Solution manual fundamentals of accounting by cabrera chapter 08

Decreases in assets are recorded bycredits; therefore, credit Cash... Decreases in assets are recorded bycredits; therefore, debit Cash.. Increases in liabilitiesare recorded by credits;

Recording Business Transactions

First, we prepare the statement of owner’s equity for the year ended December

31, 2007 The format of the statement of owner’s equity is as follows:

Statement of Owner’s Equity

812,000

To solve for proprietor’s withdrawals, we put the data in equation form:

P0 + P150,000 + P662,000 – PX = P271,000

X = P662,000 – P150,000 – P271,000

X = P541,000

Exercise 8

Date Analysis of Transactions and Journal Entries

Dec 4 The asset Cash is increased; therefore, debit Cash

The liability Note Payable is increased; therefore, credit NotePayable

19 The asset Cash is increased; therefore, debit Cash

The asset Land is decreased; therefore, credit Land

Cash 740,000

Land 740,000

24 The asset Building is increased; therefore, debit Building

The liability Note Payable is increased; therefore, credit NotePayable

Building 1,400,000

Note Payable 1,400,000

Dec 27 The liability Accounts Payable is decreased; therefore, debit

Cash Accounts Receivable Mar 1 590,000 Mar 4 400,000 Mar 17 16,000 Mar.23 12,000

Mar 6 20,000 Mar.31 12,000

17 16,000 Mar.31 10,000 Mar.31 36,000

Exercise 11

Tarlac EnterprisesTrial BalanceFebruary 28, 2007

Service Revenue Salary Expense

Mar 6 20,000 Mar.31 12,000

17 16,000 Mar.31 10,000 Mar.31 36,000

Students who disapprove may argue that Alalay sa Kapwa is using the bank’smoney adequately compensating the bank – a subtle form of stealing In thisview, Alalay sa Kapwa should curtail its spending until it has the money to coverits expenditures and maintain a positive balance Alternatively, Alalay sa Kapwacould sign a note payable to borrow the needed money The related interest isthe bank’s compensation

The bank is the key player in this case Whether the bank approves ordisapproves of Alalay sa Kapwa overdrafts is critical to the ethical decision.Approval by the bank turns the overdrafts into a gift to Alalay sa Kapwa.Disapproval by the bank would no doubt be communicated to Mr Oscar

Exercise 14

Date Analysis of Transactions

May 1 Given in the problem; not required for May 1 transaction

5 The expense Rent Expense is increased Increases in expenses arerecorded by debits; therefore, debit Rent Expense

The asset Cash is decreased Decreases in assets are recorded bycredits; therefore, credit Cash

May 9 The asset Land is increased Increases in assets are recorded by

debits; therefore, debit Land

The asset Cash is decreased Decreases in assets are recorded bycredits; therefore, debit Cash

10 The asset Supplies is increased Increases in assets are recorded

by debits; therefore, debit Supplies

The liability Accounts Payable is increased Increases in liabilitiesare recorded by credits; therefore, credit Accounts Payable

19 The liability Accounts Payable is decreased Decreases in liabilitiesare recorded by debits; therefore, debit Accounts Payable

The asset Cash is decreased Decreases in assets are recorded bycredits; therefore, credit Cash

22 The asset Cash is increased Increases in assets are recorded bydebits; therefore, debit Cash

The liability Notes Payable is increased Increased in liabilities arerecorded by credits; therefore, credit Notes Payable

30 The assets Cash and Accounts Receivable are increased Increases

in assets are recorded by debits; therefore, debit Cash and AccountsReceivable

The revenue Service Revenue is increased Increases in revenuesare recorded by credits; therefore, credit Service Revenue for thesum of the debits to Cash and Accounts Receivable

30 The expenses Salary Expense, Rent Expense, and Utilities Expenseare increased Increases in expense are recorded by debits;therefore, debit Salary Expense, Rent Expense, and UtilitiesExpense

The asset Cash is decreased Decreases in assets are recorded bycredits; therefore, credit Cash for the sum of the three debit amounts

30 The owner’s equity of the business is decreased Decreases inowner’s equity are recorded by debits Decreases due towithdrawals by the owner are debited to the Withdrawals account;therefore, debit Jayce Ferrer, Withdrawals

The asset Cash is decreased Decreases in assets are recorded bycredits; therefore credit Cash

Palace Copy CenterTrial BalanceOctober 31, 2007

Property tax expense 1,000

Lorna Rodriguez, capital: P295,000 + P13,000 = P308,000

Lorna Rodriguez, withdrawals: P37,000 + P13,000 = P50,000

Service revenue: P49,000 + P56,000 = P105,000

Rent expense: P6,000 + P2,000 + P2,000 = P10,000

Utilities expense: P2,000 + P600 = P2,600

Exercise 16

May 2 50,000 May 5 25,000 May 5 25,000 May 7 3,000

19 5,000 25 6,500

22 6,000

61,000 31,500

Balance 29,500

Accounts Receivable Rent Expense Accounts Payable

Service Revenue Unearned Service Revenue Share Capital

May 19 5,000 May 22 6,000 May 2 50,000

31 25,000 30,000

Exercise 18

Jones Programming Service, Inc.

Trial BalanceMay 31, 2007

Exercise 20

Kim Beauty ServiceTrial BalanceJanuary 31, 2007

To record partial payment of software purchased.

(a) 184,000 (b) 5,600 (a) 62,000 (a) 146,000

Garcia, Drawing

(m) 6,000

Requirement (3)

Garcia Training Center Trial Balance(current date)

Test Material 8-2

Requirement (1)

GENERAL JOURNAL

Date Particulars F Debit Credit

Date Explanation Debit Credit Balance

2008

2008

2008

Accounts Payable Account No 212

2008

2008

Lease Expense Account No 412

2008

Date Particulars F Debit Credit

Cash Accounts Receivable Supplies

June 3 142,000 June 5 10,000 June 8 9,600 June 13 9,600 June 7 6,400

123,400

June14 8,000 June 3 24,600 June 5 38,000

21 1,200 25,800

Notes Payable Accounts Payable Gomez, Capital June 28 4,000 June 5 28,000 June 20 6,400 June 7 6,400 June 3 166,600

23 1,200 8,200 Gomez, Drawing Painting Fees Earned Wage Expense June 30 6,000 June 8 9,600 June 18 3,000

10 3,000 29 3,600

16 12,400 6,600

26 7,200 32,200

Telephone Expense Truck Expense

June 23 1,200 June 19 800

Requirement (3)

Gomez Painting ServiceTrial BalanceJune 30, 2008