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01 - eLMS - Activity - 1 FINAREP

1. Ms. Lea began a real estate business with an initial cash investment of $1,500,000. She paid rent and purchased office equipment. 2. She sold a house for a client and received $220,000 in fees, which she recorded as revenue. She later paid $55,000 towards the equipment purchase. 3. The GTC Company provides lawn services. At the end of April, adjusting entries were made - $150 was allocated to insurance expense from prepaid insurance, $500 to depreciation, $400 to interest payable, $700 to unearned revenue, and $1,500 was recorded for services performed but not billed.

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Ma. Daniella Lavarias
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59 views

01 - eLMS - Activity - 1 FINAREP

1. Ms. Lea began a real estate business with an initial cash investment of $1,500,000. She paid rent and purchased office equipment. 2. She sold a house for a client and received $220,000 in fees, which she recorded as revenue. She later paid $55,000 towards the equipment purchase. 3. The GTC Company provides lawn services. At the end of April, adjusting entries were made - $150 was allocated to insurance expense from prepaid insurance, $500 to depreciation, $400 to interest payable, $700 to unearned revenue, and $1,500 was recorded for services performed but not billed.

Uploaded by

Ma. Daniella Lavarias
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Case 1: Real Estate Agency

Oct. 1 Ms. Lea begins business as a real estate agent with a cash investment of P1,500,000.
2 Paid rent, P35,000, on office space.
3 Purchased office equipment for P140,000 on account.
6 Sold a house and lot for Mr. Smith; billed Mr. Smith P220,000 for realty services
performed.
27 Paid P55,000 on the balance related to the transaction of October 3.
30 Received bill for October utilities, P6,500 (not paid at this time).

General Journal
Date Particulars Dr Cr
Oct. 1 Cash P 1,500,000
Capital P 1,500,000

2 Rent Expense 35,000


Cash 35,000

3 Office Equipment 140,000


Accounts Payable 140,000

6 Cash 220,000
Service Revenue 220,000

27 Accounts Payable 55,000


Cash 55,000

30 Utilities Expense 6,500


Accounts Payable 6,500

Case 2: GTC Company


The GTC Company began operations on April 1. On April 30, the trial balance shows the
following balances for selected accounts.
Analysis reveals the following additional data.
1. Prepaid insurance is the cost of a 2-year insurance policy, effective April 1.
2. Depreciation on the equipment is P500 per month.
3. The note payable is dated April 1. It is a 6-month, 12% note.
4. Seven (7) customers paid for the company’s 6-month lawn service package of P600
beginning in April. The company performed services for these customers in April.
5. Lawn services performed for other customers but not recorded on April 30, totaled P1,500.

Adjusting Entries
Particulars Dr Cr
1 Insurance Expense 150
Prepaid Insurance 150

2 Depreciation-Equipment 500
Equipment 500

3 Interest Payable 400


Cash 400

4 Unearned Service Revenue 700


Service Revenue 700

5 Cash 1,500
Service Revenue 1,500

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