 (2,000) (2,000)
Tota 92,100 72,000 500 10,000 120,000 120,000 55,000 119,600
l
Required:
Analyze the above transactions in an accounting equation table using the following headings for
columns: Cash; Accounts Receivable; Office supplies; Equipment; Accounts Payable; Notes
Payable; Utilities Payable; Wong, Capital; Explanation of Changes in Capital. Then use
additions and subtractions to show the effects of the transactions on individual items of the
accounting equation. Show balances after all transactions are recorded.
a. Prepare an income statement for the month of July

Wong Consulting Firm

Income Statement
For the month ended July 31, 2020
Service Revenue ₱159,000
Less: Salaries expense ₱12,400
Rent expenses ₱24,500
Utilities expense ₱ 500
Supplies expense ₱ 2,000 ₱39,400
NET INCOME: ₱119,600

b. Prepare a statement of owner’s equity for the month of July

Wong Consulting Firm

Statement of Owner’s Equity
For the month ended July 31, 2020

Owner, Capital October 1 ₱ 60,000

Add: Net Income ₱119,600
TOTAL ₱179,600
Less: Drawings ₱ 5,000
Owner Capital, October 31 ₱174,600

c. Prepare a classified report form of statement of financial position as at July 31.

 Wong Consulting Firm
Statement of Financial Position
For the month ended July 31, 2020

ASSETS:

Current Assets:
Cash ₱92,100
Supplies ₱ 500
Accounts Receivable ₱72,000
Total Current Assets: ₱164,600

Non-Current Assets
Furniture & Fixtures ₱ 10,000
Equipment ₱120,000
Total Non-Current Assets: ₱130,000

TOTAL ASSESTS: ₱294,600

LIABILITIES:

Current Liabilities:
Accounts Payable ₱120,000

OWNER’S EQUITY:
Wong, Capital ₱179,600
Wong, Drawing (₱5,000)
TOTAL LIABILITIES & OWNER’S EQUITY ₱294,600

12. Refer to Problem 11 and look for the cash on the format you did. Analyze the movement
(inflow and outflow) in a working paper. Did the cash increase? Explain by citing the net flow of
cash in the operating, financing and investing activities of the business.
 Wong Consulting Firm
Statement of Cash Flow
For the month ended May 31, 2020

Cash Flow of Operating Activities

Cash payments to utilities (₱25,000)
Cash payments to suppliers (₱ 2,500)
Cash received from customer ₱32,000
Cash payments to employees (₱ 6,200)
Cash received from customer ₱15,000
Cash received from customer ₱40,000
Cash payments to employees (₱ 6,200)
Net Cash Flow provided by Operation Activities ₱47,100
Cash Flow of Investing Activities

Net Cash Flow provided by Investing Activities ₱0

Cash Flow of Financing Activities
Cash withdraws of owner (₱5,000)
Net Cash Flow provided by Investing Activities (₱ 5,000)
Net Change in Cash
₱42,100
Cash & Cash Equivalents, Beginning ₱50,000
Cash & Cash Equivalents, Ending ₱92,100