CLASSIFICATION OF ACCOUNTS

INSTRUCTIONS: The customary classifications for accounts listed in the chart of accounts are listed below. Classify each account
by inserting the appropriate letter in the classification column and indicate the normal balance by inserting a check mark in the debit
column or the credit column.

CLASSES
A. Assets

B. Liabilities

C. Owners equity

D. Revenue

E. Expenses
Normal Balance

ACCOUNTS
0.

Cash ......................................................................................

1.

Notes Payable .......................................................................

2.

Supplies .................................................................................

3.

Unearned Fees ......................................................................

4.

Land ......................................................................................

5.

Prepaid Insurance .................................................................

6.

April Saran, Capital ................................................................

7.

Unearned Rent ......................................................................

8.

Rent Expense ........................................................................

9.

Office Equipment ...................................................................

Classification

Debit

Credit

10. Accounts Receivable .............................................................

ACCOUNTS

Normal Balance
Debit
Credit

Classification

0.

Land ......................................................................................

1.

Earned Revenue ....................................................................

2.

Equipment .............................................................................

3.

Notes Receivable ..................................................................

4.

Supplies Expense ..................................................................

5.

Paula Downing, Drawing .......................................................

6.

Commissions Earned ............................................................

7.

Prepaid Insurance .................................................................

8.

Wages Expense ....................................................................

9.

Cash ......................................................................................

10. Unearned Revenue ...............................................................

DEBIT AND CREDIT

INSTRUCTIONS: Indicate the manner in which each of the increases and decreases in the accounts listed below would be
recorded by placing a check mark in the debit column or the credit column at the right.
Answers
DESCRIPTIONS
0.

Inventory is decreased ..............................................................................

1.

Accounts Payable is increased ..................................................................

2.

Cash is decreased .....................................................................................

3.

Salaries Expense is increased ...................................................................

4.

Notes Payable is decreased ......................................................................

5.

Unearned Fees is decreased .....................................................................

6.

Accounts Payable is decreased .................................................................

7.

Buildings is increased ................................................................................

8.

Prepaid Insurance is decreased ................................................................

9.

Alex Saran, Capital is decreased ...............................................................

Debit

Credit

10. Equipment is decreased ............................................................................

Answers
DESCRIPTIONS
0.

Notes Payable is decreased ......................................................................

1.

Alex Small, Drawing is decreased .............................................................

2.

Accounts Payable is increased ..................................................................

Debit

Credit

3.

Fees earned is increased ..........................................................................

4.

Supplies Expense is decreased .................................................................

5.

Wages Expense is increased ....................................................................

6.

Supplies is decreased ...............................................................................

7.

Automobile is increased ............................................................................

8.

Accounts Receivable is decreased ............................................................

9.

Cash is increased ......................................................................................

10. Insurance Expense is decreased ...............................................................

ANALYSIS OF TRANSACTIONS
INSTRUCTIONS: Indicate the effect of each of the following transactions for the current month on assets, liabilities, and owners
equity by inserting + for increase and for decrease in the appropriate columns at the right.

Answers
TRANSACTIONS

0.

Paid cash for wages ..................................................................................

1.

Received cash from owner as additional investment .................................

2.

Received cash for services provided (sold) ...............................................

3.

Paid cash to owner as a withdrawal ..........................................................

4.

Charged customers for services sold on account ......................................

5.

Purchased cleaning supplies on account ..................................................

6.

Paid cash to customer who was overcharged for services sold for cash ...

7.

Received cash for cleaning supplies sold to employee at cost ...................

8.

Received cash on account from customers ...............................................

9.

Recorded cost of supplies used during the month .....................................

OE

10. Paid rent ....................................................................................................

11. Paid creditors on account ..........................................................................
12. Paid cash for utilities for current month ......................................................
NOTE: Each + or is assigned a weight of 2%.
ANALYSIS OF TRANSACTIONS
INSTRUCTIONS: For Demo Tech Systems Consultants, indicate the accounts to be debited and credited in recording the selected
transactions described below by inserting the letter designation for the accounts in the appropriate columns.

A.
B.
C.
D.

Cash
Accounts Receivable
Building
Prepaid Insurance

E.
F.
G.
H.

Equipment
Office Supplies
Notes Receivable
Accounts Payable

ACCOUNTS
I. X. Allornunn, Capital
J. X. Allornunn, Drawing
K. Notes Payable
L. Office Supplies Expense

TRANSACTIONS
0. Provided professional services on account ..............................................
12. Provided professional services on account ..............................................
34. X. Allornunn withdrew cash for personal use ...........................................
56. Purchased office supplies on account .....................................................
78. Discovered an error in computing and paying the wages of an employee. Paid cash to the
employee for the amount of the underpayment .......................................
910. Paid rent covering a two-year period .......................................................
1112. Purchased building and equipment, paying 15% in cash and
giving a note for the balance ....................................................................
1314. Sold office supplies to employees at cost, receiving cash .......................
1516. Returned for credit equipment purchased on account .............................
1718. Received cash from customers on account .............................................

M.
N.
O.
P.

Prepaid Rent
Fees Earned
Rent Expense
Wages Expense

Debit

Credit

Problems
1. At the beginning of the year, Pena Calling Station had liabilities of P100,000 and owners equity of P96,000.
If assets increased by P40,000 and liabilities decreased by P30,000, what was the owners equity at the end of
the year?
2. The liabilities of Pagal Company equal one-third of the total assets, and the owners equity is P240,000.
What is the amount of the liabilities?
3. On April 1, the cash account balance was P11,250. During April, the cash receipts totaled P31800 and the
April 30 balance was P12,500. Determine the cash payments made during April?
4. At the beginning of the year, Queen computer had total assets of P200,000 and total liabilities of P125,000.
If the total assets decreased by P80,000 and the owners equity increased to P120,000 during the year, what is
the amount of total liabilities at the end of the year?
5. Glory Arroyo, a recent medical board topnotcher, started his medical practice on July 1, 2007. Presented
below is the November 30, 2007 trial balance representing from July 1, 2007 to November 30, 2007 together
with the account titles.
Glory Arroyo Medical Center
Trial Balance
November 30, 2007
Cash
Accounts Receivable
Notes Receivable
Medical Supplies
Medical Equipment
Accounts Payable
Note Payable
Arroyo, Capital
Arroyo, Withdrawal
Medical Revenues
Miscellaneous Expense
Telephone Expense
Rent Expense
Laboratory Expense
Salaries Expense
TOTAL

309000
25000
3500
19000
415000
7000
33000
554000
6500
285300
4300
3000
37500
8500
48000
879300

879300

During the month of December 2007, the following transactions were completed:
Dec 1
Dec 2
Dec 3
Dec 5
Dec 7
Dec 9
Dec 15
Dec 24
Dec 28
Dec28

Arroyo made an additional investment in the business furniture and fixtures valued as P 12,300 and
place P71,000 personal funds in a business checking account.
Acquired medical equipment costing P95,000 from Tambilo Medical Equipment Company, paying
P15,000 cash and financing the remainder by issuing the note payable.
Paid rent for the month of December (There was no change in the monthly rental fee).
Acquired medical supplies from Suiza Medical Supply Company on account P15,250.
Received P18,450 in cash for patients for medical services rendered this week.
Paid Pablo Labrador for preparing laboratory work on patient, P1800
Billed patients P51,700 for services rendered.
Paid P20.000 on notes payable.
Paid salaries for medical technician and receptionist, P9,600.
Paid Suiza Medical Supply Company P3,750 on account.

Required
1. Prepare the journal entries for the December transactions.
2. Prepare a Trial Balance as at December 31, 2007.
3. Prepare Statement of Financial Position and Income Statement for December.