.....

1. C2
THE ACCOUNTING EQUATION AND
BOOK OF ACCOUNTS
Prepared by: SORIANO, Sunshine A. L.P.T.

2. Objectives
At the end of this chapter, the learners should
be able to:
1. Recall the accounting cycle
2. Recall the accounting equation
3. Determine the normal balance of account
4. Differentiate journal from the general
ledger
5. Prepare journal entries to record business
transactions
6. Determine the balances of accounts using
T-Accounts

3. The Accounting Equation
ASSETS
LIABIILITIES
OWNER’S EQUITY
=

4. Double-Entry System
• In every transaction, at least two
accounts are affected
• Accounting equation must always be
kept balanced

5. Whichever side you INCREASE is
the NORMAL side

6. The Accounting Equation
DEBIT
CREDIT
OWNER’S EQUITY
=

7. The Accounting Equation
OWNER’S EQUITY
CAPITAL/
OWNER’S EQUITY
DRAWINGS/
WITHDRAWAL
REVENUES
EXPENSE
CREDIT
CREDIT
DEBIT
DEBIT

8. All
Dead
Elephants
Love
Crushed
Raisins

9. All
Dead
Elephants
Love
Crushed
Raisins
SSETS
IABIILITES
APITAL/OWNER’S EQUITY
RAWINGS/WITHDRAWAL
EVENUES
XPENSE
CREDIT
DEBIT

10. ACCOUNTING CYCLE
1. Analysis of Transactions
2. Journalizing Transactions
3. Posting of entries to the General Ledger
4. Generation of Unadjusted Trial Balance
5. Journalizing and Posting of Adjusting
Entries
6. Preparation of FS, Closing of Nominal
and Drawing Accounts
7. Preparation of Post-Closing Trial Balance

11. 1.
Analysis
of
Transactions
2.
Journalizing
Transactions
GENERAL TRANSACTION TYPES
1. Analysis of Transactions
2. Journalizing Transactions

12. GENERAL JOURNAL
• JOURNAL – a chronological record
of events or business transactions
showing all the effects of each
transaction in terms of debits and
credits
• Also called the book of original
entry
• The simplest journal is the general
journal

13. GENERAL JOURNAL
• Simple Entry- only 1 debit account
and 1 credit account
• Compound Entry- entries that
require the use of 3 or more
accounts
• Journalizing - the process of
recording a transaction in the
journal after it has been recognized
and measured

14. CHART
OF
ACCOUNTS
Uy Law Office
Chart of Accounts
Account Number Account Name Account Type
1001 Cash
ASSET
1002 Accounts Receivable
1003 Office Supplies
1004 Prepaid Rent
1005 Office Equipment
1006 Accumulated Depreciation – Office Equipment
2001 Accounts Payable
LIABILITY
2002 Notes Payable - Bank
2003 Unearned Revenue
2004 Interest Payable
3001 Jan Uy- Capital
EQUITY
3002 Jan Uy- Drawing
4001 Professional Fees INCOME
5001 Salaries Expense
EXPENSE
5002 Rent Expense
5003 Utilities Expense
5004 Representation Expense
5005 Office Supplies Expense
5006 Depreciation Expense
5007 Interest Expense
5008 Permit and License Expense

15. Dec.1
• Atty. Jan Uy invests ₱500,000 cash.
• Uy Law Office obtains a loan from Mars Bank amounting to
₱100,000. The loan bears 6% annual interest payable every
December 1, starting December 1, 2016. The principal is
payable in two equal annual installments.
• Uy Law Office pays ₱10,000 for the necessary permits and
licenses for its operation.
• Uy Law Office pays ₱120,000 for the annual rent of the office
space. The lease contract will expire on December 1, 2016 and
is renewable annually.

16. TRANSACTIONS WITH OWNER (INVESTMENT)
Dec.1
• Atty. Jan Uy invests ₱500,000 cash.
ASSETS = LIABILITIES + OWNER’S EQUITY
Cash (Increase) Jan Uy, Capital (Increase)
GENERAL JOURNAL
Page 1
Date Particulars Reference Debit Credit
2015
Dec 1 Cash 500,000
Jan Uy- Capital 500,000

17. BORROWING CASH FROM BANKS
• Uy Law Office obtains a loan from Mars Bank amounting
to ₱100,000. The loan bears 6% annual interest payable
every December 1, starting December 1, 2016. The
principal is payable in two equal annual installments.
ASSETS = LIABILITIES + OWNER’S EQUITY
Cash (Increase) Loan Payable – bank (Increase)
Dec 1
Cash 100,000
Loan Payable 100,000
Cash 500,000
Jan Uy- Capital 500,000

18. PERMIT AND LICENSE EXPENSE
• Uy Law Office pays ₱10,000 for the necessary permits
and licenses for its operation.
ASSETS = LIABILITIES + OWNER’S EQUITY
Cash (Decrease) Permit and License Expense
(Decrease in OE)
Date Particulars Reference Debit Credit
Permit and License Expense 10,000
Cash 10,000

19. PAYING FOR PREPAID EXPENSES
• Uy Law Office pays ₱120,000 for the annual rent of the
office space. The lease contract will expire on December
1, 2016 and is renewable annually.
ASSETS = LIABILITIES + OWNER’S EQUITY
Cash (Decrease)
Prepaid Rent (Increase)
Date Particulars Reference Debit Credit
Prepaid Rent 120,000
Cash 120,000

20. Dec. 2
Uy Law Office renders a legal advice to Mercury Co. Uy Law Office
bills Mercury Co. for ₱135,000.
Uy Law Office purchases supplies worth ₱5,000, on cash basis.

21. Dec. 2
Uy Law Office renders a legal advice to Mercury Co. Uy Law
Office bills Mercury Co. for ₱135,000.
ASSETS = LIABILITIES + OWNER’S EQUITY
Accounts Receivable
(Increase)
Professional Fees
(Increase)
Date Particulars Reference Debit Credit
Dec. 2 Accounts Receivable 135,000
Professional Fees 135,000
Rendering service on account

22. Uy Law Office purchases supplies worth ₱5,000, on cash
basis.
ASSETS = LIABILITIES + OWNER’S EQUITY
Office Supplies (Increase)
Cash (Decrease)
Date Particulars Reference Debit Credit
Dec. 2 Office Supplies 5,000
Cash 5,000
Purchase of Asset

23. Dec. 8
Uy Law Office renders legal advice to Venus Co. for ₱37,500, on cash
basis.
Uy Law Office purchases a laptop for ₱36,000 cash. The laptop has an
estimated useful life of 3 years, with no residual value. The Company
treats purchases during the first half of the month as a purchase at
the start of the month.

24. Dec. 8
Uy Law Office renders legal advice to Venus Co. for
₱37,500, on cash basis.
ASSETS = LIABILITIES + OWNER’S EQUITY
Cash (Increase) Professional Fees
(Increase)
Date Particulars Reference Debit Credit
Dec. 8 Cash 37,500
Professional Fees 37,500
Rendering service on cash basis

25. Uy Law Office purchases a laptop for ₱36,000 cash. The
laptop has an estimated useful life of 3 years, with no
residual value. The Company treats purchases during the
first half of the month as a purchase at the start of the
month.
ASSETS = LIABILITIES + OWNER’S EQUITY
Office Equipment (Increase)
Cash (Decrease)
Date Particulars Reference Debit Credit
Dec. 8 Office Equipment 36,000
Cash 36,000
Purchase of asset on cash basis

26. Dec. 15
Mercury Co. pays Uy Law Office.
ASSETS = LIABILITIES + OWNER’S EQUITY
Accounts Receivable (Decrease)
Cash (Increase)
Date Particulars Reference Debit Credit
Dec. 2
Dec 15
Accounts Receivable 135,000
Professional Fees 135,000
Subsequent collection of rendered service on
account
Cash 135,000
Accounts Receivable 135,000

27. Dec. 17
Atty. Uy withdraws ₱25,000 from the law office for his
personal use
ASSETS = LIABILITIES + OWNER’S EQUITY
Cash (Decrease) Jan Uy, Drawing
(Decrease in OE)
Date Particulars Reference Debit Credit
Dec. 17 Jan Uy, Drawing 25,000
Cash 25,000
Transaction with owner (Cash withdrawal)

28. Dec. 20
Cygnus Catering bills Uy Law Office for ₱25,000 for services
rendered for the company’s holiday luncheon for its clients
and staff.
ASSETS = LIABILITIES + OWNER’S EQUITY
Accounts Payable
(Increase)
Representation Expense
(Decrease in OE)
Date Particulars Reference Debit Credit
Dec. 2 Representation Expense 25,000
Accounts Payable 25,000
REPRESENTATION

29. ACCRUAL PRINCIPLE
• Income should be recognized at the
time it is earned
• Expenses should be recognized at
the time they are incurred

30. Dec. 22
Uy Law Office receives ₱35,000 cash in advance from
Jupiter Co. for legal services to be rendered in 2016.
ASSETS = LIABILITIES + OWNER’S EQUITY
Cash (Increase) Unearned Revenue
(Increase)
Date Particulars Reference Debit Credit
Dec. 23 Cash 35,000
Unearned Revenue 35,000
ADVANCE PAYMENTS

31. Dec. 23
Uy Law Office renders legal service to Vega Co. for ₱55,000,
on account
ASSETS = LIABILITIES + OWNER’S EQUITY
Accounts Receivable
(Increase)
Professional Fees
(Increase)
Date Particulars Reference Debit Credit
Dec. 23 Accounts Receivable 55,000
Professional Fees 55,000
Rendering service on account

32. Dec. 27
Uy Law Office renders taxation advice to a client. Uy Law
Office bills the client for ₱20,000
ASSETS = LIABILITIES + OWNER’S EQUITY
Accounts Receivable
(Increase)
Professional Fees
(Increase)
Date Particulars Reference Debit Credit
Dec. 27 Accounts Receivable 20,000
Professional Fees 20,000
Rendering service on account

33. Dec. 31
Uy Law Office pays ₱15,000 for the salary of its accounting
and office staff. Uy Law Office also pays utilities of ₱8,000.
(Office supplies of ₱3,000 has been used up by the Law
Office)
ASSETS = LIABILITIES + OWNER’S EQUITY
Cash (Decrease) Utilities Expense
Date Particulars Reference Debit Credit
Dec. 27 Salaries Expense 15,000
Utilities Expense 8,000
Paying for Incurred Expenses
Salaries Expense
(Decrease in OE)
Cash 23,000

34. 1.
Analysis
of
Transactions
2.
Journalizing
Transactions
OTHER TRANSACTIONS

35. Owner invests Equipment
Date Particulars Reference Debit Credit
Equipment Amount
Owner, Capital
Amount
Hired an employee
No entry

36. Purchases Supplies on Credit
Date Particulars Reference Debit Credit
Supplies Amount
Accounts Payable
Amount
Pays the Supplies bought on credit
Date Particulars Reference Debit Credit
Cash Amount
Accounts Payable Amount

37. Pays the Supplies bought on credit
Date Particulars Reference Debit Credit
Cash Amount
Accounts Payable Amount
Paid for personal funds for a family vacation
Date Particulars Reference Debit Credit
Cash Amount
Owner, Drawing Amount

38. GENERAL LEDGER
• Ledger- is the group of accounts
used by the company
• Also called the book of final entry

39. GENERAL
GROUPS
OF
ACCOUNT Uy Law Office
Chart of Accounts
Account Number Account Name Account Type
1001 Cash
ASSET
1002 Accounts Receivable
1003 Office Supplies
1004 Prepaid Rent
1005 Office Equipment
2001 Accounts Payable
LIABILITY
2002 Notes Payable - Bank
2003 Unearned Revenue
3001 Jan Uy- Capital
EQUITY
3002 Jan Uy- Drawing
4001 Professional Fees INCOME
5001 Salaries Expense
EXPENSE
5003 Utilities Expense
5004 Representation Expense
5008 Permit and License Expense
Balance Sheet
Accounts or
Real Accounts
Income
Statement
Accounts or
Nominal
Accounts

40. INDIVIDUAL ASSET
ACCOUNTS
INDIVIDUAL LIABIILITY
ACCOUNTS
OWNER’S EQUITY
Cash
Accounts Receivable
Office Supplies
Prepaid Rent
Prepaid Rent
Accounts Payable
Notes Payable
Unearned Income
Salaries Expense
Utilities Expense
Representation Expense
Permits and License
Expense
Professional Fees
Jan Uy, Drawing
Jan Uy, Capital

41. CONTROLLING ACCOUNTS AND
SUBSIDIARY LEDGERS
• SUBSIDIARY ACCOUNT
an account that is kept within
a subsidiary ledger, which in turn
summarizes into a control account in
the general ledger.

42. Accounts Receivable Accounts Payable
Control Accounts
Accounts Receivable- Customer A
Accounts Receivable- Customer B
Accounts Receivable- Customer C
Accounts Receivable- Creditor A
Accounts Receivable- Creditor B
Accounts Receivable- Creditor C
Subsidiary Accounts

43. GENERAL LEDGER
• Posting- process of transferring
information from the journal to the
ledger.

44. TRANSACTIONS WITH OWNER (INVESTMENT)
Dec.1
• Atty. Jan Uy invests ₱500,000 cash.
ASSETS = LIABILITIES + OWNER’S EQUITY
Cash (Increase) Jan Uy, Capital (Increase)
GENERAL JOURNAL
Page 1
Date Particulars Reference Debit Credit
2015
Dec 1 Cash 500,000
Jan Uy- Capital 500,000

45. GENERAL JOURNAL
Page 1
Date Particulars Reference Debit Credit
2015
Dec 1
Initial Investment
Cash 500,000
Jan Uy- Capital 500,000
GENERAL LEDGER
Cash Account No. 1001
Date Explanation J. R. Debit Credit Balance
2015
Dec 1 Initial Investment J1 500,000 500,000
GENERAL LEDGER
Jan Uy, Capital Account No. 3001
Date Explanation J. R. Debit Credit Balance
2015
Dec 1 Initial Investment J1 500,000 500,000
1001
3001

46. T-ACCOUNT
Informal tool used to analyze the
effect of a transaction
ACCOUNT TITLE
DR CR
Date
mm/dd (8/20)or
Month Day(Aug. 20)

47. GENERAL JOURNAL
Page 1
Date Particulars Reference Debit Credit
2015
Dec 1
Initial Investment
Cash 500,000
Jan Uy- Capital 500,000
GENERAL LEDGER
Cash Account No. 1001
Date Explanation J. R. Debit Credit Balance
2015
Dec 1 Initial Investment J1 500,000 500,000
GENERAL LEDGER
Jan Uy, Capital Account No. 3001
Date Explanation J. R. Debit Credit Balance
2015
Dec 1 Initial Investment J1 500,000 500,000
1001
3001

48. GENERAL JOURNAL
Page 1
Date Particulars Reference Debit Credit
2015
Dec 1
Initial Investment
Cash 500,000
Jan Uy- Capital 500,000
1001
3001
Cash- 1001
DR CR
Dec 1 500,000
Jan Uy, Capital- 3001
DR CR
Dec 1 500,000

49. GENERAL JOURNAL
Page 1
Date Particulars Reference Debit Credit
2015
Dec 1 Cash 500,000
Jan Uy- Capital 500,000
Cash 100,000
Notes Payable - Bank 100,000
Permit and License Expense 10,000
Cash 10,000
Prepaid Rent 120,000
Cash 120,000
Dec 2 Accounts Receivable 135,000
Professional Fees 135,000
Office Supplies 5,000
Cash 5,000
Dec 8 Cash 37,500
Professional Fees 37,500
Office Equipment 36,000
Cash 36,000
Dec 15
Cash
135,000
Accounts Receivable 135,000
Dec 17 Jan Uy- Drawing 25,000
Cash 25,000
Dec 20 Representation Expense 25,000
Accounts Payable 25,000
Dec 22 Cash 35,000
Unearned Revenue 35,000
Dec 23 Accounts Receivable 55,000
Professional Fees 55,000
Dec 27 Accounts Receivable 20,000
Professional Fees 20,000
Dec 31 Salaries Expense 15,000
Utilities Expense 8,000
Cash 23,000

50. Cash- 1001
DR CR
Dec 1 500,000 Dec 1 10,000
Dec 1 100,000 Dec 1 120,000
Dec 8 37,500 Dec 2 120,000
Dec 15 135,000 Dec 8 36,000
Dec 17 25,000
Dec 31 23,000
807,500 219,000
588,500
Accounts Receivable-1002
DR CR
Dec 2 135,000 Dec 15 135,000
Dec 23 55,000
Dec 27 20,000
210,000 135,000
75,000
Office Supplies -1003
DR CR
Dec 2 5,000
Prepaid Rent-1004
DR CR
Dec 1 120,000
Office Equipment-1005
DR CR
Dec 8 36,000

51. Accounts Payable-2001
DR CR
Dec 20 25,000
Notes Payable-2002
DR CR
Dec 1 100,000
Unearned Revenue- 2003
DR CR
Dec 22 35,000

52. Professional Fees - 4001
DR CR
Dec 2 135,000
Dec 8 37,500
Dec 23 55,000
Dec 27 20,000
247,500
Salaries Expense - 5001
DR CR
Dec 31 15,000
Utilities Expense - 5003
DR CR
Dec 31 8,000
Representation Expense-5004
DR CR
Dec 20 25,000
Jan Uy, Capital - 3001
DR CR
Dec 1 500,000
Jan Uy, Drawing - 3002
DR CR
Dec 17 25,000
Permit and Licenses Expense -
5008
DR CR
Dec 1 10,000

53. 1.
Analysis
of
Transactions
2.
Journalizing
Transactions
GENERATION OF UNADJUSTED
TRIAL BALANCE

54. Uy Law Office
Unadjusted Trial Balance
31-Dec-15
Account Number Account Name Debit Credit
1001 Cash 588,500
1002 Accounts Receivable 75,000
1003 Office Supplies 5,000
1004 Prepaid Rent 120,000
1005 Office Equipment 36,000
2001 Accounts Payable 25,000
2002 Notes Payable - Bank 100,000
2003 Unearned Revenue 35,000
3001 Jan Uy- Capital 500,000
3002 Jan Uy- Drawing 25,000
4001 Professional Fees 247,500
5001 Salaries Expense 15,000
5003 Utilities Expense 8,000
5004 Representation Expense 25,000
5008 Permit and License Expense 10,000
Totals 907,500 907,500

55. 1.
Analysis
of
Transactions
2.
Journalizing
Transactions
JOURNALIZING AND POSTING OF
ADJUSTING ENTRIES

56. ADJUSTING ENTRIES
• Are entries used to update the
accounts prior to the preparation of
Financial Statements

57. PREPAYMENTS
• Uy Law Office pays ₱120,000 for the annual rent of the
office space. The lease contract will expire on December
1, 2016 and is renewable annually.
Date Particulars Reference Debit Credit
Prepaid Rent 120,000
Cash 120,000
COMPUTATION for Expired Rent (Dec 1- Dec 31)
Php 120,000
12
X 1 = Php 10,000
Adjusting Entry
Date Particulars Reference Debit Credit
Dec 31 Rent Expense 10,000
Prepaid Rent 10,000

58. Prepaid Rent-1004
DR CR
Dec 1 120,000
Rent Expense-5002
DR CR
Dec 31 10,000
Dec 31 10,000
110,000

59. Uy Law Office purchases supplies worth ₱5,000, on cash
basis.
Date Particulars Reference Debit Credit
Dec. 2 Office Supplies 5,000
Cash 5,000
SUPPLIES
Dec. 31
Uy Law Office pays ₱15,000 for the salary of its accounting
and office staff. Uy Law Office also pays utilities of ₱8,000.
(Office supplies of ₱3,000 has been used up by the Law
Office)

60. Date Particulars Reference Debit Credit
Dec. 2 Office Supplies 5,000
Cash 5,000
Adjusting Entry
Date Particulars Reference Debit Credit
Dec 31 Office Supplies Expense 3,000
Office Supplies 3,000
Office Supplies- 1003
DR CR
Dec 2 5,000
Office Supplies Expense-5005
DR CR
Dec 31 3,000
Dec 31 3,000
2,000

61. ACCRUED EXPENSES – Expenses already used but not yet paid
• Uy Law Office obtains a loan from Mars Bank amounting
to ₱100,000. The loan bears 6% annual interest payable
every December 1, starting December 1, 2016. The
principal is payable in two equal annual installments.
Adjusting Entry
Date Particulars Reference Debit Credit
Dec 31 Interest Expense 500
Interest Payable 500
COMPUTATION for Interest (Dec 1- Dec 31)
I= ₱ 100,000 x .06 x
1
12
= Php 500
I= Prt

62. Interest Expense-5007
DR CR
Dec 31 500
Interest Payable -2004
DR CR
Dec 31 500

63. DEPRECIATION
• Uy Law Office obtains a loan from Mars Bank amounting
to ₱100,000. The loan bears 6% annual interest payable
every December 1, starting December 1, 2016. The
principal is payable in two equal annual installments.
COMPUTATION for Depreciation (Dec 1- Dec 31)
Uy Law Office purchases a laptop for ₱36,000 cash. The
laptop has an estimated useful life of 3 years, with no
residual value. The Company treats purchases during the
first half of the month as a purchase at the start of the
month.
Cost
Less: Salvage Value
Depreciable Cost
Divided by: Estimated Useful Life
Php 36,000
0
Php 36,000
3
12,000
Annual Depreciation
Php 12,000
12
X 1 = Php 1,000

64. Adjusting Entry
Date Particulars Reference Debit Credit
Dec 31 Depreciation Expense 1,000
Accumulated Depreciation-
Office Equipment
1,000
Depreciation Expense-5006
DR CR
Dec 31 1,000
Accumulated Depreciation-
Office Equipment-1006
DR CR
Dec 31 1,000

65. GENERAL JOURNAL
Page 2
Date Particulars Reference Debit Credit
2020
Dec 31 Office Supplies Expense 3,000
Office Supplies 3,000
Interest Expense 500
Interest Payable 500
Rent Expense 10,000
Prepaid Rent 10,000
Depreciation Expense 1,000
Accumulated Depreciation- Office
Equipment 1,000

66. 1.
Analysis
of
Transactions
2.
Journalizing
Transactions
ADJUST THE TRIAL BALANCE

67. Unadjusted Trial Balance
Account
Number Account Name Debit Credit
1001 Cash 588,500
1002 Accounts Receivable 75,000
1003 Office Supplies 5,000
1004 Prepaid Rent 120,000
1005 Office Equipment 36,000
1006
Accumulated Depreciation-
Office Equipment
2001 Accounts Payable 25,000
2002 Notes Payable - Bank 100,000
2003 Unearned Revenue 35,000
2004 Interest Payable
3001 Jan Uy- Capital 500,000
3002 Jan Uy- Drawing 25,000
4001 Professional Fees 247,500
5001 Salaries Expense 15,000
5002 Rent Expense
5003 Utilities Expense 8,000
5004 Representation Expense 25,000
5005 Office Supplies Expense
5006 Depreciation Expense
5007 Interest Expenses
5008 Permit and License Expense 10,000
Totals 907,500 907,500
Adjustments
Debit Credit
3,000
10,000
1,000
500
10,000
3,000
1,000
500
14,500 14,500
Adjusted Trial Balance*
Debit Credit
588,500
75,000
5,000 3,000
120,000 10,000
36,000
1,000
25,000
100,000
35,000
500
500,000
25,000
247,500
15,000
10,000
8,000
25,000
3,000
1,000
500
10,000
922,000 922,000

68. 1.
Analysis
of
Transactions
2.
Journalizing
Transactions
PREPARATION OF FS, Closing of
Nominal and Drawing Accounts

69. Nominal Accounts
OWNER’S EQUITY
CAPITAL/
OWNER’S EQUITY
DRAWINGS/
WITHDRAWAL
REVENUES
EXPENSE

70. Nominal Accounts
OE = Capital – Drawings + Retained Earnings (or INCOME)
Retained Earnings (or INCOME) = Revenues – Expenses
= Capital – Drawings + Revenues – Expenses
OE

71. 1.
Analysis
of
Transactions
2.
Journalizing
Transactions
CLOSING ENTRIES

72. Professional Fees - 4001
DR CR
Dec 2 135,000
Dec 8 37,500
Dec 23 55,000
Dec 27 20,000
247,500
Jan Uy, Capital - 3001
DR CR
Dec 1 500,000
Jan Uy, Drawing - 3002
DR CR
Dec 17 25,000
REVENUES
DRAWINGS

73. Salaries Expense - 5001
DR CR
Dec 31 15,000
Utilities Expense - 5003
DR CR
Dec 31 8,000
Rent Expense-5002
DR CR
Dec 31 10,000
Representation Expense-5004
DR CR
Dec 20 25,000
Permit and Licenses Expense -
5008
DR CR
Dec 1 10,000
Office Supplies Expense-5005
DR CR
Dec 31 3,000
Interest Expense-5007
DR CR
Dec 31 500
Depreciation Expense-5006
DR CR
Dec 31 1,000
EXPENSE

74. Date Particulars Reference Debit Credit
Dec. 31 Professional Fees 247,500
Income Summary 247,500
1. CLOSE THE REVENUE ACCOUNTS
Professional Fees - 4001
DR CR
Dec 2 135,000
Dec 8 37,500
Dec 23 55,000
Dec 27 20,000
247,500
INCOME SUMMARY
DR CR
Dec 31 247,500
Dec 31 247,500
0
Dec 31 247,500
Summary account
used to close income
and expense
accounts
DRAWINGS
REVENUES
EXPENSE

75. Salaries Expense - 5001
DR CR
Dec 31 15,000
Utilities Expense - 5003
DR CR
Dec 31 8,000
Rent Expense-5002
DR CR
Dec 31 10,000
Representation Expense-5004
DR CR
Dec 20 25,000
Permit and Licenses Expense -
5008
DR CR
Dec 1 10,000
Office Supplies Expense-5005
DR CR
Dec 31 3,000
Interest Expense-5007
DR CR
Dec 31 500
Depreciation Expense-5006
DR CR
Dec 31 1,000
2. CLOSE THE EXPENSE ACCOUNTS
INCOME SUMMARY
DR CR
Dec 31 247,500
Dec 31 15,000 Dec 31 10,000
Dec 31 8,000 Dec 31 25,000 Dec 31 3,000
Dec 31 1,000 Dec 31 500 Dec 31 10,000
0 0
0 0 0
0 0 0
Dec 31 72,500
DRAWINGS
REVENUES
EXPENSE

76. Date Particulars Reference Debit Credit
Dec. 31 Income Summary 72,500
Salaries Expense
Rent Expense
Utilities Expense
Representation Expense
Office Supplies Expense
Depreciation Expense
Interest Expenses
Permit and License Expense
15,000
10,000
8,000
25,000
3,000
1,000
500
10,000
DRAWINGS
REVENUES
EXPENSE

77. 3. CLOSE THE INCOME SUMMARY TO CAPITAL
INCOME SUMMARY
DR CR
Dec 31 247,500
Dec 31 72,500
Dec 31 175,000
Dec 31 175,000
0
Jan Uy, Capital - 3001
DR CR
Dec 1 500,000
Dec 31 175,000
Date Particulars Reference Debit Credit
Dec. 31 Income Summary 175,000
Jan Uy, Capital 175, 000
Expenses Revenues

78. 3. If LOSS (i.e. Expense > Revenue)
INCOME SUMMARY
DR CR
Dec 31 20,000
Dec 31 100,000
Dec 31 80,000 Dec 31 80,000
0
Capital
DR CR
Dec 1 500,000
Dec 31 80,000
Date Particulars Reference Debit Credit
Dec. 31 Owner, Capital 80,000
Income Summary 80, 000
Expenses Revenues

79. 3. CLOSE THE INCOME SUMMARY TO CAPITAL
INCOME SUMMARY
DR CR
Dec 31 247,500
Dec 31 72,500
Dec 31 175,000
Dec 31 175,000
0
Jan Uy, Capital - 3001
DR CR
Dec 1 500,000
Dec 31 175,000
Date Particulars Reference Debit Credit
Dec. 31 Income Summary 175,000
Jan Uy, Capital 175, 000
Expenses Revenues

80. 3. CLOSE THE DRAWING ACCOUNT
Jan Uy, Capital - 3001
DR CR
Dec 1 500,000
Dec 31 175,000
Date Particulars Reference Debit Credit
Dec. 31 Jan Uy, Capital 25,000
Jan Uy, Drawing 25, 000
Jan Uy, Drawing - 3002
DR CR
Dec 17 25,000 Dec 31 25,000
0
Dec 31 25,000
Dec 31 675,000
Dec 31 25,000
Dec 31 650,000
DRAWINGS
REVENUES
EXPENSE

81. Date Particulars Reference Debit Credit
2020
Dec. 31 Professional Fees 247,500
Income Summary 247,500
Income Summary 72,500
Salaries Expense 15,000
Rent Expense 10,000
Utilities Expense 8,000
Representation Expense 25,000
Office Supplies Expense 3,000
Depreciation Expense 1,000
Interest Expenses 500
Permit and License Expense 10,000
Income Summary 175,000
Jan Uy, Capital 175,000
Jan Uy, Capital 25,000
Jan Uy, Withdrawal 25,000

82. DEBIT CREDIT
3001 Jan Uy- Capital 500,000
3002 Jan Uy- Drawing 25,000
4001 Professional Fees 247,500
5001 Salaries Expense 15,000
5002 Rent Expense 10,000
5003 Utilities Expense 8,000
5004 Representation Expense 25,000
5005 Office Supplies Expense 3,000
5006 Depreciation Expense 1,000
5007 Interest Expenses 500
5008 Permit and License Expense 10,000
Balances before Closing Entries (OE Accounts)

83. DEBIT CREDIT
3001 Jan Uy- Capital 650,000
3002 Jan Uy- Drawing 0
4001 Professional Fees 0
5001 Salaries Expense 0
5002 Rent Expense 0
5003 Utilities Expense 0
5004 Representation Expense 0
5005 Office Supplies Expense 0
5006 Depreciation Expense 0
5007 Interest Expenses 0
5008 Permit and License Expense 0
Balances after Closing Entries(OE Accounts)

84. 1.
Analysis
of
Transactions
2.
Journalizing
Transactions
POST-CLOSING TRIAL BALANCE

85. Uy Law Office
Adjusted Trial Balance
31-Dec-15
Account No. Account Name Debit Credit
1001 Cash 588,500
1002 Accounts Receivable 75,000
1003 Office Supplies 2,000
1004 Prepaid Rent 110,000
1005 Office Equipment 36,000
1006
Accumulated Depreciation- Office
Equipment
1,000
2001 Accounts Payable 25,000
2002 Notes Payable - Bank 100,000
2003 Unearned Revenue 35,000
2004 Interest Payable 500
3001 Jan Uy- Capital 500,000
3002 Jan Uy- Drawing 25,000
4001 Professional Fees 247,500
5001 Salaries Expense 15,000
5002 Rent Expense 10,000
5003 Utilities Expense 8,000
5004 Representation Expense 25,000
5005 Office Supplies Expense 3,000
5006 Depreciation Expense 1,000
5007 Interest Expenses 500
5008 Permit and License Expense 10,000
Totals 909,000 909,000

86. Uy Law Office
Post-Closing Trial Balance
31-Dec-15
Account No. Account Name Debit Credit
1001 Cash 588,500
1002 Accounts Receivable 75,000
1003 Office Supplies 2,000
1004 Prepaid Rent 110,000
1005 Office Equipment 36,000
1006
Accumulated Depreciation- Office
Equipment
1,000
2001 Accounts Payable 25,000
2002 Notes Payable - Bank 100,000
2003 Unearned Revenue 35,000
2004 Interest Payable 500
3001 Jan Uy- Capital 650,000
Totals 811,500 811,500

87. 1.
Analysis
of
Transactions
2.
Journalizing
Transactions
RECAP of ACCOUNTING CYCLE

88. ACCOUNTING CYCLE
1. Analysis of Transactions
2. Journalizing Transactions
3. Posting of entries to the General Ledger
4. Generation of Unadjusted Trial Balance
5. Journalizing and Posting of Adjusting
Entries
6. Preparation of FS, Closing of Nominal
and Drawing Accounts
7. Preparation of Post-Closing Trial Balance

89. 1. Analysis of Transactions
2. Journalizing Transactions
3. Posting of entries to the General Ledger/ T-
Accounts

90. Uy Law Office
Unadjusted Trial Balance
31-Dec-15
Account Number Account Name Debit Credit
1001 Cash 588,500
1002 Accounts Receivable 75,000
1003 Office Supplies 5,000
1004 Prepaid Rent 120,000
1005 Office Equipment 36,000
2001 Accounts Payable 25,000
2002 Notes Payable - Bank 100,000
2003 Unearned Revenue 35,000
3001 Jan Uy- Capital 500,000
3002 Jan Uy- Drawing 25,000
4001 Professional Fees 247,500
5001 Salaries Expense 15,000
5003 Utilities Expense 8,000
5004 Representation Expense 25,000
5008 Permit and License Expense 10,000
Totals 907,500 907,500
4. Generation of Unadjusted Trial Balance

91. GENERAL JOURNAL
Page 2
Date Particulars Reference Debit Credit
2020
Dec 31 Office Supplies Expense 3,000
Office Supplies 3,000
Interest Expense 500
Interest Payable 500
Rent Expense 10,000
Prepaid Rent 10,000
Depreciation Expense 1,000
Accumulated Depreciation- Office
Equipment 1,000
4. Journalizing and Posting of Adjusting Entries

92. Unadjusted Trial Balance
Account
Number Account Name Debit Credit
1001 Cash 588,500
1002 Accounts Receivable 75,000
1003 Office Supplies 5,000
1004 Prepaid Rent 120,000
1005 Office Equipment 36,000
1006
Accumulated Depreciation-
Office Equipment
2001 Accounts Payable 25,000
2002 Notes Payable - Bank 100,000
2003 Unearned Revenue 35,000
2004 Interest Payable
3001 Jan Uy- Capital 500,000
3002 Jan Uy- Drawing 25,000
4001 Professional Fees 247,500
5001 Salaries Expense 15,000
5002 Rent Expense
5003 Utilities Expense 8,000
5004 Representation Expense 25,000
5005 Office Supplies Expense
5006 Depreciation Expense
5007 Interest Expenses
5008 Permit and License Expense 10,000
Totals 907,500 907,500
Adjustments
Debit Credit
3,000
10,000
1,000
500
10,000
3,000
1,000
500
14,500 14,500
Adjusted Trial Balance*
Debit Credit
588,500
75,000
2,000
110,000
36,000
1,000
25,000
100,000
35,000
500
500,000
25,000
247,500
15,000
10,000
8,000
25,000
3,000
1,000
500
10,000
909,000 909,000

93. Uy Law Office
Adjusted Trial Balance
31-Dec-15
Account No. Account Name Debit Credit
1001 Cash 588,500
1002 Accounts Receivable 75,000
1003 Office Supplies 2,000
1004 Prepaid Rent 110,000
1005 Office Equipment 36,000
1006
Accumulated Depreciation- Office
Equipment
1,000
2001 Accounts Payable 25,000
2002 Notes Payable - Bank 100,000
2003 Unearned Revenue 35,000
2004 Interest Payable 500
3001 Jan Uy- Capital 500,000
3002 Jan Uy- Drawing 25,000
4001 Professional Fees 247,500
5001 Salaries Expense 15,000
5002 Rent Expense 10,000
5003 Utilities Expense 8,000
5004 Representation Expense 25,000
5005 Office Supplies Expense 3,000
5006 Depreciation Expense 1,000
5007 Interest Expenses 500
5008 Permit and License Expense 10,000
Totals 909,000 909,000

94. Date Particulars Reference Debit Credit
2020
Dec. 31 Professional Fees 247,500
Income Summary 247,500
Income Summary 72,500
Salaries Expense 15,000
Rent Expense 10,000
Utilities Expense 8,000
Representation Expense 25,000
Office Supplies Expense 3,000
Depreciation Expense 1,000
Interest Expenses 500
Permit and License Expense 10,000
Income Summary 175,000
Jan Uy, Capital 175,000
Jan Uy, Capital 25,000
Jan Uy, Withdrawal 25,000
6. Preparation of FS, Closing of Nominal and Drawing Accounts

95. Uy Law Office
Post-Closing Trial Balance
31-Dec-15
Account No. Account Name Debit Credit
1001 Cash 588,500
1002 Accounts Receivable 75,000
1003 Office Supplies 2,000
1004 Prepaid Rent 110,000
1005 Office Equipment 36,000
1006
Accumulated Depreciation- Office
Equipment
1,000
2001 Accounts Payable 25,000
2002 Notes Payable - Bank 100,000
2003 Unearned Revenue 35,000
2004 Interest Payable 500
3001 Jan Uy- Capital 650,000
Totals 811,500 811,500
7. Preparation of Post-Closing Trial Balance