Question

Raymond opened the Muscles Fitness Gym in August. The Following transactions occurred during the first month of the business:

a) Raymond invested P100,000 in cash and 30,000 in gym equipment in the business.

b) Paid P10,000 for the first month’s rent.

c) Purchased supplies costing P4,000 on credit.

d) Purchased exercise equipment costing P25,000 for 15,000 cash and the rest on account.

e) Recorded income for the first half of the month of P6,500 in cash and P3,500 on account.

f) Paid P2,750 to a creditor on account.

g) Received payment from a customer on account for P1600.

h) Raymond withdrew P500 for a graduation gift.

i) Paid aerobics instructor her salary, P3,000.

j) Paid miscellaneous expense P1,500

k) Recorded income for the second half of the month of P5,600 in cash.

Prepare a new accounting equation every time a transaction occurs.

Answer 1

Accounting Equation is Assets = Liabilities + Equity

a)

Assets		=	Liabilities	+	Equity
Cash	Equipment				Common Stock	Retained Earnings
100,000	30,000				130,000

b)

Assets		=	Liabilities	+	Equity
Cash	Equipment				Common Stock	Retained Earnings
(10,000)						(10,000)

c)

Assets		=	Liabilities	+	Equity
Cash	Supplies		Accounts Payable		Common Stock	Retained Earnings
	4,000		4,000			-

d)

Assets		=	Liabilities	+	Equity
Cash	Equipment		Accounts Payable		Common Stock	Retained Earnings
(15,000)	25,000		10,000

e)

Assets		=	Liabilities	+	Equity
Cash	Accounts Receivable		Accounts Payable		Common Stock	Retained Earnings
6,500	3,500					10,000

f)

Assets		=	Liabilities	+	Equity
Cash	Accounts Receivable		Accounts Payable		Common Stock	Retained Earnings
(2,750)			(2,750)

g)

Assets		=	Liabilities	+	Equity
Cash	Accounts Receivable		Accounts Payable		Common Stock	Retained Earnings
1,600	(1,600)

h)

Assets		=	Liabilities	+	Equity
Cash	Accounts Receivable		Accounts Payable		Common Stock	Retained Earnings
(500)						(500)

i)

Assets		=	Liabilities	+	Equity
Cash	Accounts Receivable		Accounts Payable		Common Stock	Retained Earnings
(3,000)						(3,000)

j)

Assets		=	Liabilities	+	Equity
Cash	Accounts Receivable		Accounts Payable		Common Stock	Retained Earnings
(1,500)						(1,500)

k)

Assets		=	Liabilities	+	Equity
Cash	Accounts Receivable		Accounts Payable		Common Stock	Retained Earnings
5,600						5,600