SAMPLE EXERCISE

Listed below are the ten business transactions for Puring Company during its first month of
operations:
a. Owner invested cash in the business amounting to ₱300,000.
b. Purchased equipment for cash amounting to ₱50,000.
c. Purchased inventories through credit amounting to ₱35,000.
d. Purchased furniture amounting to ₱30,000. Made initial payment with cash ₱10,000 and
incurred an accounts payable for the balance ₱20,000.
e. Paid cash to the local government for the business permit ₱9,000.
f. Made sales of ₱17,000: ₱12,000 cash sales and ₱5,000 credit sales.
g. The cost of sales made in (f) amounted to ₱8,500.
h. Paid the accounts payable in (d).
i. Collected ₱2,500 out of the ₱5,000 credit sales in (f).
j. Paid employee ₱12,000.

Indicate the effects of the given transactions on each of the financial statement elements in the
table shown below. The answer for transaction (a) is given as an example:
Puring Company
Assets = Liabilities + Owner’s Equity
(a) ₱300,000 = + ₱300,000
(b) (₱50,000) and = +
₱50,000 so
No effect
(c) ₱35,000 = ₱35,000 +
(d) ₱30,000 - ₱10,000 = ₱20,000 +
=₱20,000
(e) (₱9,000) = + (₱9,000)
(f) ₱12,000 + ₱5,000 = + ₱17,000
=₱17,000
(g) (₱8,500) = + (₱8,500)
(h) (₱20,000) = (₱20,000) +
(i) ₱2,500 and (₱2,500) = +
so No effect
(j) (₱12,000) = + (₱12,000)
Bal. ₱35,000 + ₱287,500
₱322,500 = =₱322,50
0

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