Illustrative Problem:
The following are the transactions of Happy Tour and Travel for its first month of
operation.
2020
July 1 May Gomez opened a tour and travel service by contributing cash of P50,000
and a car worth P750,000.
3 Gomez borrowed P100,000 cash from a bank for use in her business. This
borrowing is supported by a note.
7 Bought tables and chairs from Blims and paid cash, P45,000.
15 Various equipment were purchased on account from National Winners for
P55,000.
18 Gomez made cash withdrawal of P5,000 for personal use.
20 The account due to National Winners was paid in cash.
21 A tourist hired the services of the agency for a tour in Baguio. Cash of
P15,000 was received from the tourist.
22 Cash was paid for the following: gas and oil, P500 and repair of car, P1,000.
24 Mr. Gray hired the services of the agency for his visitors and promised to pay
P16,000 on July 31.
25 Paid telephone bill for P500.
27 The Faculty Club of Angelicum Academy hired the services of the agency for
a tour in Manila. A bill was issued to them for P20,000, 50% of which was
collected.
30 Mr. Gray paid one half of his account in cash.
31 Paid rental for office space, P10,000 and salaries of employees and workers,
P9,000.
Required:
1. Give the necessary journal entries.
2. Post the journal entries to ledger.
3. Prepare a Trial Balance.
4. Prepare Income Statement, Capital Statement and Statement of Financial Position.
Use the following chart of accounts.
101 Cash
102 Accounts Receivable
201 Cars
202 Furniture
203 Equipment
301 Accounts Payable
302 Notes Payable
401 Gomez, Capital
402 Gomez, Drawing
501 Service Income
601 Rent Expense
602 Salaries Expense
603 Repair Expense
604 Gas and Oil Expense
605 Utilities Expense
GENERAL JOURNAL
Date Account title PR Debit Credit
July 1 Cash 101 50,000
Cars 201 750,000
Gomez, capital 401 800,000
To record initial
investment
3 Cash 101 100,000
Notes payable 302 100,000
To record
borrowings from
bank
7 Furniture 202 45,000
Cash 101 45,000
To record
purchase of tables
and chairs
15 Equipment 203 55,000
Accounts payable 301 55,000
To record
purchase of
equipment on account
18 Gomez, drawing 402 5,000
Cash 101 5,000
To record cash
withdrawal
20 Accounts payable 301 55,000
Cash 101 55,000
Payment of
accounts payable in
cash
21 Cash 101 15,000
Service income 501 15,000
To record
services rendered
22 Gas and oil expense 604 500
Repair expense 603 1,000
Cash 101 1,500
To record
payment for gas and
oil and repair of car
24 Accounts receivable 102 16,000
Service income 501 16,000
To record
services rendered on
account
25 Utilities expense 605 500
Cash 101 500
To record
payment of telephone
bills
27 Cash 101 10,000
Accounts receivable 102 10,000
Service income 501 20,000
To record
services rendered
30 Cash 101 8,000
Accounts 102 8,000
receivable
To record partial
collection due from
customer
31 Rent expense 601 10,000
Salaries expense 602 9,000
Cash 101 19,000
To record
payment of rent and
salaries expenses
LEDGER
Acct name: cash
Acct number: 101
Date Particulars PR Debit Credit Debit balance
July 1 50,000 50,000
3 100,000 150,000
7 45,000 105,000
18 5,000 100,000
20 55,000 45,000
21 15,000 60,000
22 1,500 58,500
25 500 58,000
27 10,000 68,000
30 8,000 76,000
31 19,000 57,000
Acct name: accounts receivable
Acct number: 102
24 16,000 16,000
27 10,000 26,000
30 8,000 18,000
Acct name: cars
Acct number: 201
July 1 750,000 750,000
Acct name: furniture
Acct number: 202
7 45,000 45,000
Acct name: equipment
Acct number: 203
15 55,000 55,000
Acct name: accounts payable
Acct number: 301
Credit
balance
15 55,000 55,000
20 55,000 0
Acct names: notes payable
Acct number: 302
3 100,000 100,000
Acct name: Gomez, capital
Acct number: 401
1 800,000 800,000
Acct name: Gomez, drawing
Acct number: 402
Debit
balance
18 5,000 5,000
Acct name: service income
Acct number: 501
Credit
balance
21 15,000 15,000
24 16,000 31,000
27 20,000 51,000
Acct name: rent expense
Acct number: 601
31 10,000 10,000
Acct name: salaries expense
Acct number: 602
31 9,000 9,000
Acct name: repair expense
Acct number: 603
22 1,000 1,000
Acct name: gas and oil expense
Acct number: 604
22 500 500
Acct name: utilities expense
Acct number: 605
25 500 500
Happy Tour and Travel
Unadjusted Trial Balance
For the period ended July 31, 2020
Account title Debit credit
Cash 57,000
Accounts receivable 18,000
Cars 750,000
Furniture 45,000
Equipment 55,000
Accounts payable 0
Notes payable 100,000
Gomez, capital 800,000
Gomez, drawing 5,000
Service income 51,000
Rent expense 10,000
Salaries expense 9,000
Repair expense 1,000
Gas and oil expense 500
Utilities expense 500
951,000 951,000
Happy Tour and Travel
Income Statement
For the Month ended July 31, 2020
Service income 51,000
Less operating expenses:
Rent expense 10,000
Salaries expense 9,000
Repair expense 1,000
Gas and oil expense 500
Utilities expense 500
Net income 30,000
Happy Tour and Travel
Capital Statement
For the month ended July 31, 2020
Gomez, capital 800,000
Net income 30,000
Total 830,000
Less: drawing 5,000
Gomez, capital 825,000
Happy Tour and Travel
Statement of financial position
As of July 31, 2020
Assets
Current assets
Cash 57,000
Accounts receivable 18,000
Non current assets
Cars 750,000
Furniture 45,000
Equipment 55,000
Total assets 925,000
Liabilities and owner’s equity
Accounts payable
Notes payable 100,000
Gomez, capital 800,000
Gomez, drawing (5,000)
Service income 51,000
Rent expense (10,000)
Salaries expense (9,000)
Repair expense (1,000)
Gas and oil expense (500)
Utilities expense (500)
Total liabilities and owner’s equity 925,000
