Step 1

Pre-forma Entries

1. 850,000

Date Account titles Debit Credit

Cash 850,000
Owner’s Capital 90,000
to record owner’s initial investment.

2. Purchased laundry supplies on account.

Date Account titles Debit Credit

Equipment 90,000
Cash 90,000
to record acquisition of equipment on cash
basis

3. Purchased laundry machine for cash

Date Account titles Debit Credit

Equipment 150,000
Accounts Payable 150,000
to record acquisition of equipment on
accounts.

4. Paid taxes and licenses due to the government

Date Account titles Debit Credit

Tax and License Expense 4,000
Cash 4,000
to record the settlement of taxes and
licenses fee.
5. Mr. Severo Santos withdrew P10,000 cash from the business for his personal use.

Date Account titles Debit Credit

Cash 10,000 10,000
Owner’s drawings
to record the settlement of taxes and
licenses fee.

6. The business borrowed money from Allied Bank Corporation

Date Account titles Debit Credit

Cash 100,000 100,000
Notes Payable
to record the loan obtained.

7. Bank issued a debit memo, P1,000 for interest and bank charges.

Date Account titles Debit Credit

Account expense 1,000 1,000
Cash
to record the settlements of accounts
payable.

8. Cash received of P45,000 representing collection from the clients.

Date Account titles Debit Credit

Cash 45,000 45,000
Accounts Receivable
to record the collection of accounts
receivable.
9. Partial payment of accounts, P60,000.

Date Account titles Debit Credit

Accounts Payable 60,000 60,000
Cash
to record the collection of accounts
receivable.

10. Mr. Severo hired an accountant for his business as he has plenty of things to
attain to at P10,000 per month effective April 1.

Date Account titles Debit Credit

Salaries Expense 10,000 10,000
Cash
to record the collection of accounts
receivable.

11. Paid the following expenses: Rental – P5,000; Light and water – P12,000 and
Salaries-10,000

Date Account titles Debit Credit

Expenses 27,000
Cash 27,000
to record the collection of accounts
receivable.
 ASSETS
1. Cash – 850,000
2. Equipment- 90,000
3. equipment- 150,000
Cash- (150,000)
4. Cash (4,000)
5. cash( 10,000)
6. Cash 100,000
7. Cash- (1,000)
8. Cash- 45,000
Accounts Receivable(45,000)
9. Cash- (60,000)
10. cash- (10,000)
11.Cash (27,000)
928, 000
LIABILITY EQUITY
Owner’s Capital-850,000
Accounts Payable- 90,000
Tax expense- (4,000)
Owner’s drawing (10,000)
Notes Payable- 100,000
Expense- (1,000)
Accounts Payable-(60,000)
Salaries expense- (10,000)
Expense (27,000)
130,000 798,000