AE 111 Financial Accounting & Reporting Module 3 PDF

COLLEGE OF COMMERCE MODULE 3 PACKET AE 111 – FINANCIAL ACCOUNTING & REPORTING MODULE 3 OVERVIEW: Welcome to Module 3 – RECORDING BUSINESS TRANSACTIONS In this module, we will discuss how to journalize transactions, post entries from the journal to the ledger...

COLLEGE OF COMMERCE MODULE 3 PACKET AE 111 – FINANCIAL ACCOUNTING & REPORTING MODULE 3 OVERVIEW: Welcome to Module 3 – RECORDING BUSINESS TRANSACTIONS In this module, we will discuss how to journalize transactions, post entries from the journal to the ledger and prepare the trial balance. CONSULTATION HOURS: Phone or Messenger: Virtual time: Class Schedule MODULE 3 LEARNING OBJECTIVES: By the end of this module, the students will be able to: 1. Enumerate and explain the steps in the accounting cycle. 2. Develop a chart of accounts. 3. Identify the general journal as the book of original entry. 4. Apply the rules of debit and credit in analyzing business transactions. 5. Journalize transactions in proper form. 6. Describe a general ledger and understand the purpose it serves. 7. Post entries from the general journal to the general ledger. 8. Prepare and explain the use of trial balance. 9. Perform steps in locating and correcting errors. 2022-2023 Module Packets for AE 111 (Financial Accounting & Reporting) | College of Commerce | University of San Agustin, Iloilo City, 5000, Philippines Page 1 of 22  COLLEGE OF COMMERCE COURSE CONTENT FOR MODULE 3: RECORDING BUSINESS TRANSACTIONS ACTIVITY DESCRIPTION TIME TO COMPLETE Lecture discussions Recording Business Transactions 40 minutes Activity 3-1 Journalizing, Posting & Trial Balance 40 minutes Activity 3-2 Comprehensive Problem 40 minutes Quiz Summative Quiz for Module 3 60 minutes LECTURE DISCUSSIONS THE ACCOUNTING CYLE The accounting cycle refers to series of sequential steps or procedures performed to accomplish the accounting process. This cycle is repeated each accounting period. The first three steps (i.e. collection of business documents, journalizing, posting) are accomplished during the period. The fourth to ninth steps (preparation of trial balance, adjusting entries, working paper, financial statements, closing entries and post-closing trial balance) generally occur at the end of the period. The last step – preparation of reversing entries is optional and occurs at the beginning of the next period. The discussion in this module will focus on the first four steps. Steps 5 to 10 will be discussed in the succeeding modules. 2022-2023 Module Packets for AE 111 (Financial Accounting & Reporting) | College of Commerce | University of San Agustin, Iloilo City, 5000, Philippines Page 2 of 22  COLLEGE OF COMMERCE 2022-2023 Module Packets for AE 111 (Financial Accounting & Reporting) | College of Commerce | University of San Agustin, Iloilo City, 5000, Philippines Page 3 of 22  COLLEGE OF COMMERCE CHART OF ACCOUNTS A listing of all accounts and their account numbers in the ledger is known as the chart of accounts. The chart is arranged in the financial statement order, that is, assets first, followed by liabilities, owner’s equity, income and expenses. The accounts should be numbered in a flexible manner to permit indexing and cross-referencing. When analyzing transactions, the accountant refers to the chart of accounts to identify the pertinent accounts to be increased and decreased. If an appropriate account title is not listed in the chart, an additional account may be added. Presented below is the chart of accounts for the illustration: Del Mundo Landscape Specialist Chart of Accounts Balance Sheet Accounts Income Statement Accounts Assets Income 110 Cash 410 Landscaping Revenues 120 Accounts Receivable 420 Lawn Cutting Revenues 130 Supplies 140 Prepaid Rent Expenses 150 Prepaid Insurance 510 Salaries Expense 160 Vehicles 520 Supplies Expense 165 Accumulated Depreciation- Vehicles 530 Rent Expense 170 Equipment 540 Insurance Expense 175 Accumulated Depreciation- Equipment 550 Gas Expense 560 Advertising Expense Liabilities 570 Depreciation Expense - Vehicles Depreciation Expense- 210 Notes Payable 580 Equipment 220 Accounts Payable 590 Interest Expense 230 Salaries Payable 240 Interest Payable 250 Unearned Revenues Owner's Equity 310 Del Mundo, Capital 320 Del Mundo, Withdrawals 330 Income Summary 2022-2023 Module Packets for AE 111 (Financial Accounting & Reporting) | College of Commerce | University of San Agustin, Iloilo City, 5000, Philippines Page 4 of 22  COLLEGE OF COMMERCE JOURNALIZING TRANSACTIONS Accountants use special forms called journals to keep track of their business transactions. A journal is where information is entered first into the accounting system. A journal is often referred to as the book of original entry because it is the place the information originally enters into the system. A journal keeps a historical account of all recordable transactions with which the company has engaged. In other words, a journal is similar to a diary for a business. When you enter information into a journal, we say you are journalizing the entry. Journaling the entry is the second step in the accounting cycle. Here is a picture of a journal. Here is a picture of a journal. PR You can see that a journal has columns labeled debit and credit. The debit is on the left side, and the credit is on the right. Let us look at how we use a journal. When filling in a journal, there are some rules you need to follow to improve journal entry organization. Formatting When Recording Journal Entries Include a date of when the transaction occurred. The year and month are not rewritten for every entry unless the year or month changes or a new page is needed. The debit account title(s) always come first and on the left. The credit account title(s) always come after all debit titles are entered, and on the right. The titles of the credit accounts will be indented below the debit accounts. You will have at least one debit (possibly more). You will always have at least one credit (possibly more). The posting reference (PR) will be used when the entries are posted, i.e. until the amounts are transferred to the related ledger accounts. The peso value of the debits must equal the peso value of the credits or else the equation will go out of balance. You will write a short description after each journal entry. Skip a space after the description before starting the next journal entry. 2022-2023 Module Packets for AE 111 (Financial Accounting & Reporting) | College of Commerce | University of San Agustin, Iloilo City, 5000, Philippines Page 5 of 22  COLLEGE OF COMMERCE An example journal entry format is as follows. It is not taken from previous examples but is intended to stand alone. PR Cash Del Mundo, Capital Received cash investment from owner. Note that this example has only one debit account and one credit account, which is considered a simple entry. A compound entry is when there is more than one account listed under the debit and/or credit column of a journal entry (as seen in the following). PR Cash Supplies Santos, Capital Received cash and supplies as investment from owner. Notice that for this entry, the rules for recording journal entries have been followed. There is a date of April 1, 2018, the debit account titles are listed first with Cash and Supplies, the credit account title of Santos, Capital is indented after the debit account titles, there are at least one debit and one credit, the debit amounts equal the credit amount, and there is a short description of the transaction. Let us now look at a few transactions from Printing Plus and record their journal entries. Recording Transactions We now return to our company example of Del Mundo Landscape Specialist. We will analyze and record each of the transactions for the business and discuss how this impacts the financial statements. 1. On November 1, 2019, the owner invested P450,000 cash into the business. 2. On November 1, 2019 rented office space and paid three month’s rent in advance, P21,000. 3. On November 2, 2019, purchases used truck paying P300,000 in cash and signing P100,000 note payable which is due in eighteen months. 4. On November 3, 2019 Del Mundo purchases mechanical lawn mowers for P54,000 in cash. 5. On November 4, 2019 Del Mundo purchases P1,500 worth of gasoline. 2022-2023 Module Packets for AE 111 (Financial Accounting & Reporting) | College of Commerce | University of San Agustin, Iloilo City, 5000, Philippines Page 6 of 22  COLLEGE OF COMMERCE 6. On November 5, 2019 Del Mundo pays P24,000 for a one-year insurance contract that protects his business from November 1 until October 31 of the following year. 7. On November 8, 2019, purchases supplies on account for P1,000, payment due within three months 8. On November 14, 2019, the Del Mundo Landscape Specialists cut grass for seven customers, receiving P2,500 from each. 9. On November 20, 2019, receives P13,500 cash in advance from a customer for six future maintenance visits. 10. On November 22, 2019, provides P2,500 in services to eight customer who asks to be billed for the services. 11. On November 26, 2019, paid P4,000 cash in salaries expense to employees. 12. On November 28, 2019, Del Mundo pays P1,750 to print advertising fliers. 13. On November 29, 2019, Del Mundo withdraws P5,000 for personal use. 14. On November 30, 2019, five of the eight customers billed last November 22 each pay P2,500. Transaction 1: On November 1, 2019, the owner invested P450,000 cash into the business. Analysis: Assets increased. Owner’s equity increased. Rule: Increases in assets are recorded by debits. Increases in owner’s equity are recorded by credits. Dr. Cr. Cash 450,000 Del Mundo Capital 450,000 Initial investment. Transaction 2: On November 1, 2019 rented office space and paid three month’s rent in advance, P21,000. Analysis: An asset increased. Another asset decreased. Rule: Increases in assets are recorded by debits. Decreases in assets are recorded by credits. 2022-2023 Module Packets for AE 111 (Financial Accounting & Reporting) | College of Commerce | University of San Agustin, Iloilo City, 5000, Philippines Page 7 of 22  COLLEGE OF COMMERCE Dr. Cr. Prepaid Rent 21,000 Cash 21,000 Payment of 3 months rent in advance Transaction 3: On November 2, 2019, purchases a P300,000 used truck, paying P200,000 in cash and signing a note payable for the balance which is due in eighteen months. Analysis: An asset increased. Another asset decreased. Liabilities increased. Rule: Increases in assets are recorded by debits. Decreases in assets are recorded by credits. Increases in liabilities are recorded by credits. Dr. Cr. Vehicles 300,000 Cash 200,000 Notes Payable 100,000 Acquisition of truck. Transaction 4: On November 3, 2019 Del Mundo purchases mechanical lawn mowers for P54,000 in cash. Analysis: An asset increased. Another asset decreased. Rule: Increases in assets are recorded by debits. Decreases in assets are recorded by credits. Dr. Cr. Equipment 54,000 Cash 54,000 Purchase of mechanical lawn mowers for cash. Transaction 5: On November 4, 2019 Del Mundo purchases P1,500 worth of gasoline for cash. Analysis: Assets decreased. Owner’s equity decreased. Rule: Decreases in assets are recorded by credits. Decreases in owner’s equity are recorded by debits. Dr. Cr. Gas Expense 1,500 Cash 1,500 Purchase of gasoline for cash. 2022-2023 Module Packets for AE 111 (Financial Accounting & Reporting) | College of Commerce | University of San Agustin, Iloilo City, 5000, Philippines Page 8 of 22  COLLEGE OF COMMERCE Transaction 6: On November 5, 2019 Del Mundo pays P24,000 for a one-year insurance contract that protects his business from November 1 until October 31 of the following year. Analysis: An asset increased. Another asset decreased. Rule: Increases in assets are recorded by debits. Decreases in assets are recorded by credits. Dr. Cr. Prepaid insurance 24,000 Cash 24,000 Payment for a one-year insurance contract for the business. Transaction 7: On November 8, 2019, purchases supplies on account for P1,000, payment due within three months. Analysis: Assets increased. Liabilities increased. Rule: Increases in assets are recorded debits. Increases in liabilities are recorded by credits. Dr. Cr. Supplies 1,000 Accounts Payable 1,000 Purchase of supplies on account. Transaction 8: On November 14, 2019, the Del Mundo Landscape Specialists cut grass for seven customers, receiving P2,500 from each. Analysis: Assets increased. Owner’s equity increased. Rule: Increases in assets are recorded by debits. Increases in owner’s equity are recorded by credits. Dr. Cr. Cash 17,500 Lawn Cutting Revenues 17,500 To record lawn cutting revenues. Transaction 9: On November 20, 2019, receives P13,500 cash in advance from a customer for six future maintenance visits. Analysis: Assets increased. Liabilities increased. Rule: Increases in assets are recorded by debits. Increases in liabilities are recorded by credits. 2022-2023 Module Packets for AE 111 (Financial Accounting & Reporting) | College of Commerce | University of San Agustin, Iloilo City, 5000, Philippines Page 9 of 22  COLLEGE OF COMMERCE Dr. Cr. Cash 13,500 Unearned Revenues 13,500 To record cash advance from a customer. Transaction 10: On November 22, 2019, provides P2,500 in services to eight customer who asks to be billed for the services. Analysis: Assets increased. Owner’s equity increased. Rule: Increases in assets are recorded by debits. Increases in owner’s equity are recorded by credits. Dr. Cr. Accounts Receivable 20,000 Lawn Cutting Revenues 20,000 To record services to customers on account. Transaction 11: On November 26, 2019, paid P4,000 cash in salaries expense to employees. Analysis: Assets decreased. Owner’s equity decreased. Rule: Decreases in assets are recorded by credits. Decreases in owner’s equity are recorded by debits. Dr. Cr. Salaries Expense 4,000 Cash 4,000 Payment of salaries to employees. Transaction 12: On November 28, 2019, Del Mundo pays P1,750 to print advertising fliers. Analysis: Assets decreased. Owner’s equity decreased. Rule: Decreases in assets are recorded by credits. Decreases in owner’s equity are recorded by debits. Dr. Cr. Advertising Expense 1,750 Cash 1,750 Payment to print advertising fliers. 2022-2023 Module Packets for AE 111 (Financial Accounting & Reporting) | College of Commerce | University of San Agustin, Iloilo City, 5000, Philippines Page 10 of 22  COLLEGE OF COMMERCE Transaction 13: On November 29, 2019, Del Mundo withdraws P5,000 for personal use. Analysis: Assets decreased. Owner’s equity decreased. Rule: Decreases in assets are recorded by credits. Decreases in owner’s equity are recorded by debits. Dr. Cr. Del Mundo, Withdrawals 5,000 Cash 5,000 To record the owner’s withdrawal of cash. Transaction 14: On November 30, 2019, five of the eight customers billed last November 22 each pay P2,500. Analysis: An asset increased. Another asset decreased. Rule: Increases in assets are recorded by debits. Decreases in assets are recorded by credits. Dr. Cr. Cash 12,500 Accounts Receivable 12,500 Collection of receivable from 5 customers. POSTING TO THE LEDGER A grouping of entity’s accounts is referred to as the ledger. A general ledger is the reference book of the accounting system and is used to classify and summarize transactions, and to prepare data for the financial statements. The general ledger is a record of each account and its balance. Reviewing journal entries individually can be tedious and time consuming. The general ledger is helpful in that a company can easily extract account and balance information. Here is a small section of a general ledger. 2022-2023 Module Packets for AE 111 (Financial Accounting & Reporting) | College of Commerce | University of San Agustin, Iloilo City, 5000, Philippines Page 11 of 22  COLLEGE OF COMMERCE You can see at the top is the name of the account “Cash,” as well as the assigned account number “101.” Remember, all asset accounts will start with the number 1. The date of each transaction related to this account is included, a possible description of the transaction, and a reference number if available. There are debit and credit columns, storing the financial figures for each transaction, and a balance column that keeps a running total of the balance in the account after every transaction. Posting means transferring the amounts from the journal to the appropriate accounts in the ledger. The steps are illustrated on the next page. 1. Transfer the date of the transaction from the journal to the ledger. 2. Transfer the page number from the journal to the reference column of the ledger. 3. Post the debit figure from the journal as a debit figure in the ledger and the credit figure from the journal as a credit figure in the ledger. 4. Enter the account number in the posting reference column of the journal once the figure has been posted in the ledger. PR Cash Santos, Capital Received cash investment from owner Investment of owner Santos, Capital Investment of owner 2022-2023 Module Packets for AE 111 (Financial Accounting & Reporting) | College of Commerce | University of San Agustin, Iloilo City, 5000, Philippines Page 12 of 22  COLLEGE OF COMMERCE As you can see, there is one ledger account for Cash and another for Santos, Capital. Cash is labeled account number 101 because it is an asset account type. The date of January 3, 2019 is in the far-left column, and a description of the transaction follows in the next column. Cash had a debit of P20,000 in the journal entry, so P20,000 is transferred to the general ledger in the debit column. The balance in this account is currently P20,000, because no other transactions have affected this account yet. Santos, Capital has the same date and description. Santos, Capital had a credit of P20,000 in the journal entry, and that information is transferred to the general ledger account in the credit column. The balance at that time in the Santos, Capital ledger account is P20,000. Some companies would use the basic format of the T-account for its ledger. Compared to a journal, a ledger organizes information by account. The accounts in the general ledger are classified into two general groups: 1. Balance sheet or permanent accounts/ real accounts (assets, liabilities, equity) 2. Income statement or temporary accounts/ nominal accounts (income and expenses). Temporary or nominal accounts are used to gather information for a particular accounting period. At the end of the period, the balances of these accounts are transferred to a permanent owner’s equity account. Calculating Account Balances When calculating balances in ledger accounts, one must take into consideration which side of the account increases and which side decreases. To find the account balance, you must find the difference between the sum of all figures on the side that increases and the sum of all figures on the side that decreases. For example, the Cash account is an asset. We know from the accounting equation that assets increase on the debit side and decrease on the credit side. If there was a debit of P5,000 and a credit of P3,000 in the Cash account, we would find the difference between the two, which is P2,000 (5,000 – 3,000). The debit is the larger of the two sides (P5,000 on the debit side as opposed to P3,000 on the credit side), so the Cash account has a debit balance of P2,000. Another example is a liability account, such as Accounts Payable, which increases on the credit side and decreases on the debit side. If there were a P4,000 credit and a P2,500 debit, the difference between the two is P1,500. The credit is the larger of the two sides (P4,000 on the credit side as opposed to P2,500 on the debit side), so the Accounts Payable account has a credit balance of P1,500. 2022-2023 Module Packets for AE 111 (Financial Accounting & Reporting) | College of Commerce | University of San Agustin, Iloilo City, 5000, Philippines Page 13 of 22  COLLEGE OF COMMERCE Illustration: The ledger accounts of Del Mundo Landscape Specialist after posting are shown next page. The account numbers are purposely omitted. The balance of each account has been determined. 2022-2023 Module Packets for AE 111 (Financial Accounting & Reporting) | College of Commerce | University of San Agustin, Iloilo City, 5000, Philippines Page 14 of 22  COLLEGE OF COMMERCE Cash Notes Payable Nov. 1 450,000 Nov. 1 21,000 Nov. 2 100,000 14 17,500 2 200,000 Balance 100,000 20 13,500 3 54,000 30 12,500 4 1,500 5 24,000 Accounts Payable 26 4,000 Nov. 8 1,000 28 1,750 Balance 1,000 29 5,000 493,500 311,250 Balance 182,250 Unearned Revenues Nov. 20 13,500 Balance 13,500 Accounts Receivable Nov.22 20,000 Nov. 30 12,500 Balance 7,500 Del Mundo, Capital Nov. 1 450,000 Balance 450,000 Supplies Nov.8 1,000 Balance 1,000 Del Mundo, Withdrawals Nov.29 5,000 Balance 5,000 Prepaid Rent Nov.1 21,000 Balance 21,000 Lawn Cutting Revenues Nov. 14 17,500 22 20,000 Prepaid Insurance Balance 37,500 Nov.5 24,000 Balance 24,000 Salaries Expense Nov.26 4,000 Vehicles Balance 4,000 Nov.2 300,000 Balance 300,000 Gas Expense Nov.4 1,500 Equipment Balance 1,500 Nov.3 54,000 Balance 54,000 Advertising Expense Nov.28 1,750 Balance 1,750 2022-2023 Module Packets for AE 111 (Financial Accounting & Reporting) | College of Commerce | University of San Agustin, Iloilo City, 5000, Philippines Page 15 of 22  COLLEGE OF COMMERCE TRIAL BALANCE The trial balance is a list of all accounts with their respective debit or credit balances. It is prepared to verify the equality of debits and credits in the ledger at the end of each accounting period or at any time the postings are updated. It is a control device that helps minimize accounting errors. When the totals are equal, the trial balance is in balance, but it does not signify the absence of errors. For example, if the bookkeeper failed to record rent, the trial balance columns are equal but, the accounts are incorrect since rent expense is understated and cash is overstated. The procedures in the preparation of a trial balance follow: 1. List the account tiles in numerical order 2. Obtain the account balance of each account from the ledger and enter the debit balances in the debit column and the credit balances in the credit column. 3. Add the debit and credit columns. 4. Compare the totals. The trial balance for Del Mundo Landscape Specialist follows: Del Mundo Landscape Specialist Trial Balance November 30, 2019 Acct No. Account Title Dr Cr 110 Cash ₱ 182,250 120 Accounts Receivable 7,500 130 Supplies 1,000 140 Prepaid Rent 21,000 150 Prepaid Insurance 24,000 160 Vehicles 300,000 170 Equipment 54,000 210 Notes Payable ₱ 100,000 220 Accounts Payable 1,000 250 Unearned Revenues 13,500 310 Del Mundo, Capital 450,000 320 Del Mundo, Withdrawals 5,000 420 Lawn Cutting Revenues 37,500 510 Salaries Expense 4,000 550 Gas Expense 1,500 560 Advertising Expense 1,750 ₱ 602,000 ₱ 602,000 2022-2023 Module Packets for AE 111 (Financial Accounting & Reporting) | College of Commerce | University of San Agustin, Iloilo City, 5000, Philippines Page 16 of 22  COLLEGE OF COMMERCE LOCATING ERRORS An inequality in the totals of the debits and credits would automatically signal the presence of an error. These errors include: 1. Error in posting a transaction to the ledger. An erroneous amount was posted to the account A debit entry was posted as a credit or vice versa A debit or credit posting was omitted. 2. Error in determining the account balances. A balance was incorrectly computed A balance was entered in the wrong balance column 3. Error in preparing the trial balance One of the columns of the trial balance was incorrectly added. The amount of an account balance was incorrectly recorded in the trial balance. A debit was recorded on the trial balance as a credit or vice versa, or a balance was omitted entirely. What is the most efficient approach in locating an error? The following procedures may be done in locating errors. 1. Prove the addition of the trial balance columns by adding these columns in the opposite direction. 2. If the amount does not lie in addition, determine the exact amount by which the trial balance is out of balance If the discrepancy is divisible by 9, this suggests either a transposition (reversing the order of numbers) error or a slide (moving of the decimal point) error. Example of transposition error: The cash account balance is 21,750 was transposed and written as 21,570. The resulting error is 180 which is divisible by 9. Example of slide error: 21,750 was copied as 2,175 or 217,500. The resulting discrepancy in the trial balance will also be an amount divisible by 9. Assume that office equipment has a debit balance of 42,000 but was erroneously listed in the credit column of the trial balance. This will cause a discrepancy of two times 42,000 2022-2023 Module Packets for AE 111 (Financial Accounting & Reporting) | College of Commerce | University of San Agustin, Iloilo City, 5000, Philippines Page 17 of 22  COLLEGE OF COMMERCE or 84,000 in the trial balance totals. It is advisable to scan the columns for an amount equal to exactly one-half of the discrepancy. It is also advisable to look over the transactions for an item of the exact amount of the discrepancy. An error may have been made by recording the debit side of the transaction and forgetting to enter the credit side. 3. Compare the accounts and amounts in the trial balance with that in the ledger. Be certain that no account is omitted. 4. Recompute the balance of each ledger account. 5. Trace all postings from the journal to the ledger accounts. Note that even when a trial balance is in balance, the accounting records may still contain errors. A balanced trial balance simply proves that, as recorded, debits equal credits. The following errors are not detected by a trial balance: 1. Failure to record or post a transaction. 2. Recording the same transaction more than once. 3. Recording an entry but with the same erroneous debit and credit amounts. 4. Posting a part of a transaction correctly as a debit or credit but to the wrong account. 2022-2023 Module Packets for AE 111 (Financial Accounting & Reporting) | College of Commerce | University of San Agustin, Iloilo City, 5000, Philippines Page 18 of 22  COLLEGE OF COMMERCE Activity 3-1 Journalizing, Posting & Trial Balance Required: (a) Prepare the journal entries for the September transactions. (b) Post all the journal entries in the ledger using T-accounts. (c) Prepare a trial balance. 2022-2023 Module Packets for AE 111 (Financial Accounting & Reporting) | College of Commerce | University of San Agustin, Iloilo City, 5000, Philippines Page 19 of 22  COLLEGE OF COMMERCE Activity 3-2 Comprehensive Problem Required: (a) Prepare the journal entries for the July transactions. (b) Post all the journal entries in the ledger using T-accounts. (c) Prepare a trial balance. Juan de la Cruz began professional practice as a system analyst on July 1. He plans to prepare a monthly financial statement. During July, the owner completed these transactions : 1. July 1 Juan de la Cruz invested cash P500,000 along with computer equipment that had a market value of P120,000 two years ago but was now worth P100,000 only 2. July 2 Paid P15,000 for the rent of office space for the month 3. July 4 Purchased P12,000 of additional computer equipment on credit (due within 30 days) 4. July 8 Completed work for a client and immediately collected P32,000 cash 5. July 10 Completed work for a client and sent a bill for P27,000 to be paid within 30 days 6. July 12 Purchased additional equipment for P8,000 in cash. 7. July 15 Paid an assistant for P6,200 cash as payment for wages for 15 days 8. July 18 Collected P15,000 on the amount owed by the client 9. July 25 Paid P12,000 cash to settle the liability on the equipment purchased 10. July 28 Owner withdrew P500 cash for personal use. 11. July 31 Received PLDT bill P1,800 and Meralco bill P3,000. Activity 3-3 Summative Quiz for Module 3 REFERENCES: Printed Learning Resources Aliling, Leonardo E. (2013). Fundamentals of basic accounting. Quezon City: Rex Printing Company, Inc. 2022-2023 Module Packets for AE 111 (Financial Accounting & Reporting) | College of Commerce | University of San Agustin, Iloilo City, 5000, Philippines Page 20 of 22  COLLEGE OF COMMERCE Ballada, Win Lu, Susan Ballada (2019). Basic financial accounting & reporting. Manila, Philippines: Made Easy & Domdane Publisher. Cabrera, Ma. Elenita B., Cabrera, Gilbert Anthony B. (2019) Financial accounting and reporting fundamentals.. Manila, Philippines: GIC Enterprises & Co., Inc. Cabrera, Ma. Elenita B. (2018). Financial accounting and reporting -comprehensive edition. Manila, Philippines: GIC Enterprises & Co. Inc. Mroczkwowski, Nicholas, David Flanders. (2015). Accounting basic reports. 10th ed. Australia: Cengage Learning Australia. Valix, Conrado T., Christian Aris M. Valix. (2017). Theory of accounts. Manila, Philippines: GIC Enterprises & Co. Weygandt, Jerry J., Paul D. Kimmek Donald E. Kieso. (2016) Accounting principles. International Student Version. 12th ed. Hoboken, NJ: John Wiley & Sons. Wild, John, et al. (2015) Principles of accounting. International edition. New York: Mc Graw Hill. https://youtu.be/pGNB-8VN-cA Journalizing. Retrieved from Filipino Accounting Tutorial https://www.youtube.com/watch?v=vOGuOpkpBW8 Journal Entries are Posted in the Ledger. Retrieved Web and other Learning Resources from Filipino Accounting Tutorial https://www.youtube.com/watch?v=BFli545A4Jg Preparation of Trial Balance. Retrieved from Filipino Accounting Tutorial https://www.youtube.com/watch?v=l_UfmkmlzUM 2022-2023 Module Packets for AE 111 (Financial Accounting & Reporting) | College of Commerce | University of San Agustin, Iloilo City, 5000, Philippines Page 21 of 22  COLLEGE OF COMMERCE Complete Accounting Cycle for Sole Proprietor. Retrieved from https://www.youtube.com/watch?v=bnRY3c_KFrA ProfAlldredge (2016). Financial Accounting for Sole Proprietorships. Retrieved from https://www.youtube.com/playlist?list=PL8Sg4W1XyH vCrLMHxYeZsXBmv7DYpRzVC Christy Lynch (2016). Journal Entries of Sole Proprietorship. Retrieved from https://www.youtube.com/watch?v=KWna4QjBf7A 2022-2023 Module Packets for AE 111 (Financial Accounting & Reporting) | College of Commerce | University of San Agustin, Iloilo City, 5000, Philippines Page 22 of 22