T Accounts, Journal Entry and Trial Balance Exercise

by Jane
(Philippines)

Q: Juan de la Cruz began professional practice as a system analyst on July 1. He plans to prepare a monthly financial statement. During July, the owner completed these transactions (PHP = Philippine Peso, currency of Philippines):


July 1. Owner invested PHp 500,000 cash along with computer equipment that had a market value of php. 120,000 two years ago but was now worth Php. 100,000 only.
July 2. Paid php. 15,000 cash for the rent of office space for the month.
July 4. Purchased php. 12,000 of additional equipment on credit (due within 30 days).
July 8. Completed awork for a client and immediately collected the php. 32,000 cash.
July 10. Completed work for a client and sent a bill for php. 27,000 to be paid within 30 days.
July 12. Purchased additional equipment for php. 8,000 in cash.
July 15. Paid an assistant php. 6,200 cash as wages for 15 days.
July 18. Collected php. 15,000 on the amount owed by the client.
July 25. Paid php. 12,000 cash to settle the liability on the equipment purchased.
July 28. Owner withdrew php. 500 cash for personal use.
July 30. Completed work for another client who paid only php. 40,000 for 50% of the system design.
July 31. Paid salary of assistant php. 700.
July 31. Received PLDT bill, php. 1,800 and Meralco bill php. 3,800.

Required:
Prepare the journal entries, T accounts and trial balance for this business.

A: This is a really good question to practice.

Journal entries for the above transactions:
July 1 Dr Cash 500,000
Dr Computer Eqpt 100,000
Cr Capital 600,000
Owner started business
with cash and computer Eqpt.

2 Dr Rent Exp 15,000
Cr Cash 15,000
Paid rent of office for the month of July.

4 Dr Equipment 12,000
Cr Creditors 12,000
Equipment purchased for business use.

8 Dr Cash 32,000
Cr Services rendered (income) 32,000
Services rendered for a client.

10 Dr Debtors 27,000
Cr Services rendered (income) 27,000
Services rendered for a client.

12 Dr Equipment 8,000
Cr Cash 8,000
Additional equipment purchased.

15 Dr Salaries & Wages 6,200
Cr Cash 6,200
Paid wages to assistant for 15 days.

18 Dr Cash 15,000
Cr Debtors 15,000
Received cash from debtor.

25 Dr Creditors 12,000
Cr Cash 12,000
Creditors of Eqpt purchased, settled.

28 Dr Drawings 500
Cr Cash 500
Owner withdrew cash for personal use.

30 Dr Cash 40,000
Dr. Debtors 40,000
Cr Services rendered (income) 80,000
50% amount received by a client on a/o work completed.

31 Dr Salaries & Wages 700
Cr Cash 700
Paid salary to the assistant.

31 Dr Utilities Exp (PLDT) 1,800
Dr Utilities Exp (Meralco) 3,800
Cr Creditors 5,600
PLDT and Meralco have been assumed to be the utility companies.

Note: In this example we have combined salaries and wages into one account, but sometimes in real life these are kept separate - one account for wages and another account for salaries.

T-ACCOUNTS:

T-account cash computer equipment

T-account equipment rent

T-account creditors

T-account services rendered debtors

T-account capital

T-account salaries drawings

T-account utilities



TRIAL BALANCE:

trial balance

Hope you enjoyed the solutions we provided here for this exercise on journals, T-accounts and the trial balance!

Feel free to check out the lessons on each of the topics covered in this exercise:
Best of luck with your studies!

Best,

Comments for T Accounts, Journal Entry and Trial Balance Exercise

Click here to add your own comments

ENTRIES
by: ALJHUN

I really don't know if this journal entries as what you presented as example is applicable to the Philippines. Specifically the entries like debit debtors credit cash? or credit creditors debit cash? You know what I mean? This samples that you have is not that typical source that we can rely on for our studies. Especially we are accounting major.

18 Cash 15,000
Debtors (Mr. X) 15,000
Received cash from debtor (Mr. X).


25 Creditors (Mr. Y) 12,000
Cash 12,000
Creditors of Equipment purchased, settled.

*Editor

HOW?
by: Anonymous

How would I know Miss Jane if my answers are really correct. Please show here the solutions, I really need your help. I am currently on a self-study mode in preparation for our upcoming exams and now, my chances are at luck. Hopefully you could help me and some other students that need your help. Thank you and God bless!

Click here to add your own comments

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