Recording Drills

3:00-4:00 PM

Jade Angelie B. Flores

BS Accountancy 2
 OVERVIEW
• Case 1.1 Initial Investment in Cash
• Case 1.2 Initial Investment in NON Cash ASSETS
• Case 2.1 Acquisition of asset – equipment
• Case 2.2 acquisition of asset – inventory (cash basis)
• Case 2.3A acquisition of asset – inventory (on account)
• Case 2.3b payment of accounts payable
• Case 3.1 LIABILITY
• Case 3.2 payment of a liability
• Case 4.1 INCOME – CASH SALE
• Case 4.2a INCOME – credit SALE
• Case 4.2b collection of accounts receivable
• Case 5 expense – paid in cash
• Case 6 owner’s withdrawal
 WHAT IS
RECORDING?
1. Analyze each
transaction 3. Document transactions
in a journal

2. Decide what account to

be debited and credited
Case 1.1 Initial Investment in Cash

• On August 1, 2019, the owner invests 100,000 cash to the business.

Aug 1 Cash 100, 000

Owner’s Capital 100, 000
to record the owner’s initial investment

ASSET = LIABILITES + EQUITY

Cash 100,000 = 0 + Owner’s Capital 100,000
Case 1.2 Initial Investment in NON Cash ASSETS
• On August 20, 2019, the owner provides a building valued at 1,000,000 and an automobile
valued at 500,000 to the business.

Aug 20 Building 1,000, 000

Transportation equipment 500,000
Owner’s Capital 1,500, 000
to record the owner’s non-cash investment

ASSET = LIABILITES + EQUITY

Building 1,000,000

Transpo. Equipment
500,000 = 0 + Owner’s Capital 1,500,000

Total 1,500,000 = 0 + Owner’s Capital 1,500,000

Case 2.1 Acquisition of asset - equipment

• On August 25, 2019, the business acquires a machine for 20,000.

Aug 25 Machinery 20, 000

Cash 20, 000
to record the acquisition of machine

ASSET = LIABILITES + EQUITY

Machinery 20,000

Cash (20,000)

Total 0 = 0 + 0
Case 2.2 acquisition of asset – inventory (cash basis)
• On August 26, 2019, the business acquires inventories for 50,000 cash.

Aug 26 Inventory 50, 000

Cash 50, 000
to record the acquisition of inventory on cash basis

ASSET = LIABILITES + EQUITY

Inventory 50,000

Cash (50,000)

Total 0 = 0 + 0
Case 2.3A acquisition of asset – inventory (on account)
• On August 27, 2019, the business purchases inventories worth 70,000 on account (on credit).

Aug 27 Inventory 50, 000

Accounts Payable 50, 000
to record the acquisition of inventory on credit

ASSET = LIABILITES + EQUITY

Accounts Payable
Inventory 70, 000 = 70,000 + 0
Case 2.3b payment of accounts payable
• On August 31, 2019, the business settles the 70,000 accounts payable from Aug 27 purchase.

Aug 31 Accounts Payable 70, 000

Cash 70, 000
to record the settlement of account payable

ASSET = LIABILITES + EQUITY

Accounts Payable
Cash (70,000) = (70,000) + 0
Case 3.1 LIABILITY
• On September 1, 2019, the business obtains a bank loan of 800,000.

Sept 1 Cash 800, 000

Notes Payable 800, 000
to record the loan obtained from a bank

ASSET = LIABILITES + EQUITY

Notes Payable 800,000
Cash 800,000 = + 0
Case 3.2 payment of a liability
• On October 1, 2019, the business makes a partial payment of 400,000 on the bank loan.

Oct 1 Notes Payable 400, 000

Cash 400, 000
to record the partial payment of notes payable

ASSET = LIABILITES + EQUITY

Notes Payable (400,000)

Cash (400,000) = + 0
Case 4.1 INCOME – CASH SALE
• On October 2, 2019, the business makes a cash sale of 100,000. The cost of the inventories
sold is 30,000.

Oct 2 Cash 100, 000

Sales 100, 000
to record cash sale

Oct 2 Cost of Sales 30, 000

Inventory 30, 000
to charge the cost of inventories sold as expense

ASSET = LIABILITES + EQUITY

Cash 100,000 Sales 100,000

Inventory (30,000) Cost of Sales

= 0 + (30,000)

Total 70,000 = 0 + Total 70,000

Case 4.2a INCOME – credit SALE
• On October 4, 2019, the business makes a sale on account of 80,000. The sale price is
collectible on October 8, 2019. The cost of inventories sold is 20,000.
Oct 4 Accounts Receivable 80, 000
Sales 80, 000
to record credit sale

Oct 4 Cost of Sales 20, 000

Inventory 20, 000
to charge the cost of inventories sold as expense

ASSET = LIABILITES + EQUITY

Accounts Receivable
Sales 80,000
80,000
Cost of Sales
Inventory (20,000) = 0 + (20,000)

Total 60,000 = 0 + Total 60,000

Case 4.2b collection of accounts receivable

• On October 8, 2019, the business collects 80,000 accounts receivable.

Oct 4 Cash 80, 000

Accounts Receivable 80, 000
to record collection of accounts receivalbe

ASSET = LIABILITES + EQUITY

Cash 80,000

Accounts Receivable
(80,000) = 0 + 0

0 = 0 + 0
Case 5 expense – paid in cash

• On October 20, 2019, the business pays 5,000 for an advertisement that was aired on the
radio.

Oct 20 Advertising Expense 5,000

Cash 5,000
to record the cost of advertisement as expense

ASSET = LIABILITES + EQUITY

Cash (5,000) = 0 + (5,000)
Case 6 owner’s withdrawal

• On November 7, 2019, the owner make temporary withdrawal of 10,000 cash from the
business.

Nov 7 Owner’s Withdrawal 10,000

Cash 10,000
to record the owner’s withdrawal

ASSET = LIABILITES + EQUITY

Cash (10,000) = 0 + (10,000)
Exercise 1
A business had the following transactions during the month of October 2019.
• Oct 1. The owner contributed 800,000 cash to the business.
Dr. Cash 800,000
Cr. Owner’s Capital 800,0000
to record owner’s initial investment

• Oct 3. The business purchased inventory worth 100,000 on cash basis.

Dr. Inventory 100,000
Cr. Cash 100,0000
to record acquisition of inventory on cash basis

• Oct 4. The business purchased inventory worth 400,000 on account.

Dr. Inventory 400,000
Cr. Accounts Payable 400,0000
to record acquisition of inventory on account
• Oct 8. The business sold goods for 300,000 cash. The cost of the goods sold is 120,000.
Dr. Cash 300,000
Cr. Sales 300,000
to record sale on cash

Dr. Cost of Sales 120,000

Cr. Inventory 120,0000
to charge the cost of inventories sold as expense

• Oct 12. The business sold goods for 700,000 on account. The cost of goods sold is 280,000.

Dr. Accounts Receivable 700,000

Cr. Sales 700,0000
to record sale on account

Dr. Cost of Sales 280,000

Cr. Inventory 280,000
to record cost of inventories sold as expense
• Oct 15. The business paid 400,000 accounts payable.
Dr. Accounts Payable 400,000
Cr. Cash 400,000
to record payment of accounts payable

• Oct 17. The business collected 700,000 accounts receivable.

Dr. Cash 700,000
Cr. Accounts Receivable 700,000
to record collection of accounts receivable

• Oct 18. The business purchased equipment worth 280,000 for cash.
Dr. Equipment 280,000
Cr. Cash 280,000
to record acquisition of equipment

• Oct 22. The owner withdrew 22,000 from the business.

Dr. Owner’s Withdrawal 22,000
Cr. Cash 22,0000
to record owner’s withdrawal
• Oct 31. The business paid salaries expense of 50,000.
Dr. Salaries Expense 50,000
Cr. Cash 50,000
to record salaries expense
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