THE ACCOUNTING EQUATION & FINANCIAL TRANSACTION WORKSHEET

PROBLEM 1
Determine the amount of the missing element of financial position.

Assets Liabilities Owner’s Equity

1. 707,500 334,444 ?
2. 987,654 ? 234,567
3. ? 2,345,678 7,654,321
4. ? 1,002,003 (303,808)

PROBLEM 2
Supply the missing element of performance in the following cases:

Income Expense Net Income (Loss)

1. 456,654 147,258 ?
2. 3,599,953 ? 864,468
3. 6,907,211 ? (1,234,567)
4. ? 3,367,882 2,987,996

PROBLEM 3
Following are some transactions of BITUING DI MAGNINGNING REPAIR SHOP:

1. Mika Niko, the proprietor, invested cash in the business.

2. Bought repair shop equipment.
3. Paid the rent for the month.
4. Bought tables, chairs and cabinets from Kar Penter on account.
5. Received cash from various customers for services rendered.
6. Bought additional shop equipment paying a 30% down payment, the balance, on account.
7. Paid Kar Penter in partial of account.
8. Repaired the car of Kas Kasero receiving a 40% down payment, and issuing a bill for the
balance.
9. Received the telephone bill from Smart, paying ½ of the bill, a promissory note given for
the balance.
10. The tuition fee of the child of Mika Niko was paid from business fund.

REQUIRED
Write the effect (INCREASED, DECREASED, NO EFFECT) of each of the following
transactions on the assets, liabilities and owner’s equity of the business. If owner’s equity is
affected, indicate if there is investment, withdrawal, income or expense. Opposite each answer,
write also the specific asset and the specific liability affected. Use the following format.

E F F E C T
Number ASSETS LIABILITIES OWNER’S EQUITY

PROBLEM 4
Following are some transactions of KAMPANERANG SAKANG BEAUTY SHOP:

11. Imang, the proprietor, invested cash in the business.

12. Bought beauty shop equipment.
13. Paid the rent for the month.
14. Bought tables, chairs and cabinets from Sister Clavel on account.
15. Received cash for services rendered.
16. Bought additional shop equipment paying a 30% down payment, the balance, on account.
17. Paid Sister Clavel in partial of account.
18. Rendered shop services to Bangikngik receiving a 40% down payment, the balance, on
credit.
19. Imang withdrew cash for personal use.
20. Received the telephone bill from Digitel paying ½ of the bill, a promissory note given for the
balance.
REQUIRED
Write the effect (INCREASED, DECREASED, NO EFFECT) of each of the above
transactions on the assets, liabilities and owner’s equity of the business. If owner’s equity is
affected, indicate if there is investment, withdrawal, income or expense. Use the following
format.

E F F E C T
Number ASSETS LIABILITIES OWNER’S EQUITY

PROBLEM 5
State the effect (Increased, Decreased, No Effect) of each of the following transactions on the
assets, liabilities and owner’s equity of a laundry business company. Indicate also the specific
asset and liability affected. If the transaction affects owner’s equity, indicate also if the effect is
due to investment, withdrawal, income earned or expense incurred.

1. Undress de Saya, the proprietor, invested cash in the business.

2. Bought washing machine and other laundry equipment from National Co. Terms: 75%
down payment, balance, on credit.
3. Paid the rent of the laundry shop for two months.
4. Bought detergent powder, zonrox and other laundry supplies.
5. Receipts to date for laundry services rendered.
6. Received the water bill for the month from Laputa Latubig.
7. Bought computer and other office equipment from Pentium Company. Terms: on open
account.
8. Paid the account due to National Co.
9. Undress de Saya brought home detergent powder for bathing purposes.
10. Rendered laundry services to Tig Kal, receiving cash downpayment and issuing a bill for
the balance.
11. Issued a promissory note to Pentium Company in full settlement of open account.
12. Collected from Tig Kal in partial of account.

Use the following format for the above problem:

E f f e c t
Transaction No. Assets Liabilities Owner’s Equity

PROBLEM 6
Ma. Ann Tot, a beauty specialist, opened a beauty salon on July 1. Her transactions are
as follows:

a. Deposited 600,000 in a bank account in the name of the business, Ma. Ann Tot
Cooper Salon.
b. Bought beauty shop equipment from Ystilo, 425,000. Terms: 40% downpayment,
balance, on open account.
c. Invested furniture items into the business, 18,800.
d. Paid the shop rent for the month, 25,000.
e. Received 52,200 for shop services rendered.
f. Bought various beauty supplies from Reyes Nose Cutter, 40,000. Terms: 30%
down, balance, 15 – day promissory note.
g. Rendered beauty services for the wedding of Mummy Mikot receiving a
downpayment of 9,900 and sending a bill for the balance of 22,200.
 h. Paid Ystilo to apply on account, 12,000.
i. Paid ABS-ABC for radio advertising for one month, 8,800.
j. Collected from Mummy Mikot in partial of account, 9,900.
k. Received the electric bill from Meralco, 5,800.
l. Ma. Ann Tot withdrew cash for personal use, 10,000.
m. The remaining beauty supplies at the end of the month amounted to 25,600.

REQUIRED
Prepare a financial transaction worksheet. Provide the following columnar headings:
ASSETS: Cash, Accounts Receivable, Beauty Supplies, Shop Equipment, Furniture,
LIABILITIES: Accounts Payable, Notes Payable, Electricity Payable, OWNER’S EQUITY:
Ma. Ann Tot, Capital. If the transaction affects owner’s equity, identify it as investment,
withdrawal, income or expense. After the last transaction, prove the equality of the accounting
equation.

PROBLEM 7
Atty. Fermin Talo put up his own office in July, 2005. His transactions are as follows:

July 1 Invested the following to start his law office: Cash – 100,000; car –
200,000.
3 Paid the office rent for the month, 8,500.
4 Bought computer and printer from IBM Co., 50,000. Terms: 60%
downpayment, balance, on open account.
7 Purchased bond paper, envelopes, ballpens and other office supplies,
3,365.
8 Receipts from clients for legal services, 3,300.
12 Bought gasoline for the proprietor’s car, 1,000.
15 Billed Hwe Teng , who was convicted anyway, for legal maneuverings
rendered,
15,000.
18 Issued a note to IBM Co. in partial settlement of open account, 12,000.
20 Bought for cash additional office equipment, 12,500.
22 Received the electric bill from Meralco, 886.
25 Received downpayment of 4,000 and issued a bill for 16,000 to Mando
Rukot for legal services rendered.
28 Fermin Talo withdrew 5,000 for his family’s household expenses.
31 Collected from Hwe Teng in full of account.

REQUIRED
Prepare a financial transaction worksheet for the month of July, 2005. Prove the equality
of the accounting equation at the end of the month. Use the following columnar headings:
ASSETS; Cash, Accounts Receivable, Office Supplies, Car, Office Equipment, LIABILITIES:
Accounts Payable, Notes Payable, Electric Expense Payable, OWNER’S EQUITY: Fermin
Talo, Capital. If the transaction affects owner’s equity, indicate if there is investment,
withdrawal, income earned and expense incurred.

PROBLEM 8
Puto Genic, a veteran photographer, opened her own studio on July 1. Her transactions
are as follows:

a. Deposited 240,000 in a bank account in the name of the business, Puto Bumbong
Studio.
b. Bought photography equipment from Canon, 125,000. Terms: 40% downpayment,
30-day, 30,000 note, balance, on open account.
c. Invested furniture items into the business, 8,500.
d. Paid studio rent for the month, 9,600.
 e. Received 7,250 for professional services rendered.
f. Bought photographic films from Black House, 6,000. Terms: 30% down, balance,
15 days.
g. Rendered services for the wedding of Nap Pikot receiving a downpayment of 8,800
and sending a bill for the balance of 15,300.
h. Paid Canon to apply on account, 12,000.
i. Paid DZBB for radio advertising for one month, 4,800.
j. Collected from Nap Pikot in partial of account, 9,600.
k. Received the electric bill from Quezelco, 1,800.
l. Puto Genic withdrew cash for personal use, 9,000.
m. The remaining photographic films at the end of the month amount to 2,340.

REQUIRED
Prepare a financial transaction worksheet. Provide the following columnar headings:
ASSETS: Cash, Accounts Receivable, Supplies, Photography Equipment, Furniture,
LIABILITIES: Accounts Payable, Notes Payable, Electricity Payable, OWNER’S EQUITY:
Puto Genic, Capital. If the transaction affects owner’s equity, identify it as investment,
withdrawal, income or expense. After the last transaction, prove the equality of the accounting
equation.