FUNDAMENTALS OF ABM II – REVIEW OF BASIC BOOKKEEPING SKILS_PART 2

EMALYN F. PUNZALAN CPA

COLEGIO DE LA PURISIMA CONCEPCION

The Catholic School of the Archdiocese of Capiz
Roxas City

SENIOR HIGH SCHOOL DEPARTMENT

MODULE 2

FUNDAMENTALS OF ABM II
REVIEW OF BASIC BOOKKEEPING SKILLS–PART II

Learning Objectives:
After the end of the discussion, you should be able to:
1. Outline the output of the accounting cycle and pinpoint the embedded
relationships among the financial statements;
2. Learn the different accounting values or elements;
3. Know what is a business transaction and its effect on the accounting elements;
4. Learn how to record the business transactions using the double entry system of
bookkeeping;
5. Post entries from the general journal to the general ledger; and
6. Prepare and explain the use of a trial balance

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BUSINESS TRANSACTION
Business transaction is an economic event or condition that directly changes an entity’s
financial condition or directly affects its results of operation. An accounting transaction
takes place when a business exchanges a thing or things of value for another. Business
transactions are recorded in terms of debit and credit. Debit is the value received or
paid for by the business while credit is the value parted with or given up by the
business. This called the dual effect of the transaction. Business transaction will affect
the accounting elements but the equality of the accounting equation will be maintained.

Example 1.1 Business Transactions

Value/s received or paid for Value/s given up or parted with
Transactions
(DEBIT) (CREDIT)
1. J. Cruz, invested P 200,000 to start an J. Cruz, Capital
Cash
auto repair business (ownership right)
2. Cruz bought repair equipment from X Accounts Payable
Equipment
Co. on credit, P 100,000 (obligation to pay)
3. Cruz bought shop supplies for cash, P
Supplies Cash
62,000
Accounts Payable
4. Paid X Co. partially, P 60,000 Cash
(reduction of obligation)
5. Cruz received a bank loan for Loan Payable
Cash
business use, P 100,000 (promise to pay)
6. Customers paid cash for auto repair Repair Income
Cash
services rendered, P 25,000 (services)
7. Repair services rendered on account, Accounts receivable Repair income
P 50,000 (right to collect) (services)
Rent Expense
8. Paid monthly rent of P 10,000 Cash
(right to occupy)
9. Cruz made partial collections from Accounts Receivable
Cash
customer’s accounts, P 30,000 (reduction of right to collect)
10. Cruz paid the salaries and wages of Salary Expense
Cash
laborers, P 15,000 (employees’ services)
Cash
11. Billed a customer, P 6,000 and Repair Income
Accounts receivable
received a partial payment of P 2,000 (services)
(right to collect)
12. Shop supplies purchased, P 15,000 Cash
Supplies
and made a down payment of P 5,000 Accounts Payable
13. Shop supplies bought for cash and Supplies Expense
Cash
used P 18,000 (supplies used)
14. Cruz withdrew P 20,000 for his J Cruz, Drawing
Cash
personal use (ownership right taken)

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ACCOUNTING EQUATION EXPANDED

ASSETS = LIABI LTTIES + OWNER'S EQUITY
Accounts
Accou nts J. Cruz,
Cash + Receivable Supplies+ Equipment = Bank Loan + Revenues - Expenses
Payable+ Capital+
+
1 200,000.00 = + 200,000.00
2 100,000.00 = 100,000.00 +
Bal 200,000.00 100,000.00 = 100,000.00 + 200,000.00
3 - 62,000.00 62,000.00 = +
Bal 138,000.00 62,000.00 100,000.00 = 100,000.00 + 200,000.00
4 - 60,000.00 = - 60,000.00 +
Bal 78,000.00 62,000.00 100,000.00 = 40,000.00 + 200,000.00
5 100,000.00 = 100,000.00 +
Bal 178,000.00 62,000.00 100,000.00 = 40,000.00 100,000.00 + 200,000.00
6 25,000.00 = + 25,000.00
Bal 203,000.00 62,000.00 100,000.00 = 40,000.00 100,000.00 + 200,000.00 25,000.00
7 50,000.00 = + 50,000.00
Bal 203,000.00 50,000.00 62,000.00 100,000.00 = 40,000.00 100,000.00 + 200,000.00 75,000.00
8 - 10,000.00 = + - 10,000.00
Bal 193,000.00 50,000.00 62,000.00 100,000.00 = 40,000.00 100,000.00 + 200,000.00 75,000.00 - 10,000.00
9 30,000.00 - 30,000.00 = +
Bal 223,000.00 20,000.00 62,000.00 100,000.00 = 40,000.00 100,000.00 + 200,000.00 75,000.00 - 10,000.00
10 - 15,000.00 = + - 15,000.00
Bal 208,000.00 20,000.00 62,000.00 100,000.00 = 40,000.00 100,000.00 + 200,000.00 75,000.00 - 25,000.00
11 2,000.00 4,000.00 = + 6,000.00
Bal 210,000.00 24,000.00 62,000.00 100,000.00 = 40,000.00 100,000.00 + 200,000.00 81,000.00 - 25,000.00
12 - 5,000.00 15,000.00 = 10,000.00 +
Bal 205,000.00 24,000.00 77,000.00 100,000.00 = 50,000.00 100,000.00 + 200,000.00 81,000.00 - 25,000.00
13 - 18,000.00 = + - 18,000.00
Bal 187,000.00 24,000.00 77,000.00 100,000.00 = 50,000.00 100,000.00 + 200,000.00 81,000.00 - 43,000.00
14 - 20,000.00 = + - 20,000.00
Bal 167,000.00 24,000.00 77,000.00 100,000.00 = 50,000.00 100,000.00 + 180,000.00 81,000.00 - 43,000.00

1. Transaction effect: increase assets (Cash) and increases owner’s equity (J. Cruz,
Capital) by P 200,000
2. Transaction effect: increase assets (Equipment) and increases liability (Accounts
Payable) by P 100,000
3. Transaction effect: decrease assets (Cash) and increases another asset
(Supplies) by P 62,000
4. Transaction effect: decrease assets (Cash) and decreases liabilities (Accounts
Payable) by P 60,000
5. Transaction effect: increases assets (Cash) and increases liabilities (Bank Loan)
by P 100,000

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EMALYN F. PUNZALAN CPA

6. Transaction effect: increases assets (Cash) and increases owner’s equity

(Revenues) by P 25,000
7. Transaction effect: increases assets (Accounts Receivable) and increases
owner’s equity (Revenues) by P 50,000
8. Transaction effect: decrease assets (Cash) and decreases owner’s equity
(Expenses) by P 10,000
9. Transaction effect: increase assets (Cash) and decreases another asset
(Accounts Receivable) by P 30,000
10. Transaction effect: decrease assets (Cash) and decreases owner’s equity
(Expenses) by P 15,000
11. Transaction effect: increase assets (Cash; P 2,000 and Accounts Receivable; P
4,000) and increases owner’s equity (Revenues) by P 6,000
12. Transaction effect: increase assets (Supplies; P 15,000), decreases assets
(Cash; P 5,000) and increases liabilities (Accounts Payable; P 10,000)
13. Transaction effect: decrease assets (Cash) and decreases owner’s equity
(Expenses) by P 18,000
14. Transaction effect: decreases assets (Cash) and decreases owner’s equity (J.
Cruz, Capital) by P 20,000

Example 1.2 Business Transactions

On July 1 of the current year, Paul Brite started a TV repair business. The following
transactions occurred during the month:
1. He invested P 50,000 cash to start his business.
2. Purchased for cash supplies costing P 3,500.
3. Brite bought from A and G Company repair equipment costing P 20,000 on
credit.
4. Customers paid P 12,000 cash for repair services rendered.
5. Brite made a partial payment to A and G Company, P 15,000.
6. Customers were billed on account P 14,000 for repair service rendered.
7. Rental for the month of July was paid, P 6,000.
8. Collected P 8,000 from customers as payment for their accounts.

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9. Paid wages of assistant helper for the month of July, P 4,000.

10. Bought additional supplies costing P 7,500. A down payment of P 3,000 was
made and the balance is payable at the end of the month.
11. Repair services rendered, P 9,000. Received P 4,500 as partial payment.
12. Repair supplies bought for cash and used for repairs amounted to P 6,500.
13. Brite withdrew P 10,000 for his personal use.

Record the peso amount under the appropriate heading below on the accounting
equation to show the effect of each transaction. Show the balance after the second
transaction and thereafter and their final balances.

ASSETS = LIABILITIES + OWNER" S EQUITY

Accounts
Equipment Accounts P. Brite
Cash+ Receivable Supplies+ = + Revenues - Expenses
+ Payable Capital+
+

Solution to Example 1.2

ASSETS = LIABILITIES + OWNER"S EQUITY
Accounts
Accounts P. Brite
Cash+ Receivable Supplies+ Equipment = + Revenues - Expenses
Payable Capital+
+ +
1 50,000.00 = + 50,000.00
2 - 3,500.00 3,500.00 = +
Bal 46,500.00 3,500.00 = + 50,000.00
3 20,000.00 = 20,000.00 +
Bal 46,500.00 3,500.00 20,000.00 = 20,000.00 + 50,000.00
4 12,000.00 = + 12,000.00
Bal 58,500.00 3,500.00 20,000.00 = 20,000.00 + 50,000.00 12,000.00
5 - 15,000.00 = - 15,000.00 +
Bal 43,500.00 3,500.00 20,000.00 = 5,000.00 + 50,000.00 12,000.00
6 14,000.00 = + 14,000.00
Bal 43,500.00 14,000.00 3,500.00 20,000.00 = 5,000.00 + 50,000.00 26,000.00
7 - 6,000.00 = + - 6,000.00
Bal 37,500.00 14,000.00 3,500.00 20,000.00 = 5,000.00 + 50,000.00 26,000.00 - 6,000.00
8 8,000.00 - 8,000.00 = +
Bal 45,500.00 6,000.00 3,500.00 20,000.00 = 5,000.00 + 50,000.00 26,000.00 - 6,000.00
9 - 4,000.00 = + - 4,000.00
Bal 41,500.00 6,000.00 3,500.00 20,000.00 = 5,000.00 + 50,000.00 26,000.00 - 10,000.00
10 - 3,000.00 7,500.00 = 4,500.00 +
Bal 38,500.00 6,000.00 11,000.00 20,000.00 = 9,500.00 + 50,000.00 26,000.00 - 10,000.00
11 4,500.00 4,500.00 = + 9,000.00
Bal 43,000.00 10,500.00 11,000.00 20,000.00 = 9,500.00 + 50,000.00 35,000.00 - 10,000.00
12 - 6,500.00 = + - 6,500.00
Bal 36,500.00 10,500.00 11,000.00 20,000.00 = 9,500.00 + 50,000.00 35,000.00 - 16,500.00
13 - 10,000.00 = + - 10,000.00
Bal 26,500.00 10,500.00 11,000.00 20,000.00 = 9,500.00 + 40,000.00 35,000.00 - 16,500.00
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After the transactions are recorded in the general journal in terms of debit and credit,
the transactions will be further recorded in the general ledger. The process of recording
in the journal is called journalizing while the process of recording in the general ledger
is called posting.

Example 1.3 Recording Business Transactions Using the Double Entry System
On July 1, of the current year, Paul Brite started a TV repair business. The following
transactions occurred during the month:
1 He invested P 50,000 cash to start his business.
3 Purchased for cash supplies costing P 3,500.
5 Brite bought from A and G Company repair equipment costing P 20,000 on
credit.
8 Customers paid P 12,000 cash for repair services rendered.
10 Brite made a partial payment to A and G Company, P 15,000.
12 Customers were billed on account P 14,000 for repair service rendered.
14 Rental for the month of July was paid, P 6,000.
17 Collected P 8,000 from customers as payment for their accounts.
19 Paid wages of assistant helper for the month of July, P 4,000.
22 Bought additional supplies costing P 7,500. A down payment of P 3,000 was
made and the balance is payable at the end of the month.
25 Repair services rendered, P 9,000. Received P 4,500 as partial payment.
28 Repair supplies bought for cash and used for repairs amounted to P
6,500.
31 Brite withdrew P 10,000 for his personal use.

Required:
1. Journalize the above transactions in the general journal. Use the following
accounts: Cash, Accounts Receivable, Supplies, Equipment, Accounts Payable,
P. Brite Capital, P. Brite Drawing, Repair Income, Salary Expense, Rent
Expense, and Supplies Expense.
2. Post each journal entry to the ledger (using T-accounts)

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3. Prepare a trial balance at July 31.

Solution to Example 1.3

1. Journal Entries
Date Debit Credit
July 1 Cas h 50,000.00
P. Brite Capital 50,000.00
#

3 Supplies 3,500.00
Cash 3,500.00
#

5 Equipm ent 20,000.00

Ac counts Payable 20,000.00
#

8 Cas h 12,000.00
Repair Income 12,000.00
#

10 Ac counts Payable 15,000.00

Cash 15,000.00
#

12 Ac counts Receivable 14,000.00

Repair Income 14,000.00
#

14 Rent Expens e 6,000.00

Cash 6,000.00
#

17 Cas h 8,000.00
Ac counts Rec eivable 8,000.00
#

19 Salary Expense 4,000.00

Cash 4,000.00
#

22 Supplies 7,500.00
Cash 3,000.00
Ac counts Payable 4,500.00
#

25 Cas h 4,500.00
Ac counts Receivabale 4,500.00
Repair Income 9,000.00
#

28 Supplies Expense 6,500.00

Cash 6,500.00
#

31 P. Brite Drawings 10,000.00

Cash 10,000.00
#

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Date Debit Credit

July 1 Cash 50,000.00
P. Brite Capital 50,000.00
#

3 Supplies 3,500.00
Cash 3,500.00
#

5 Equipment 20,000.00
Accounts Payable 20,000.00
#

8 Cash 12,000.00
Repair Income 12,000.00
#

10 Accounts Payable 15,000.00

Cash 15,000.00
#

12 Accounts Receivable 14,000.00

Repair Income 14,000.00
#

14 Rent Expense 6,000.00

Cash 6,000.00
#

17 Cash 8,000.00
Accounts Receivable 8,000.00
#

19 Salary Expense 4,000.00

Cash 4,000.00
#

22 Supplies 7,500.00
Cash 3,000.00
Accounts Payable 4,500.00
#

25 Cash 4,500.00
Accounts Receivabale 4,500.00
Repair Income 9,000.00
#

28 Supplies Expense 6,500.00

Cash 6,500.00
#

31 P. Brite Drawings 10,000.00

Cash 10,000.00
#

Note: Many kinds of journal are used in the business. One of the most common is the
two – column general journal. It is an all-purpose journal in which all business
transactions may be recorded. Each entry made in the general journal includes the
following information, entered in this order:

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1. The date of the transaction

2. The name of the account debited as well as the amount
3. The name of the account credited as well as the amount
The account debited is on the extreme left while the account credited is indented a little
to the right. This is to distinguish the debit entry from the credit entry.

2. Posting to the ledger (T-accounts)

Cash Accounts Receivable

7/01 50,000.00 7/03 3,500.00 7/12 14,000.00 7/17 8,000.00
7/08 12,000.00 7/10 15,000.00 7/25 4,500.00
7/17 8,000.00 7/14 6,000.00 18,500.00 8,000.00
7/25 4,500.00 7/19 4,000.00 Bal. 10,500.00
7/22 3,000.00
7/28 6,500.00
7/31 10,000.00 Equipment
74,500.00 48,000.00 7/05 20,000.00
Bal. 26,500.00 Bal. 20,000.00

Supplies P. Brite Capital

7/03 3,500.00 7/01 50,000.00
7/22 7,500.00 Bal 50,000.00
Bal. 11,000.00

Accounts Payable Repair Income

7/10 15,000.00 7/05 20,000.00 7/08 12,000.00
7/22 4,500.00 7/12 14,000.00
15,000.00 24,500.00 7/25 9,000.00
Bal. 9,500.00 35,000.00
Bal. 35,000.00

P. Brite Drawing Salary Expense

7/31 10,000.00 7/19 4,000.00
Bal. 10,000.00 Bal. 4,000.00

Rent Expense Supplies Expense

7/14 6,000.00 7/28 6,500.00
Bal. 6,000.00 Bal. 6,500.00

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Note: In making T-accounts, you normally provide more lines or space for Cash and
other accounts that are more frequently affected by the transactions given in the
problem.
 The T-accounts are arranged using the accounting equation that starts with the
assets, liabilities and owner’s equity.
 The T-account for cash is longer (more space) because there are more
transactions that affect this account.
 The postings to the T-accounts are dated based on the dates of the above
transaction. You will be able to analyze the effects of each transaction on the
different accounts by following the dates chronologically.
 Balances are determined by getting the difference between the debit totals and
credit totals.
 The balances are the amounts that will be reflected in the trial balance.

After all transactions have been entered (called posting) in the appropriate T-accounts,
each account must be totaled to determine the balance. When there is only one
transaction recorded in a T-account, the balance is that figure. If there are many
transactions recorded in a T-account, the difference between the total debit and total
credit represents the debit or credit balance whichever is higher. The balances of the
different T-accounts will be summarized and shown in the trial balance.

3. Trial Balance
A trial balance is a listing of all the balances of the different accounts (assets, liabilities,
capital, revenues and expenses), as of a given time. This prepared at the end of each
month. The total of all the accounts with debit balances must equal with the total of all
the accounts with credit balances. If not, then an error in posting (recording in the ledger
or T-accounts) must have been committed.

Purposes of trial balance:

 To check the accuracy of posting by testing the equality of the debits and credits
 It aids in locating errors in posting

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 It serves as a basis in the preparation of financial statements

The trial balance of Paul Brite TV Repair Shop is as follows:

Paul Brite TV Repair Shop

Trial Balance
July 31, 2020

Account Title Debit Credit

Cash P 26,500.00
Accounts Receivable 10,500.00
Supplies 11,000.00
Equipment 20,000.00
Accounts Payable P 9,500.00
P. Brite Capital 50,000.00
P. Brite Drawing 10,000.00
Repair Income 35,000.00
Salary Expense 4,000.00
Rent Expense 6,000.00
Supplies Expense 6,500.00
Totals 94,500.00 94,500.00

Note: However, a balanced trial balance (the total of the debit column is equal to the
total of the credit column) does not necessarily mean that no errors have been
committed. The following errors cannot be detected by the trial balance:
 No entry was made for a given transaction
 A journal entry was not posted to the general ledger
 A journal entry was posted twice
 Incorrect accounts were used to record a given transaction
 Incorrect amounts were recorded for a given transaction

If the trial balance does not balance, the following are the common mistakes or errors:
 Error in addition or subtraction in the general ledger or error in addition in the trial
balance itself.
 Error in transposition, which means that digits are incorrectly interchanged. (eg.
P 890 is recorded as P 980)

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 Slide error or transplacement error, which means error in placing the decimal
point. (eg. P 150.00 is recorded as P 15.00)

Short Cuts in Locating Error/s in the Trial Balance

If the total of the debit column in the trial balance is not equal to the total of the credit
column, the following procedures may be followed to detect the errors:
1. Get the difference between the total debits and total credits.
2. A difference of 10, 100, 1000, etc., would probably indicate a simple error in
addition either in the trial balance or the general ledger.
3. If the difference is divisible by two (2), the error would probably in posting to the
wrong side (i.e., a debit is posted on the credit side or vice versa).
4. If the difference is divisible by nine (9), the error would probably an error in
transposition or error in transplacement.

Procedures to Correct Errors in Journalizing or Posting

1. Draw a straight horizontal-line through the error and insert the correct title or
amount if the entry is incorrect or the posting is incorrect.
2. Make a correcting entry. This will correct the wrong entry recorded. A correcting
entry is an entry made in the general journal to correct an error discovered.

Example 1.4 Recording Business Transactions Using the Double Entry System
Nestor Martel, a lawyer decided to open a law firm named Martel Law Firm. The partial
chart of accounts listed below will be used for recording purposes:
Statement of Financial Position Accounts:

100 - Assets 200 - Liabilities

101 Cash 201 Accounts Payable
102 Accounts Receivable 204 Loan Payable
105 Prepaid Insurance
106 Office Supplies
108 Furniture and Equipment 300 - Owner's Equity
301 Nestor Martel, Capital
302 Nestor Martel, Drawing

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Statement of Comprehensive Income Accounts:

400 - Revenues 500 - Expenses

401 Legal Fees Earned 501 Salary Expense
503 Advertising Expense
504 Utilities Expense
509 Miscellaneous Expense

In December of the current year, the following transactions took place:

2 Nestor Martel invested P 60,000 cash to put up his law firm.
4 A one-year insurance effective December 1 was paid, P 6,000.
6 Office furniture costing P 15,000 was purchased on account from EZ
Furniture.
8 Office supplies costing P 2,500 was bought for cash.
11 Received from City Bank P 60,000 for loan applied to be used in his law practice.
14 Purchased on credit a desktop computer and printer for office use costing P
60,000 from Micro System Inc.
16 Received P 12,500 cash for legal services rendered to Jose Lopez.
18 Paid P 1,000 for miscellaneous expenses incurred.
20 Received P 10,500 cash for legal services rendered to clients.
22 Advertising placed on a local newspaper for three months effective December 1,
was paid P 3,600.
24 Various clients were billed for legal services rendered, P 16,400.
25 Micro System, Inc. was partially paid, P 45,000.
26 Collected the accounts from various clients, P 7,500.
27 Light, water, and telephone expenses for the month of December was paid to the
owner of the property, P 1,500.
28 The salary of the secretary was paid, P 5,500
29 Nestor Martel withdrew P 12,000 for personal use.
30 Received P 5,000 for legal services rendered.

Required:
1. Journalize the above transactions in the general journal.

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2. Post each journal entries to the general ledger.

3. Prepare a trial balance at December 31 of the current year.

Note: The problem mentioned charts of accounts. A chart of accounts is a list of all
account titles and their account number used for journalizing business transactions. The
accounts are normally listed in the order in which they appear in the financial
statements. The Statement of Financial Position accounts first, in the order of assets,
liabilities and owner’s equity. The Statement of Comprehensive Income accounts are
then listed in the order of revenues and expenses. An account number identifies the
account. Account numbers may have three, four, or more digits. The number of digits to
be used varies depending on the nature and size of the business.

Solutions to Example 1.4

1. Journal Entries

Date Debit Credit

Dec 2 Cash 60,000.00
Nestor Martel, Capital 60,000.00
#

4 Prepaid Insurance 6,000.00

Cash 6,000.00
#

6 Furniture and Equipment 15,000.00

Accounts Payable 15,000.00
#

8 Office Supplies 2,500.00

Cash 2,500.00
#

11 Cash 60,000.00
Loan Payable 60,000.00
#

14 Furniture and Equipment 60,000.00

Accounts Payable 60,000.00
#

16 Cash 12,500.00
Legal Fees Earned 12,500.00
#

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16 Cash 12,500.00
Legal Fees Earned 12,500.00
#

18 Miscellaneous Expense 1,000.00

Cash 1,000.00
#

20 Cash 10,500.00
Legal Fees Earned 10,500.00
#

22 Advertising Expense 3,600.00

Cash 3,600.00
#

24 Accounts Receivabale 16,400.00

Legal Fees Earned 16,400.00
#

25 Accounts Payable 45,000.00

Cash 45,000.00
#

26 Cash 7,500.00
Accounts Receivable 7,500.00
#

27 Utilities Expense 1,500.00

Cash 1,500.00
#

28 Salary Expense 5,500.00

Cash 5,500.00
#

29 Nestor Martel, Drawing 12,000.00

Cash 12,000.00
#

30 Cash 5,000.00
Legal Fees Earned 5,000.00
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 FUNDAMENTALS OF ABM II – REVIEW OF BASIC BOOKKEEPING SKILS_PART 2
EMALYN F. PUNZALAN CPA

Note: When recording an expense paid in advance, two methods are acceptable: the
asset method and the expense method. Under the asset method, an account (Prepaid
Expense) is used (see transaction dated December 4 as an example). Under the
expense method, an expense account is used (see transaction dated December 22 as
an example). At the end of the period, an adjusting entry will be made to adjust the
amount to the correct amount of expense to be charged for the period (this will be
discussed further in Part 3).

2. Posting to the ledger (T-accounts)

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EMALYN F. PUNZALAN CPA

101 - Cash 102 - Accounts Receivable

12/02 60,000.00 12/04 6,000.00 12/24 16,400.00 12/26 7,500.00
12/11 60,000.00 12/08 2,500.00 Bal. 8,900.00
12/16 12,500.00 12/18 1,000.00
12/20 10,500.00 12/22 3,600.00
12/26 7,500.00 12/25 45,000.00 106 - Office Supplies
12/30 5,000.00 12/27 1,500.00 12/08 2,500.00
12/28 5,500.00 Bal. 2,500.00
12/29 12,000.00
155,500.00 77,100.00
Bal. 78,400.00 108 - Furniture and Equipment
12/06 15,000.00
12/14 60,000.00
105 - Prepaid Insurance Bal. 75,000.00
12/04 6,000.00
Bal. 6,000.00
204 - Loan Payable
12/11 60,000.00
201 - Accounts Payable Bal. 60,000.00
12/25 45,000.00 12/06 15,000.00
12/14 60,000.00 302 - Nestor Martel, Drawing
45,000.00 75,000.00 12/29 12,000.00
Bal. 30,000.00 Bal. 12,000.00

301 - Nestor Martel, Capital 501 - Salary Expense

12/02 60,000.00 12/28 5,500.00
Bal. 60,000.00 Bal. 5,500.00

401 - Legal Fees Earned 504 - Utilities Expense

12/16 12,500.00 12/27 1,500.00
12/20 10,500.00 Bal. 1,500.00
12/24 16,400.00
12/30 5,000.00
Bal. 44,400.00 509 - Miscellaneous Expense
12/18 1,000.00
Bal. 1,000.00
503 - Advertising Expense
12/22 3,600.00
Bal. 3,600.00

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EMALYN F. PUNZALAN CPA

3. Trial Balance at December 31

Nestor Martel Law Office

Trial Balance
December 31, 2020

Account Title Debit Credit

Cash P 78,400.00
Accounts Receivable 8,900.00
Prepaid Insurance 6,000.00
Office Supplies 2,500.00
Furniture and Equipment 75,000.00
Accounts Payable P 30,000.00
Loan Payable 60,000.00
Nestor Martel, Capital 60,000.00
Nestor Martel, Drawing 12,000.00
Legal Fees Earned 44,400.00
Salary Expense 5,500.00
Advertising Expense 3,600.00
Utilities Expense 1,500.00
Miscellaneous Expense 1,000.00
Totals 194,400.00 194,400.00

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