In Final Fulfillment of The Curriculum Requirements in

ACCOUNTING CYCLE OF DIFFERENT SERVICE BUSINESS
A portfolio submitted to the faculty of Caraga State University

Cabadbaran Campus College of Business and Accountancy
In fulfillment of the curriculum Requirements in

Financial Accounting & Reporting (Fundamentals)
1ST SEMESTER, A.Y 2023-2024
Prepared by:
BSBA FM2 (GROUP 6)
BASCO, REMERIO
BATOBALONOS, MA. ANGELINE
GAGBO, JOHN AXILLE
HAVANA, DANIELA
OPPUS, KHATLEYA
DECEMBER 2023
1
TABLE OF CONTENT
Overview of Financial Accounting and Reporting ………………………………3
Books of Accounts ………………………………………………………………………4 -5
Definition of terms ………………………………………………………………………6-10
10 sample problems with solutions………………………………………………… 10
Problem 1……………………………………………………………………………10-15
Problem 2………………………………………………………………………………….15-19
Problem 3……………………………………………………………………………….19-22
Problem 4…………………………………………………………………………22-28
Problem 5……………………………………………………………………………….28-32
Problem 6……………………………………………………………………………….33-35
Problem 7…………………………………………………………………………………….35-40
Problem 8…………………………………………………………………………………40-44
Problem 9……………………………………………………………………………………44-49
Problem 10………………………………………………………………………………49-54
References ………………………………………………………………………….54
2
Overview of Financial Accounting and Reporting
Accounting is a process of identifying, recording and communicating economic

information that is useful in making economic decisions. Account is the basic storage of
information in accounting in which a business records debits and credits as evidence of
accounting transactions. Bookkeeping and accounting are two functions which are
extremely important for every business organization. Bookkeeping is said to be the basis of
accounting, whereas accounting forms a part of the broader scope in finance. There are
two broad categories of users of accounting information namely; Internal users or those
who are directly involve in managing the business, External users or those from outside of
the organization who use the financial information to make decisions or to evaluate an
entity’s performance.
Financial accounting provides companies with this important information, and it also
shows them where their money is going. This helps companies determine which areas they
need to allot more of their budget to and helps companies make projections about their
future while financial reporting lets a company keep track of its current assets, liabilities,
and liquidity. This information can be used by a company to manage their debts, which
can be greatly beneficial to the company. Financial accounting, financial reporting, and
financial statements are related but separate concepts that accountants use in the day-
to-day function of their jobs. Financial accounting is a branch of accounting that keeps
tabs on a company’s financial transactions. The transactions are recorded, summarized,
and presented in a financial report or a financial statement such as a balance sheet,
income statement and cash flow statement- that record a company’s operating
performance over a specified period. The statement used in financial accounting cover
the five main classifications of financial data, which are: Revenues, Expenses, Assets,
Liabilities and Equity.
Financial accounting differs from managerial accounting, as financial reporting is for

reporting to external parties, while managerial accounting is for internal strategic
planning. Financial reporting is a standard accounting practice that uses financial
statements to disclose a company’s financial information and performance over a
particular period, usually on an annual or quarterly basis. In simple terms, a financial report
is critical for understanding how much money you have, where the money is coming
from, and where your money needs to go. Financial reporting is important for
management to make informed business decisions based on facts of the . Potential
investors and banks will also use your company’s financial reporting to decide if they want
to invest or loan your money.
3
BOOK OF ACCOUNTS
A business maintains a two books of accounts, namely:

1. Journal; and
2. Ledger
JOURNAL
The journal, also called the "book of original entities" is the accounting record where
business transactions are first recorded. Business transactions are recorded in the journal
through journal entries. This recording process is called journalizing.
TYPES OF JOURNALS
Journals can be classified into the following:
1. Special Journal - is used to record transactions of a similar nature. Special journal

simplifies the recording process, thus providing an efficient way of recording and
retrieving of information.
Common examples of Special Journals
a. Sales Journal - is used to record sales on account

b. Purchases Journal - is used to record purchases of inventory on account.
c. Cash receipts journal - is used to record all transactions involving receipt of cash.
d. Cash disbursements journal - is used to record all transactions involving payments of

cash.
2. General Journal - all other transactions that cannot be recorded in the special journals
are recorded in the general journal.
LEDGER
The ledger is a systematic compilations of a group of accounts. It is used to classify the

effects of business transactions on the accounts. The ledger is also called the, "book of
secondary entries" or the "book of final entries" because it is used only after business
transactions are first recorded in the journals. The process of recording in the ledger is
called "posting.
" KINDS OF LEDGERS
Ledgers can be classified into the following:
4
a. General Ledger - contains all the accounts appearing in the trial balance.
b. Subsidiary Ledger - provides a breakdown of the balances of controlling accounts.
NORMAL BALANCES OF ACCOUNTS
The normal balance of account is on the side where an increase in that account is
recorded. The following are the normal balances of accounts:
Type of Account:
Normal Balance
Assets Debit
Liability Credit
Equity Credit
Income Credit
Expense Debit
5
DEFINITION OF TERMS
The different financial statements, are composed of different accounting elements or

major accounts which are the broad classifications of accounting values in which similar
business transactions and events are grouped.
The different accounting elements are;
ASSETS- are resources controlled by the enterprise as a result of past transactions or events
and from which future economic benefits are expected to flow to the enterprise.
CURRENT ASSETS-It is expected to be realized in, or is intended for sale or consumption in
the entity’s normal operating cycle, it is held primarily for the purpose of being traded;
The account titles of typical current assets accounts will include the following:
1.Cash-account title that describes money, either in paper or coins.
Cash on Hand -coins, currency, check, postal money orders and express money orders.
Cash in Bank-cash deposited in savings and/or checking accounts.
2.Petty Cash Fund -represents money placed and set aside for ‘’petty or small expenses.
3.Notes Receivable- represents collectibles from customers or clients arising from sale of
goods or services which are supported from promissory notes executed by the customers.
4.Accounts receivable – represents collectibles from costumers arising from credit sale of
goods or services, not supported by promissory notes.
5.Allowance for bad debts- is an “asset offset” account which provides for possible losses
from uncollected accounts receivable.
6.Interest receivable- represents the amount of interest earned on notes receivable.
7.Advances to officers and employee - represents the amount collectible from officers or
employees with in arising from cash advances.
8.Supplies or supplies on hand- represents the cost of stationery, paper, pencil, ink and
other related supply purchased, and used, but still on hand at the end of accounting
period.
9.Prepaid expenses- represents expenses that are paid in advance but not yet incurred or
remain unexpired at the end of the period.
10.Inventories- the unsold goods at the end of the accounting period. This is applicable
only to merchandising business.
6
Non-current assets- are properties or resources, controlled by the business not classified as
current asset as a result of past events and from which economic benefits are expected
to flow to the entity.
CLASSIFICATION OF NON- CURRENT ASSET

1.Property, plant and equipment – represent tangible assets which are held by an
enterprise for use in production or supply of goods and services, for rentals, to others or for
administrative purposes and are expected to be used during more than one period.
The following accounts are classified as property, plant and equipment.
 Land- the site where the administrative building, the store or the plant is located.
 Building- physical structure on land. These are used in business.
 Machinery- machines used by the business in the production process.
 Equipment- used by the business for it be able to perform its main function or
objective.
 Furniture and fixture- this account title will include the chairs, tables, counters,
displays cases and be like.
 Accumulated depreciation- refers to the sum of depreciation for several years.
2. Long-term investments- assets held by business entity for the purpose of accumulating
wealth through capital distribution such as interest, royalties, dividends or rentals.
3. Intangible assets- identifiable non-monetary asset without physical substances held or
use in the production or supply of goods or services, for rentals to others, or for
administrative purposes.
LIABILITIES- Presents obligations of the enterprises arising from the past transactions or
events, the settlements of which expected to result in an outflow from the enterprise of
resources embodying economic benefits.
CURRENT LIABILITIES – expected to be settled in the entities normal operations. It is held

primarily for the purpose of being traded.
CURRENT LIABILITIES ACCOUNTS
1.Accounts payable- denotes obligations or debts of the business arising from services
received, merchandize, supplies or property, plant and equipment acquired on account.
2. Notes payable -includes debts arising from the purchase of an asset or acquisition of
services on account evidenced by a promissory note.
3. Bank payable or Loan payable- financial obligations to banks and other financial
institutions arising from funds borrowed by the business from these institutions; payable
within twelve months or shorter.
4. Utilities payable- an obligation to pay utility companies for services received from them.
7
5. Salaries payable- unpaid salaries of employees and workers for the services rendered
as a date of the financial statement.
6.Interest payable- unpaid interest to the bank or other financing institutions because of
amounts borrowed.
7.SSS premium payable/ Phil Health Premium Payable/ PAGIBIG Premium Payable- the
amounts withheld from the salaries of employees and the employers unremitted share
contribution to the social security system (SSS), Philippine Health Insurance Corporation
(PHIC) and Home Development Mutual Fund (PAG-IBIG).
8.Unearned Income- income collected or received in advance, but is not yet considered
as earned.
9.Witholding Tax Payable- amount of income tax withheld from the salaries of employee.
NON-CURRENT LIABILITIES ACCOUNTS
1.Mortgage Payable- the amount of long-term liability that is supported in up by collateral.

2. Long-Term Bank Loan- is used in presenting a bank loan with maturity period or the term
is beyond one year.
3. Non-current Portion of Long-term Debt- the portion of a debit or a loan that will not
mature within one year from the date of the financial statement of financial position.
4. Finance Lease Liability -the liability portion of the asset acquired through finance lease.
EQUITY OR CAPITAL- represents the residual interest of the owner in the assets of the
business after all liabilities.
EQUITY ACCOUNTS
1. Capital -the initial investments of the owner at the start of the operation or the
beginning
capital of succeeding years.
2.Withdrawal for Drawing- represents temporary withdrawal of capital by the owner from
the business for the personal use.
INCOME- is increases in economic benefits during the accounting period in the form of
inflows of enhancements of assets or decreases of liabilities that result in increases in
equity, other than those relating to contributions from equity participants.
1. Service or Sales Income- represents the income realized for all types of income derived
from service rendered and from sale of company.
8
2. Professional Income-represents the amount of income het by professions from the
practice of their professions
3. Rental Income-the income earned from buildings, space and other properties ante
leased out by the business
4. Interest income-amount of income realized arising from lending operation.
5. Miscellaneous Income -income earned that could not be classified properly on the
above income classifications. It should not represent the primary source of income of the
business.
EXPENSES-decrease in economic benefits during the accounting period in the form of

outflows or depletions of assets or incurrence of liabilities that result in decreases in equity,
other than those relating to distributions to equity participants.
EXPENSE ACCOUNTS (monthly cost)
1. Salaries and Wages-payments of services rendered by works and employees.

2. Rent Expense -amount paid for the use of office space, store space, or factory area
3. Office Supplies Expense- the different materials used by the business in its office or
offices, but not limited to coupon bonds, carbon paper, worksheets, ledgers, ball pens,
erasers, or envelops.
4. Store Supplies Expense- store related materials used by the business in its day-to-day of
operations.
5. Insurance Expense- the expired portion of premiums paid on the insurance coverage.
6. Interest Expense- the amount of interest paid or incurred during the accounting period.
7. Taxes and Licenses- the payments for or incurrence of taxes licenses, government fees
and other similar fees.
8. Utilities Expense- the amount incurred or paid for the use of light, water, as for the
business.
9. Expense Bad Debits Expense or Doubtful Accounts - the amount of receivable
estimated to be doubtful of collections.
10. Depreciation Expense- the expired portion of the cost of building machinery,
equipment store equipment, and other types of property, plant and equipment, except
land.
11. SSS Contribution/Phil Health Contribution/PAG-IBIG Contribution -the share of the
employer in $55, Phil Health and PAG-IBIG for the welfare and benefit of the employees as
required by law.
9
12. Miscellaneous Expense- used for the amount paid or incurred where separate
account is not necessary because the expenses are immaterial, uncommon, and
infrequent.
13. Cost of Sales or Cost of Services- the direct cost of the products and or the service
rendered.
10 sample problems with solutions
Problem 1:
On December 1 2023, Mr. Remerio Basco started a computer shop called “Basco’s
Comlab”. The following were the transactions during the first month of the operations:
Date Transactions
Dec. 1 The sole proprietorship of Mr. Remerio

Basco invested 100,000 cash and new
equipment worth 50,000 to the business.
Dec. 3 Mr. Remerio Basco rendered a services
worth 35,000 on account.
Dec. 5 Mr. Remerio Basco rendered a services
worth 10,000 on cash basis.
Dec. 15 Mr. Remerio Basco collected accounts
receivable of 8,000
Dec. 18 The sole proprietor of Mr. Remerio Basco
withdrew 2,000 cash from the business.
Dec. 31 Mr. Remerio Basco paid salaries expense
of 5,000, supplies expense of 1,500 and
rent expense of 12,000 for the month of
December 2023.
10
Journal entries
Date Account titles Debit credit

Dec. 1 Cash 100,000
Basco’s capital
To record the owner’s capital 100,000
investment of the business
50,000
Equipment
Cash 50,000
To record the acquisition of
equipment
Dec. 3 Account receivables 35,000

Service fees
To record the service rendered 35,000
Dec. 5 Cash 10,000
Service fees
To record the cash received for the 10,000
service rendered
Dec. 18 Cash 2,000

Basco’s drawings
To record the owners withdrawal 2,000
Dec, 31 Salaries expense 5,000
Supplies expense 1,500
Rent expense 12,000
Cash
To record the paid expenses 18,500
11
T- accounts
ASSETS
Cash
Dec.1
100,000
Dec.5 50,000
10,000
Dec.18
2,000
Dec.31
18,500
End bal.
43,500
Equipment
Dec. 1
50,000
End bal.
50,000
Account receivable
Dec 3
35,000
End bal.
35,000
Equity
Basco’s Capital
12
Dec.1
100,00
End bal.100,000
Basco’s drawing
2,000
End. Bal 2,000
Income
Service fees
Dec. 3 35,000
Dec. 5 10,000
End bal. 45,000
Expense
Salaries expense
Dec 31
5,000
End bal.
5,000
Supplies expense
13
Dec. 31
1,500
End bal.
1,500
Rent expense
Dec 31
12,000
End bal.
12,000
Basco’s Comlab
Unadjusted trial balance
December 31 2023
Account Titles Debit Credit

Cash 43,500
Account receivable 35,000
Equipment 50,000
Basco’s capital 100,000
Basco’s drawing 2,000
Service fees 45,000
Salaries expense 5,000
Rent expense 12,000
Total: 147,000 147,000
14
Financial Statement
Basco’s comlab
Accounts Worksheet
For the month ended December 31, 2023
INCOME STATEMENT BALANCE SHEET
DEBIT CREDIT DEBIT CREDIT
Cash 43,000
Account 35,000
receivable
Equipment 50,000
Basco’s capital 100,000
Basco’s drawing 2,000
Service fee 45,000
Supplies 1,500
expense
Rent expense 12,000
Total: 18,500 45,000 128,000 102,000
26,000 26,000
Total 45,000 45,000 128,000 128,000
Problem 2
Journal entries
On June 1 2023 Mr. Rico Suler started a coffee shop called “Suler coffee shop”. The
following were the transactions during the first week of the operations:
Date Transactions
June 1 Mr. Rico Suler contributed 200,000 cash to
the business
June 2 Acquired machinery for 75,000 cash
June5 Purchase supplies for 15,000
15
June 8 Rendered service worth 20,000 on cash
basis
June 11 Paid 900 salaries of employees.
Date Account titles Debit Credit

June 1 Cash 200,000
Suler’s capital 200,000
To record owner’s investment to the
business
June 2 Machinery- equipment 75,000

Cash 75,000
To record the acquisition of
equipment
June 5 Prepaid supplies 15,000

Cash 15,000
To record the supplies purchase
June 8 Cash 20,000

Service fees 20,000
To record the service rendered on
cash
June 11 Salaries expense 900

Cash 900
To record the paid salaries
T-ACCOUNTS
16
ASSETS
CASH
June1 June2
200,000 75,000
June 5
15,000
June 8
20,000 June11
900
End bal.
129,100
Machinery-Equipment
June 2
75,000
End bal.
75,000
Prepaid supplies
June 5
15,000
End bal.
15,000
EQUITY
Owner’s capital
June 1
200,000
End bal. 200,000
17
Income
Service fees
20,000
End bal. 20,000
Salaries expense
900
End bal. 900
SULER’S COFFEE SHOP

UNADJUSTED TRIAL BALANCE
JUNE 11, 2023
ACCOUNT TITLE DEBIT CREDIT
CASH 129,100
MACHINERY- EQUIPMENT 75,000
PREPAID SUPPLIES 15,000
SULER’S CAPITAL 200,000
SERVICE FEES 20,000
SALARIES EXPENSE 900
Total 220,000 220,000
Financial Statement
Suler’s Coffee shop
Worksheet
For the month ended June 11,2023
Accounts INCOME STATEMENT BALANCE SHEET

Debit Credit Debit Credit
Cash 129,100
18
Machinery- 75,000
equipment
Prepaid supplies 15,000
Suler’s capital 200,000
Service fees 20,000
Salaries expense 900
Total; 900 20,000 219,100 200,000
19,100 19,100
TOTAL 20,000 20,000 219,100 219,100
PROBLEM 3:
Journal entries
The following are transaction for January 2020 of Maligaya Company.
DATE TRANSACTIONS
January 3, 2020 issues P20,000 shares of common stock for
cash.
January 5, 2020 paid the rent for January, February and
March for P500 per month.
January 10, 2020 provides P5,500 in services to a customer
who ask to billed for the services.
January 18, 2020 paid P500 for salaries of employee for the
period of January 1-15,2020.
received P2,000 cash for partial payment
January 23, 2020 from customer on the January 10
transaction.
January 30, 2020 purchase P5,000 equipment on account.
DATE ACCOUNT TITLES DEBIT CREDIT

Jan.3 Cash 20,000
Common stock 20,000
to record issuance of common stock.
Jan.5 Prepaid rent 1,500
Cash 1,500
to record payment of rent for the month of
January, February and March.
Jan.10 Accounts receivable 5,500
Service revenue 5,500
to record service revenue on account.
Jan.18 Salaries expense 500
Cash 500
to record salaries of employees from January 1-
15,2020.
Jan.23 Cash 2,000
Accounts receivable 2,000
19
to record partial payment from customer on the
January10 transaction.
Jan.30 Equipment 5,000
Accounts payable 5,000
to record purchase of equipment on account.
T-ACCOUNTS
ASSETS:
CASH
Jan.3 20,000
1,500 Jan.5
500 Jan.18
Jan.23 2,000
Ending bal.
20,000
ACCOUNTS RECEIVABLE
Jan.10 5,500
2,000 Jan.23
Ending bal.
3,500
PREPAID RENT
Jan.5 1,500
Ending bal.
1,500
EQUIPMENT
Jan.30 5,000
Ending bal.
5,000
LIABILITY:
ACCOUNTS PAYABLE
20
5,000 Jan.30
5,000 Ending bal.
EQUITY:
COMMON STOCKS
20,000 Jan.3
20,000 Ending bal.
INCOME:
SERVICE REVENUE
5,500 Jan, 10
5,500 Ending bal.
EXPENSE:
SALARIES EXPENSE
Jan.18 500
Ending bal.
500
MALIGAYA COMPANY
JANUARY 31,2020
ACCOUNTS DEBIT CREDIT
CASH 20,000
ACCOUNTS RECEIVABLE 3,500
PREPAID RENT 1,500
EQUIPMENT 5,000
ACCOUNTS PAYABLE 5,000
COMMON STOCKS 20,000
SERVICE REVENUE 5,500
SALARIES EXPENSE 500
TOTAL: 30,500 30,500
21
Financial Statement
Maligaya company
Worksheet
For the month ended January 31,2023

Accounts
Cash 20,000
Accounts 3,500
receivable
Prepaid rent 1,500
Equipment 5,000
Account payable 5,000
Common stocks 20,000
Salaries expense 500
Total 500 25,500 30,000 5,000
25,000 25,000
Total 25,500 25,500 30,000 30,000
PROBLEM 4:
Journal entries
Persia Sikat is a financial consultant. She completed the following transactions during the
month of December of the current year.
DATE TRANSACTIONS
December 1 Sicat invested cash in the business, P200,000
December 3 Paid December office rent P10,000
December 4 Received P25,000 from a client, Paz

Gamino, for services rendered
22
December 7 Received P20,000 from Tereso Campillo, a
client, for services rendered
Paid cash to Shell Super Service for gasoline
December 12 purchases, P600.
Paid cash to Dotillos Manpower Services in

December14 payment for contractual secretarial services
during the past two weeks, P6,000.
December 17 Bought office supplies on account, P2,800.
December 20 Paid telephone bills, P1,000.
Sicat withdrew cash for personal use,

December 21 P11,000.
December 24 Donated cash to the Phil. National Red

Cross, P1,000.
December 27 Received P20,000 from Teresa Medina, a
client, for services rendered
Paid cash to Dotillos Manpower Services in
December 28 payment for contractual secretarial services
during the past two weeks, P6,000.
December 28 Paid electric bill, P750
Made partial payment on supplies

December 29 purchased on account, P1,000

Dec. 1 Cash 200,000
Sicat, capital 200,000
to record initial investment.
Dec. 3 Rent expense 10,000
Cash 10,000
to record payment of office rent.
Dec. 4 Cash 25,000 25,000
Consulting revenue
to record services rendered.
Dec. 7 Cash 20,000 20,000
23
Consulting revenue
Dec. 12 Gasoline expense 600 600
Cash
to record gasoline purchases.
Dec. 14 Salaries expense 6,000 6,000
Cash
to record payment of salaries.
Dec.17 Office supplies 2,800 2,800
Accounts Payable
to record purchase of supplies on
account.
Dec.20 Utilities expense 1,000
Cash 1,000
to record payment of telephone
bill.
Dec.21 Sicat, withdrawal 11,000
Cash 11,000
to record withdrawals.
Dec.24 Charitable Contribution Expense 1,000
Cash 1,000
to record donation.
Dec.27 Cash 20,000
Consulting revenues 20,000
Dec.28 Salaries expense 6,000
Cash 6,000
to record payment of salaries.
Utilities expense
Cash
750
to record payment of electricity bill.
750
Dec.29 Accounts payable 1,000

Cash 1,000
to record partial payment .
24
T-ACCOUNTS
ASSETS:
CASH
Dec.1 200,000
10,000 Dec.3
Dec.4 25,000
Dec.7 20,000
600 Dec.12
6,000 Dec.14
1,000 Dec.20
11,000 Dec.21
1,000 Dec.24
Dec. 20,000
6,000 Dec.28
750 Dec.28
1,000 Dec.29
Ending bal.
227,650
OFFICE SUPPLIES
Dec.2 2,800
Ending bal.
2,800
LIABILITY:
25
ACCOUNTS PAYABLE
2,800 Dec.7
Dec.29 1,000
1,800 Ending bal.
EQUITY:
SICAT, CAPITAL
200,000 Dec,1
200,000 Ending bal.
SICAT, WITHDRAWALS
Dec. 21 11,000
Ending bal.
11,000
INCOME:
CONSULTING REVENUES
25,000 Dec.4
20,000 Dec.7
20,000 Dec.27
65,000 Ending bal.
EXPENSES:
RENT EXPENSE
Dec.3 10,000
Ending bal.
10,000
GASOLINE EXPENSE
Dec.12 600
Ending Bal. 600
26
SALARIES EXPENSE
Dec. 14 6,000
Dec. 28 6,000
Ending bal. 12,000
UTILITIES EXPENSE
Dec. 20 1,000
Dec. 28 750
Ending bal. 1,750
CHARITABLE CONTRIBUTION EXPENSE

Dec. 24 1,000
Ending bal. 1,000
PERSIA SICAT FINANCIAL PLANNING

DEC. 31, 2020
ACCOUNT TITLES DEBIT CREDIT
CASH 227,650
OFFICE SUPPLIES 2,800
SICAT, CAPITAL 200,000
SICAT, WIDRAWALS 11,000
CONSULTING REVENUES 65,000
RENT EXPENSE 10,000
GASOLINE EXPENSE 600
SALARIES EXPENSE 12,000
UTILITIES EXPENSE 1,750
27
CHARITABLE
CONTRIBUTION EXPENSE 1, OOO
TOTAL: 266,800 266,800
Financial Statement
PERSIA SICAT FINANCIAL PLANNING
Worksheet
For the month ended December 31, 2020

Accounts
DEBIT CREDIT DEBIT CREDIT
Cash 227,650
Office supplies 2,800
Account 1,800
payable
Sicat capital 200,000
Sicat drawing 11,000
Consulting 65,000
revenue
Rent expense 10,000
Gasoline 600
expense
Salaries 12,000
expense
Utilities expense 1,750
Charities 1,000
contribution
expense
Total; 25,350 65,000 241,450 201,800
28
39,650 39,650
Total 65,000 65,000 241,450 241,450
Journal entry
PROBLEM 5
Rose establishes her own beauty salon/parlor. The business transactions of Ms. Rose
Beauty Salon are as follows:
Date Transactions
April 1 Rose invested 75,000 pesos in a beauty parlor, "Ms. Rose Beauty Salon".
April 2 She has also acquired equipment worth 25,000 on a cash basis.
April 3 Received 15,000 for the service rendered to various customers.
April 4 Ms. Rose temporarily withdrew 10,000 for personal use.
April 9 Received 20,000 from various customers for the service rendered.
Date Account titles Debit credit

April 1 Cash 75,000
Owner’s capital 75,000
To record owners initial investments to the business
April 2 Equipment 15,000
Cash 15,000
To record the acquisition of equipment
April 3 Cash 15,000
Service fees 15,000
To record the cash received for the rendered service
April4 Owner’s drawing 10,000

Cash 10,000
To record the owner’s withdrawal
April 5 Account receivable 5,000
Service fees 5,000
To record the bill received for the rendered service
April 6 Supplies expense 2,500
To record the supplies bought on account
April 7 Supplies expense 15,000 15,000
Cash
To record the paid employee salaries
April 8 Cash 20,000
Service fees 20,000
To record the cash received for the service
29
Assets
Cash
(1) 75,000
25,000 (2)
(3) 15,000
10,000 (4)
15,000 (5)
(6) 20,000
End bal.60,000
Account receivable
(5) 5,000
End bal. 5,000
Equipment
(2) 25,000
End bal. 25,000
Liabilities
Account payable
30
2,500 (6)
75,000 (1)
End bal. 75,000
Equity
Owners drawing
(4) 10,000
End bal. 10,000
Income
Service fees
15,000 (3)
5,000 (5)
20,000 (8)
End bal. 40,000
Expense
Supplies expense
(6) 2,500
End bal. 2,500
Salaries expense
(7) 15,000
End bal. 15,000
Ms. Rose Beauty Salon

April 30, 2023
31
Account title debit Credit
Cash 60,000
Equipment 25,000
Owner’s drawing’s 10,000
Service fees 40,000
Total; 117,500 117,500
Financial Statement
Ms. Rose Beauty Salon
Worksheet
For the month ended April 30,2023
Accounts
Cash 60,000
Equipment 25,000
Owner’s drawing 10,000
Service fees 40,000
Total 17,500 40,000 100,000 77,500
22,500 22,500
Total 40,000 40,000 100,000 100,000
32
Problem 6
Cindy owns a small merchandising enterprise that sells dry goods, "Cindy's Service
Enterprise". The following were the business transactions during the period:
Date Transactions
Feb. 1 Provided 50,000 cash as an initial investment of the business.
Feb. 2 Paid supplies expense amounting 15,000.
Feb.3 old her goods amounting 3,000. February 4. Paid 5,000 for rent in advance.
Feb. 4 Paid 5,000 for rent in advance.
Feb. 5 Purchased additional supplies worth 10,000 on a cash basis.
Feb. 6 Collected cash of 6,000 from credit costumers.
Feb. 7 Sold her goods amounting 20,000 on credit.

Feb. 1 Cash 50,000
To record the owners initial investments
Feb. 2 Supplies expense 15,000

Cash 15,000
To record the supplies paid on cash
Feb. 3 Cash 3,000

Sales of goods 3,000
To record the goods sold
Feb. 4 Rent expense 5,000

Cash 5,000
To record the rent paid in advance
Feb. 5 Supplies expense 10,000

Cash 10,000
To record the supplies purchase on a cash basis
33
Feb. 6 Cash 6,000
To record the cash collected from credit costumer .
Feb.7 Cash 20,000

To record the goods sold.
T- account
Cash
(1) 50,000
15,00(2)
(3) 3,000
(4) 5,000
(5) 10,000
(6) 6,000
(7) 20,000
End bal. 49,000
CINDY,S SERVICE ENTERPRISES

FEBRUARY 28, 2023

ACCOUNTS DEBIT CREDIT
Cash 49,000
Owners capital 50,000
Rent expense 5,000
Total 79,000 79,000
34
Financial Statement
CINDY’s SERVICE ENTERPRISES
Worksheet
For the month ended February 28,2023
INCOME STATEMENTS BALANCE SHEET

Accounts
Cash 49,000
Owners capital 50,000
Rent expense 5,000
Total 30,000 23,000 49,000 56,000
7,000 7,000
Total 30,000 30,000 56,000 56,000
Problem 7
John Legend is a painting contractor During the month of September 2021 he completed
the transactions
Date Transactions
Sept. 1 Transferred P250,000 cash from personal savings amount to the
company's bank account.
Sept. 3 acquired service vehicle costing P50,000.Paid P30,000 and signed a
note for the balance.
35
Sept. 4 Purchased painting supplies on account for P3,300
Sept. 5 Completed a painting job and billed the customer P6,500
Sept. 8 Received 2,500 cash for painting an apartment room
Sept. 15 Paid assistant P7,500
Sept. 20 Received a check from the customer billed on sept 5.
Sept. 22 Paid electricity bill ,P800.
Sept. 25. Paid P5,000 on the note signed for service vehicle.
Sept 30 Received P5,600 in cash for painting two-room
Journal entries
Date Account title Debit Credit

Sept. 1 Cash 250,000
Legend capital 250,000
To record the initial
investment of the owner
Sept. 3 Service vehicle 50,000

Cash 30,000
Notes payable 20,000
To record the purchase
service vehicle paid in
cash and balance under
notes
Sept. 4 Painting supplies 3,300

To record the purchase
painting supplies
Sept. 5 Account receivable 6,500

Painting revenue 6,500
To record painting job on
account
Sept. 8 Cash 2,500

To record the receipt from
costumer
Sept. 15 Salaries expense 7,500

Cash 7,500
36
To record the salaries paid
Sept. 20 Cash 6,500

To record payment
received from sept. 5
Sept. 22 Utilities payable 800

Cash 800
To record payment on
electricity
Sept. 25 Notes payable 5,000

Cash 5,000
To record payment on
notes payable.
Sept 30 Cash 5,600

To record painting job for
cash
T-accounts
Cash
250,000 30,000
2,500 7,500
6,500 800
5,600 5,000
End. Bal. 221,300
Account receivable
6,500 6,500
Painting supplies
3,300
End bal. 3,300
Service vehicle
50,000
End bal. 50,000
Account payable
37
3,300
End bal. 3,300

Notes payable
5,000 20,000
15,000 end bal.

Legend capital
250,000
End bal. 250,000
Painting revenue
6,500
2,500
5,600
End bal. 14,600
Salaries expense
7,500
End bal. 7,500
Utilities expense
800
End bal. 800
Legend painting service

September 30,2023
Account titles Debit Credit
38
Cash 221,300
Painting supplies 3,300
Service vehicle 50,000
Utilities expense 800
Total 282,000 282,000
Financial Statement
Legend painting service
Worksheet
For the month ended September 30,2023

Accounts Debit Credit Debit Credit
Cash 221,300
Painting supplies 3,300
Service vehicle 50,000
Notes payable 15,00
39
Total 8,300 14,600 274,600 268,300
6,300 6,300
Total 14,00 14,600 274,600 274,600
Problem 8.
Ms. Havana decided to start her practice of Law by establishing own law office. Following
are the transaction of law firm during January, it’s first month of operation.
Date Transactions
Jan. 1 Cash of P20,000 was received from M. Havana ,the owner as her initial
investment
Jan. 10 Purchase office equipment worth P50,000,Paid P10,000 cash as down

payment and signed promissory
Jan. 15 Issued check in payment for promissory note issued P40,000 .
Jan 20 Billed client for services rendered on account,P30,000.
Jan. 25 Received payment from client to whom services were previously rendered
on account.
Jan. 27 the owner withdrew P10,000 cash from the business for personal use .
Jan. 30 Paid office rent for the month ,P5,000.
40
-
Journal entry
Date Account title Debit Credit

Jan.
1 Cash 50,000
Ms. Havana capital 50,00
to record the initial investment of the owner
10 Office equipment 50,000

Cash 10,000
To record the purchase of equipment paid on cash
and balance under notes
15 Notes payable 40,000

Cash 40,000
To record the payment on notes
20 Account receivable 30,000

To record the service payment on account
25 Cash 30,000
To record the collection of cash from service
rendered
27 Owners drawing 10,000

Cash 10,000
To record the owner’s withdrawal
30 Rental expense 5,000

Cash 5,000
To record the rental expense
41
Assets
Cash
50,000 10,000
40,000
30,000 10,00-
5,000
End bal. 15,000
Office equipment
50,000
End bal.
50,000
Account receivable
30,000 30,000
End bal. 0
Notes payable
40,000 40,0000
End bal. 0
Ms. Havana capital

50,000
End bal. 50,000
Owners drawing
42
10,000
End bal. 10,000 .
Service revenue
30,000
End bal.30,000
Rental expense
5,000
End bal. 5,000
Ms. Havana office

January 31, 2021
Account titles Debit Credit

Cash 15,000
Office equipment 50,000
Account receivable 0
Notes payable 0
H. Mendoza capital 50,000
Owners drawing 10,000
Rental expense 5,000
Total 80,000 80,000
43
Financial Statement
Ms. Havana office
Worksheet

Accounts
Cash 15,000
Office equipment 50,000
Notes payable 0
H. Mendoza capital 50,000
Owners drawing 10,000
Rental expense 5,000
Total 5,000 30,000 75,000 50,000
25,000 30,000 25,000
Total 30,000 75,000 75,000
Problem 9
Ms. Oppus is a painter contractor. During the month of September 2023, He completed
the following transactions:
Sept. 1 Transferred P 100,000 cash from personal savings account to the company’s bank
account.
44
Sept 3 Acquired equipment costing P12,000, paid 5,000 cash and signed a note for the
balance.
Sept. 4 Purchased supplies on account for 2,000.
Sept. 7 Completed a painting job and billed the customer P3,760.
Sept. 9 Received P1,500 cash for painting an apartment room.
Sept. 13 Paid assistant P7,000.
Sept. 17 Received a check from the customer billed on September 5.
Sept.25 Paid electricity bill, P 900.
Sept. 27 Paid P500 on the note signed for the service vehicle.
Sept. 30 Received P26,000 in cash for painting two-room apartment.

Sept. 1 Cash 100,000
Oppus, Capital 100,000
to record initial investment of
owner, oppus.
Sept.3 Equipment 12,000

Cash 5,000
Notes payable 7,000
to record purchase of equipment,
paid 30,000 cash and balance under
note.
Sept.4 Supplies 2,000

to record of supplies on account.
Sept.7 Accounts receivable 3,760

to record painting job on account.
Sept. 9 Cash 1,500

to record receipt from customer.
Sept. 13 Wages expense 7,000

Cash 7,000
to record payment of wage of
employee.
45
Sept. 17 Cash 3,760
Accounts receivable 3,760
to record payment received from
Sept.5 painting job.
Sept. 25 Utilities expense 900

Cash 900
to record payment of electricity bill.
Sept. 27 Notes payable 500

Cash 500
to record payment on note of Sept.3.
Sept.30 Cash 26,000

to record painting job for cash.
ASSETS:
CASH
(1) 100,000
5,000 (3)
(9) 1,500
7,000 (13)
(17) 3,760
900 (25)
500 (27)
(30) 26,000
E.B. 117,860
ACCOUNTS RECEIVABLE
(7) 3,760
46
3,760 (17)
E.B 0
Equipment
(3) 12,000
E.B. 12,000
SUPPLIES
(4) 2,000
E.B. 2,000
LIABILITIES:
NOTES PAYABLE
7,000 (3)
(27) 500
6,500 E.B.
ACCOUNTS PAYABLE
2,000 (4)
2,000 E.B.
EQUITY
Oppus, CAPITAL
47
100,000 (1)
100,000 E.B
INCOME
PAINTING REVENUE
3,760 (7)
1,500 (9)
26,000 (30)
31,260 E.B.
EXPENSES
UTILITIES EXPENSE
(25) 900
E.B. 900
WAGES EXPENSE
(13) 7,000
E.B. 7,000
OPPUS PAINTING SERVICE

UNAJUSTED TRIAL BALANCE
SEPTEMBER 30,2023
ACCOUNT TITILES DEBIT CREDIT
48
CASH 117,860
ACCOUNTS RECEIVABLE 0
EQUIPEMNT 12,000
SUPPLIES 2,000
NOTES PAYABLE 6,500
OPPUS, CAPITAL 100,000
PAINTING REVENUE 31,260
WAGES EXPENSE 900
UTILITIES EXPENSE 7,000
TOTAL 139,760 139,760
Financial Statement
Ms. Havana office
Worksheet

Accounts
Cash 117,860
Equipment 12,000
Supplies 2,000
Notes payable 6,500
OPPUS, capital 100,000
Wages expense 900
Total 7,900 31,260 131,860 108,500
23,360 23,360
Total 31,260 31,260 131,860 131,860
49
Problem 10
On January 1, 2023, Batobalonos Company started its business with an initial investment of
50,000 in cash. During the month, the company engaged in the following transactions:
1. Purchased office supplies on account for 2,000.

2. Received 5,000 in cash from customers for services rendered.
3. Paid 1,500 in cash for rent.
4. Sold goods on credit for 8,000.
5. Paid 1,000 to a supplier for goods purchased on account.
6. Collected 3,000 in cash from customers on accounts receivable.
7. Recorded 2,500 of depreciation on office equipment.
Journal entry

Jan
1 Cash 50,000
Batobalonos, capital 50,000
2 Cash 5,000
Service fees 5,000
3 Rent expense 1,500
Cash 1,500
4 Account receivable 8,000

5 Account payable 1,000
Cash 1,000
6 Cash 3,000
7 Depreciation expense 2,500
Accumulated depreciation 2,500
50
T-account
Assets
Cash
(1) 50,000
(2) 5,000 (3) 1,500
(6) 3,000 (5) 1,000
E.B. 55,500
Office supplies
(1) 2,000
E.B 2,000
Account receivable
(4) 8,000
(6) 3,000
End bal. 5,000
Accumulated depreciation
(7) 2,500
End bal. 2,500
Liabilities
Accounts payable
(1) 2,000
(5) 1,000
51
End bal. 1,000
Equity
Owner’s capital
(1) 50,000
End bal. 50,000
Income
Service fees
(2) 5,000
End bal. 5,000
Sales of goods
(4) 8,000
End bal. 8,000
Expense
Rent expense
(3) 1,500
End bal. 1,500
52
Depreciation expense
(7) 2,500
E.B 2,500
Batobalonos Company
UNAJUSTED TRIAL BALANCE
January 1 ,2023
ACCOUNT TITILES DEBIT CREDIT

Cash 55,500
Service fees 5,000
Rent expense 1,500
Depreciation expense 2,500
Total 66,500 66,500
53
Financial Statement
Batobalonos Company
Worksheet

Accounts
Cash 55,500
Service fees 5,000
Rent expense 1,500
Depreciation expense 2,500
Total 4,000 13,000 62,500 53,500
9,000 9,000
Total 13,000 13,000 62,500 62,500
Reference:
54
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ACCOUNTING CYCLE OF DIFFERENT SERVICE BUSINESS

A portfolio submitted to the faculty of Caraga State University

In fulfillment of the curriculum Requirements in

Overview of Financial Accounting and Reporting ………………………………3

Books of Accounts ………………………………………………………………………4 -5

Definition of terms ………………………………………………………………………6-10

10 sample problems with solutions………………………………………………… 10

Accounting is a process of identifying, recording and communicating economic

Financial accounting differs from managerial accounting, as financial reporting is for

A business maintains a two books of accounts, namely:

1. Special Journal - is used to record transactions of a similar nature. Special journal

a. Sales Journal - is used to record sales on account

d. Cash disbursements journal - is used to record all transactions involving payments of

The ledger is a systematic compilations of a group of accounts. It is used to classify the

NORMAL BALANCES OF ACCOUNTS

The different financial statements, are composed of different accounting elements or

The different accounting elements are;

CLASSIFICATION OF NON- CURRENT ASSET

CURRENT LIABILITIES – expected to be settled in the entities normal operations. It is held

NON-CURRENT LIABILITIES ACCOUNTS

1.Mortgage Payable- the amount of long-term liability that is supported in up by collateral.

EXPENSES-decrease in economic benefits during the accounting period in the form of

EXPENSE ACCOUNTS (monthly cost)

1. Salaries and Wages-payments of services rendered by works and employees.

10 sample problems with solutions

Dec. 1 The sole proprietorship of Mr. Remerio

Date Account titles Debit credit

Dec. 3 Account receivables 35,000

Dec. 18 Cash 2,000

End. Bal 2,000

End bal. 45,000

Account Titles Debit Credit

Date Account titles Debit Credit

June 2 Machinery- equipment 75,000

June 5 Prepaid supplies 15,000

June 8 Cash 20,000

June 11 Salaries expense 900

End bal. 200,000

End bal. 20,000

End bal. 900

SULER’S COFFEE SHOP

Accounts INCOME STATEMENT BALANCE SHEET

DATE ACCOUNT TITLES DEBIT CREDIT

5,000 Ending bal.

20,000 Ending bal.

5,500 Ending bal.

INCOME STATEMENT BALANCE SHEET

December 4 Received P25,000 from a client, Paz

Paid cash to Dotillos Manpower Services in

December 17 Bought office supplies on account, P2,800.

December 20 Paid telephone bills, P1,000.

Sicat withdrew cash for personal use,

December 24 Donated cash to the Phil. National Red

December 28 Paid electric bill, P750

Made partial payment on supplies

DATE ACCOUNT TITLES DEBIT CREDIT

Dec.29 Accounts payable 1,000

1,800 Ending bal.

200,000 Ending bal.

Ending Bal. 600

Ending bal. 12,000

Ending bal. 1,750