ARELLANO UNIVERSITY

Jose Abad Santos Campus

Basic Education Department – Senior High School
3058 Taft Avenue Pasay City
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ACTIVITY NUMBER :7
SUBJECT : Fundamentals of Accountancy, Business and Management 1
TOPIC : The Accounting Equation
LEARNING TARGET : The learners demonstrate an understanding of the accounting
equation and use it to solve problems.
REFERENCES : ABM Part 1 in Context Learning Module for Grade 11
TYPE OF ACTIVITY : Concept Notes

THE ACCOUNTING EQUATION

Formulas and equations are important to solve a certain mathematical problem not only
in the fields of Mathematics and Science but also in Accounting. Its equation has two sides - the
left and the right side. The left side of the equation is the company’s assets and the liabilities and
equity are shown on the right side.

The BASIC ACCOUNTING EQUATION is shown below:

ASSETS = LIABILITIES + OWNER’S EQUITY

The Basic Accounting Equation can also be expressed as follows:

OWNER’S EQUITY = ASSETS – LIABILITIES
LIABILITIES = ASSETS – OWNER’S EQUITY

The accounting equation formula represents the relationship between the assets,
liabilities, and owner's equity of a business. The value of a company's assets should always equal
the sum of its liabilities and owner's equity.
The underlying concept of this formula is that every asset acquired by a company was
financed either through debt (liability) or through investment from owners (owner’s equity).

• For every transaction, the accounting equation should always be balanced.

The accounting equation consists of three (3) major accounts:

1. ASSETS – are the items that a company owns that can provide future economic benefit.
Assets are valuable resources controlled by the company.
EXAMPLES OF ASSETS: Cash, Accounts Receivables, Notes Receivables, Furniture,
Equipment, Supplies, Long term Investments, Inventory, Building & Land

2. LIABILITIES – are the financial obligation of a company that results in the company’s future
sacrifices of economic benefits to other businesses.
EXAMPLES OF LIABILITIES: Accounts Payable, Notes Payables, Accrued Expense,
Unearned Income, Loans Payable & Mortgage Payable
3. EQUITY – is the residual interest of the owner of the business. Meaning, any assets left after
paying liabilities is the right of the owner of the business. It is simply assets minus liabilities.
Other terms for equity are “capital”, “net assets,” and “net worth. There are four elements that
affect equity: (1) Investment; (2) Withdrawal; (3) Revenue, and; (4) Expenses.

Four elements that affect equity:

a. Investment is an asset or item acquired with the goal of generating income or appreciation.

b. Withdrawal occurs when funds are removed from an account for personal use.

c. Revenue is the total amount of income generated by the sale of goods or services related to the
company’s primary operations.

d. Expenses are the cost of operations that a company incurs to generate revenue.

EXPANDED ACCOUNTING EQUATION:

ASSETS = LIABILITIES + OWNER’S EQUITY – DRAWINGS + REVENUES – EXPENSES

Like the basic accounting equation, the expanded accounting equation shows the
relationships among the accounting elements.

What's the difference? In the expanded accounting equation, the "capital" portion is
broken down into several components: contributions, withdrawals, income, and expenses.

Owners' contributions are often recorded directly into Capital. Thus, additional
contributions are already included in "Capital".

Nevertheless, if you want to show all of the components, then you can rewrite the
equation as:

Assets = Liabilities + (Owner’s Equity at beginning + Additional Contributions - Drawings

+ Revenue - Expenses)

Contributions and revenue increase capital. Drawings and expenses decrease it.

The difference between income and expenses represents profits or loss (net income or net loss).
• If income is greater than expenses, the difference is profit.
• If income is less than expenses, the difference is loss.
• If income is equal to expenses, it is called breakeven.

Let’s try how accounting equation works. I encourage you to diligently study the following drills:

CASE 1: TOTAL ASSETS

Given liabilities of Php10, 000 and the owner’s equity of Php50, 000. Find the value of the assets.

FORMULA: ASSETS = LIABILITIES + OWNER’S EQUITY

ASSETS = 10,000 + 50,000
ASSETS = 60,000

CASE 2: TOTAL LIABILITIES

Based on the following information: Economic resources 240,000 and Residual Interest 150,000.
Compute the. Economic obligations.

FORMULA: LIABILITIES = ASSETS – OWNER’S EQUITY

LIABILITIES = 240,000 – 150,000
LIABILITIES = 90,000
CASE 3: TOTAL OWNER’S EQUITY
If a business has total Assets of Php100,000 and total Liabilities of Php60,000, what is the amount
of Total Owner’s Equity?

FORMULA: OWNER’S EQUITY = ASSETS – LIABILITIES

OWNER’S EQUITY = 100,000 – 60,000
OWNER’S EQUITY = 40,000

CASE 4.1: PROFIT OR LOSS

If you have total income of ₱5,000 and total expenses of ₱2,000, how much is your profit (or
loss)?

Solution:
Total Income 5,000
Less: Total Expenses (2,000)
Profit 3,000

CASE 4.2: PROFIT OR LOSS

If you have total revenue of ₱6,000 and total expenses of ₱11,000, how much is your profit (or
loss)?

Solution:
Total Revenue 6,000
Less: Total Expenses (11,000)
Loss (5,000)

CASE 5: INCOME/REVENUE
If you have total expenses of ₱2,000 and a profit of ₱3,000, how much is your total income?

Solution:
Total Income ? (Squeeze)
Less: Total Expenses (2,000)
Profit 3,000 (Start)

The unknown (“?”) is simply “squeezed.” In accounting, to “squeeze” means to come up

with an unknown amount in a given formula by performing basic arithmetic functions like
adding, subtracting, multiplying or dividing. When squeezing “upwards” (just like in the
illustration above), the arithmetic function is simply reversed. Thus, the amount ₱2,000 which is
deducted when solving downwards is added when “squeezing” upwards.

Answer: Total income = (3,000 + 2,000) = 5,000

CASE 6: EXPENSES
If you have total revenue of ₱5,000 and a profit of ₱3,000, how much is your total expenses for
the period?

Solution:
Total revenue 5,000
Total expense ? (Squeeze)
Profit 3,000
Answer: Total expenses = (5,000 – 3,000) = 2,000
CASE 7.1: ENDING TOTAL ASSETS
You have total assets, liabilities and equity of ₱10,000, ₱7,000 and ₱3,000, respectively, at the
beginning of the period. During the period, your total liabilities decreased by ₱4,000 while your
profit is ₱5,000. How much is your ending total assets?

Solutions:
Assets Liabilities Equity
Beginning 10,000 7,000 3,000
Decrease in (4,000) 5,000
Liabilities / Profit
Ending ? 3,000 8,000

Answer: Ending total assets = (3,000 liabilities, end + 8,000 equity, end) = 11,000

CASE 7.2: ENDING TOTAL ASSETS

You have total assets, liabilities and equity of ₱11,000, ₱8,500 and ₱2,500, respectively, at the
beginning of the period. During the period, your total liabilities increased by ₱3,000 while your
owner’s equity increased by ₱4,000. How much is your ending total assets?

Solutions:
Assets Liabilities Equity
Beginning 11,000 8,500 2,500
Adjustment 3,000 4,000
Ending ? 11,500 6,500

Answer: Ending total assets = (11,500 liabilities, end + 6,500 equity, end) = 18,000

CASE 8: ENDING TOTAL LIABILITIES

At the beginning of the year, Makakalimutin Company had total assets of 15,000 and total
liabilities of 4,000. If total assets decreased by 5,000 and owner’s equity increased to 6,000. How
much is the total liabilities at the end of the year?

Solutions:
Assets Liabilities Equity
Beginning 15,000 4,000 ?
Adjustment (5,000)
Ending ? 6,000

Assets Liabilities Equity

Beginning 15,000 4,000 11,000
Adjustment (5,000) - -
Ending 10,000 4,000 6,000

Answer: Ending total liabilities = (10,000 assets, end + 6,000 equity, end) = 4,000
CASE 9.1: ENDING TOTAL OWNER’S EQUITY
At the beginning of the year, EZ Mil Company had total liabilities of 9,000 and total owner’s
equity of 14,000. If total assets increased by 3,000 and total liabilities decreased to 5,000. How
much is the total liabilities at the end of the year?

Solutions:
Assets Liabilities Equity
Beginning ? 9,000 14,000
Adjustment 3,000
Ending 5,000 ?

Assets Liabilities Equity

Beginning 23,000 9,000 14,000
Adjustment 3,000 -
Ending 26,000 5,000 21,000

Answer: Ending total owner’s equity = (21,000 assets, end + 5,000 liabilities, end) = 21,000

CASE 9.2: ENDING TOTAL OWNER’S EQUITY

Your beginning equity is ₱5,000. No additional contributions or withdrawals during the period.
If your total income for the period is ₱8,000 while your total expenses as ₱6,000, how much is
the ending balance of your equity?

Solution:
(Owner’s Equity at beginning + Additional Contributions - Drawings + Revenue - Expenses)
5,000 + 0 - 0 + 8,000 - 6,000

Answer: 5,000 + 8,000 – 6,000 = 7,000

CASE 9.3: ENDING TOTAL OWNER’S EQUITY

Your beginning equity is ₱12,000. Additional contributions are ₱7,000. Withdrawals are ₱4,000.
If your total income for the period is ₱5,000 while your total expenses are ₱8,000, how much is
the ending balance of your equity?

Solution:
(Owner’s Equity at beginning + Additional Contributions - Drawings + Revenue - Expenses)
12,000 + 7,000 - 4,000 + 5,000 - 8,000

Answer: 12,000 + 7,000 - 4,000 + 5,000 - 8,000 = 12,000

CASE 10: REVENUE/INCOME

You have ending “total assets of ₱4,800, ending total liabilities of ₱1,000 and beginning equity is
₱800. No additional contributions or withdrawals during the period. If your total expenses for the
period amount to ₱2,000, how much is your total income?
Solution:
Assets = Liabilities + (OE beg + AC - D + Revenue - Expenses)
4,800 1,000 800 0 0 ? 2,000

Answer: 4,800 = 1,000 + 800 +? – 2,000

4,800 = 1,000 + 800 + 5,000 – 2,000

or
4,800 = 1,000 + 800 +? – 2,000
4800 – 1,000 – 800 + 2,000 = 5,000
CASE 11: EXPENSES FOR THE PERIOD
You can have ending total assets of ₱4,800, ending total liabilities of ₱1,000 and beginning
equity of ₱800. Additional contributions are ₱3,000. Withdrawals are ₱2,000. If your total
income for the period amounts to ₱5,000, how much is your total expenses?

Solution:
Assets = Liabilities + (OE beg + Additional Contributions - Drawings + Revenue - Expenses)
4,800 1,000 800 3,000 2,000 5,000 ?

Answer: 4,800 = 1,000 + 800 + 3,000 – 2,000 + 5,000 –?

4,800 = 1,000 + 800 + 3,000 – 2,000 + 5,000 – 3,000

To maintain this equation, transactions affecting financial position accounts may have the
following effects:

• Increase in Assets = Increase in Owner’s Equity

Example: Calma started his new business by depositing Php 350,000.00 in a bank account in the
name of Calma Graphics Design at Masa Bank.

• Increase in Assets = Increase in Liabilities

Example: Calma acquired computer equipment by issuing a Php 40,000.00 note payable to
Microsoft Office Systems. The note is due in six months.

• Increase in one Asset = Decrease in another Asset

Example: Calma paid Php 10,000.00 to El Grande Suites for rent on the office studio for the
months of June, July, and August.

• Decrease in Assets = Decrease in Liabilities

Example: Calma partially paid Php 15,000.00 for the purchase of computer supplies on account.

• Decrease in Assets = Decrease in Owner’s Equity

Example: Calma paid Php 5,000.00 to Bills Express for the semi-monthly utilities.

• Increase in Liabilities = Decrease in Owner’s Equity

Example: Yola Company billed Calma for Php 25,000.00 for the ads. Calma will pay next
month.

As business transactions take place, the values of the accounting elements change. The
accounting equation nonetheless always stays in balance.
Every transaction has a two-fold effect. Meaning, at least two accounts are affected.

Assume the following transactions:

1. Mr. Alex invested P20,000 to start a printing business,
2. The company obtained a loan from a bank, P30,000,
3. The company purchased printers and paid a total of P1,000.

How will the transactions affect the accounting equation?

Let us take a look at transaction #1:

Transaction Assets = Liabilities + Capital
1. Owner's investment 20,000.00 = + 20,000.00

Again, every transaction has a two-fold effect. In the above transaction, Assets increased
as a result of the increase in Cash. At the same time, Capital increased due to the owner's
contribution. Remember that capital is increased by contribution of owners and income, and
is decreased by withdrawals and expenses. No liability is affected hence, stays at zero.
Let's continue with transaction #2:
Transaction Assets = Liabilities + Capital
1. Owner's investment 20,000.00 = + 20,000.00
2. Loan from bank 30,000.00 = 30,000.00 +
In transaction #2, the company received cash. Thus, the value of total assets is increased.
At the same time, it incurred in an obligation to pay the bank. Therefore, liabilities are increased.
The liability in this case is recorded as Loans Payable. Notice that the accounting equation is still
equal (balanced).

Let's add transaction #3:

Transaction Assets = Liabilities + Capital
1. Owner's investment 20,000.00 = + 20,000.00
2. Loan from bank 30,000.00 = 30,000.00 +
1,000.00
3. Purchased printers = +
(1,000.00)
The company acquired printers, hence, an increase in assets. However, the company used
cash to pay for the printers. Thus, it also results in a decrease in assets. Transaction #3 results in
an increase in one asset (Service Equipment) and a decrease in another asset (Cash).
For those who are new to accounting format: The parentheses "()" around the 1,000 amount
above means "minus" or "less".
Liabilities and capital were not affected in transaction #3. Still, the equation in this
transaction is equal. It resulted to a zero effect in both sides.
At this point, the balance of total assets is P50,000. The combined balance of liabilities and
capital is also at P50,000.

To help you better understand how the accounting equation works and stays in balance,
here are more sample transactions and their effects to the accounting equation.
In addition to transactions 1, 2 and 3, assume the following data:
4. Rendered services and received the full amount in cash, P500
5. Rendered services on account (receivable from customer), P750
6. Purchased office supplies on account (payable to supplier), P200
7. Had some equipment repaired for P400, to be paid after 15 days
8. Mr. Alex, the owner, withdrew P5,000 cash for personal use
9. Paid one-third of the loan obtained in transaction #2
10. Received customer payment from services in transaction #5
The transactions will result to the following effects:

Transaction Assets = Liabilities + Capital

1. Owner's investment 20,000.00 = + 20,000.00
2. Loan from bank 30,000.00 = 30,000.00 +
1,000.00
3. Purchased printers = +
(1,000.00)
4. Service revenue for cash 500.00 = + 500.00
5. Service revenue on account 750.00 = + 750.00
6. Supplies on account 200.00 = 200.00 +
7. Repair of equipment = 400.00 + (400.00)
8. Owner's withdrawal (5,000.00) = + (5,000.00)
9. Payment of loan (10,000.00) = (10,000.00) +
750.00
10. Collection of accounts = +
(750.00)
Balance 36,450.00 = 20,600.00 + 15,850.00
Examples Explained
4. The company received cash for services rendered. Cash increased thereby increasing
assets. At the same time, capital is increased as a result of the income (Service Revenue).
As we've mentioned in the Accounting Elements lesson, income increases capital.
5. The company rendered services on account. The services have been rendered, hence,
already earned. Thus, the P750 worth of services rendered is considered income even if
the amount has not yet been collected. Since the amount is still to be collected, it is
recorded as Accounts Receivable, an asset account.
6. Office supplies worth P200 were acquired. This increases the company's Office Supplies,
part of the company's assets. The purchase results in an obligation to pay the supplier;
thus a P200 increase in liability (Accounts Payable).
7. The company incurred in P400 Repairs Expense. Expenses decrease capital. The amount
has not yet been paid. Thus, it results in an increase in total liabilities.
8. The owner withdrew P5,000 cash. Cash is decreased thereby decreasing total
assets. Withdrawals or drawings decrease capital.
9. One-third of the P30,000 loan was paid. Therefore, Cash is decreased by P10,000 as a
result of the payment. And, liabilities are decreased because part of the obligation has
been settled.
10. The P750 account in a previous transaction has been collected. Therefore, the Accounts
Receivable account is decreased and Cash is increased.

Notice that every transaction results in an equal effect to assets and liabilities plus capital.
The beginning balances are equal. The changes arising from the transactions are equal.
Therefore, the ending balances would still be equal.
The balance of the total assets after considering all of the above transactions amounts to
P36,450. It is equal to the combined balance of total liabilities of P20,600 and capital of
P15,850 (a total of P36,450).

Here are the examples where you will see the effects of every transaction to the major accounts.

Assets invested by the owner

July 1 – Sandy Dela Cruz started a catering service on July 1, 2020. She invested Php 800,000.00
cash and car amounting to Php 200,000.00 which both happened in the month of July.

Assets Liabilities Owner’s Equity

Cash Dela Cruz, Capital
Php 800,000.00 Php 1,000,000.00
+ +
Car
Php 200,000.00
+

Borrowings from the bank

July 2 – Sandy Dela Cruz borrowed Php 100,000.00 cash from Matagumpay Bank for her business.

Assets Liabilities Owner’s Equity

Cash Loans Payable
Php 100,000.00 Php 100,000.00
+ +
The asset purchased for cash
July 7 – Sandy bought tables and chairs from Matibay Furnitures and paid Php 45,000.00 cash.

Assets Liabilities Owner’s Equity

Cash
Php 45,000.00
(-)
Furniture
Php 45,000.00
+

Assets purchased on account

July 15 – Various equipment were purchased on account from Masigasig Trucking Services for
Php 55,000.00.

Assets Liabilities Owner’s Equity

Equipment Accounts Payable
Php 55,000.00 Php 55,000.00
+ +

Cash withdrawal by the owner

July 18 – Sandy Dela Cruz made a withdrawal of Php 5,000 for her personal use.

Assets Liabilities Owner’s Equity

Cash Dela Cruz, Drawings
Php 5,000.00 Php (5,000.00)
(-) (-)

Payment of liability
July 20 – The account due to Masigasig Trucking Services was paid in cash.

Assets Liabilities Owner’s Equity

Cash Accounts Payable
Php 55,000.00 Php 55,000.00
(-) (-)

Received cash for revenue earned

July 21 – Sandy Dela Cruz’s catering service was hired and Php 15,000.00 cash was received from
the customers.

Assets Liabilities Owner’s Equity

Cash Service Revenue
Php 15,000.00 Php 15,000.00
+ +

Paid cash for expenses incurred

July 22 – Gas and oil worth Php 500.00, and car repairs worth Php 1,000.00 were paid in a cash
transaction.
Assets Liabilities Owner’s Equity
Cash Gas & Oil
Php (1,500.00) Php (500.00)
(-) Repair Exp.
Php (1,000.00)
(-)
Revenue rendered on account
July 24 – Dela Cruz’s catering service was hired again by a customer but this time, the customer
was not able to pay Dela Cruz on that day. Instead, she made a promise to pay Php 16,000.00 on
July 31 and August 15.

Assets Liabilities Owner’s Equity

Accounts Receivable Service Revenue
Php 16,000.00 Php 16,000.00
+ +

Paid for expenses incurred

July 25 – Dela Cruz paid Php 500.00 for the telephone bill.

Assets Liabilities Owner’s Equity

Cash Telephone expense
Php (500.00) Php (500.00)
(-) (-)

Revenue earned with a down payment, balance on the account

July 27 – Another customer hired the catering service of Dela Cruz and received a bill amounting
to Php 20,000.00 and 50% of it was collected.

Assets Liabilities Owner’s Equity

Cash Service Revenue
Php 10,000.00 Php 20,000.00
+ +
Accounts Receivable
Php 10,000.00
+

Customer’s account collected in cash

July 30 – The customer on July 24 paid 50% of his account in cash.

Assets Liabilities Owner’s Equity

Cash
Php 8,000.00
+
Accounts Receivable
Php (8,000.00)
(-)

Paid cash for expenses incurred

July 31 – Sandy Dela Cruz paid Php 10,000.00 for rental of office space, and salaries of Php
9,000.00.

Assets Liabilities Owner’s Equity

Cash Salaries Expense
Php (19,000.00) Php (9,000.00)
(-) (-)
Rent Expense
Php (10,000.00)
(-)
The table summarizes the effects of these transactions on the accounting equation, (increase or
decrease in each account).
 ENRICHMENT EXERCISES

EXERCISE 1.1 BASIC ACCOUNTING EQUATION

Direction: Fill up the missing amounts for each case.
Case 1 Case 2 Case 3
Assets ₱100,000 ________ ₱120,000
Liabilities 45,000 35,000 _________
Owner’s Equity ₱ _______ 35,000 65,000

EXERCISE 1.2 EXPANDED ACCOUNTING EQUATION

Direction: Fill up the missing amounts for each case.
Case 1 Case 2 Case 3
Revenue ₱90,000 ________ ₱110,000
Expenses 35,000 30,000 _________
Profit / Loss ₱_______ 45,000 (25,000)

EXERCISE 1.3 ENDING TOTAL OWNER’S EQUITY

Your beginning equity is ₱125,000. Additional contributions are ₱45,000. Withdrawals are
₱20,000. If your total income for the period is ₱200,000 while your total expenses are ₱105,000,
how much is the ending balance of your equity?

EXERCISE 1.4 Transaction Affecting Changes in Accounting Values

At the beginning of the year, Boss Gumaru Enterprises had total assets of 840,000 and total
liabilities of 445, 600. Answer the following questions:
1. Total assets increased by 40% and owner’s equity increased by the same percent, what is the
amount of total liabilities at the end of the year?

2. During the year, total liabilities increased by 100,000 and owner’s equity decreased by 75,000,
what is the amount of total assets at the end of the year?

3. If total liabilities increased by 15% and total assets decreased to 810,000, what is the amount of
total owner’s equity at the end of the year?

EXERCISE 2 Directions: Write (+) if there is an increase, (-) if there is a decrease, or NE if there
is no effect on the assets, liabilities and equity accounts. Write your answers on a separate sheet of
paper.

Transactions Asset Liability Owner's Equity

1. Invested cash in the business
2.Purchased equipment on a cash basis
3. Billed a customer for a spa service
4. Paid employee's salary
5. Purchased supplies on account
6. Paid an advertisement for the
company's new product
7. Paid the rent in advance
8. Received cash from customers
9. Withdrew cash for some personal use
10. Invested a vehicle on the company
EXERCISE 3 For each transaction, tell whether the assets, liabilities and equity will increase (I),
decrease (D) or is not affected (NE).
Assets Liabilities Equity
1. Investment of equipment in the business _______ _______ _______
2. Purchase furniture and fixtures for cash _______ _______ _______
3. Billed a customer for services rendered _______ _______ _______
4. Paid miscellaneous expense _______ _______ _______
5. Purchased office supplies on credit _______ _______ _______
6. Paid taxes and licenses expense _______ _______ _______
7. Paid rent _______ _______ _______
8. Received cash from services rendered _______ _______ _______
9. Withdrew supplies for personal use _______ _______ _______
10. Invested land into the company _______ _______ _______
11 The company repays the bank that had lent _______ _______ _______
money.
12. The company purchases land by paying half _______ _______ _______
in cash and signing a note.
13. The company repays the suppliers. _______ _______ _______
14. The owner contributes her personal truck _______ _______ _______
to the business.
15. Paid creditors. _______ _______ _______

EXERCISE 4 Use additions and subtractions to show the effects of each transaction on the
accounts in the accounting equation. Show new balances after each transaction.
1. The owner invested cash of PHP150,000 or the business earned PHP150,000 cash from
providing services.
2. Purchased equipment at PHP20,000 for cash.
3. The owner withdrew cash of PHP112,500 or the business incurred PHP112,500 expenses and
paid in cash.
4. The company purchased supplies on account.
5. The owner withdrew cash of PHP15,000 or the business incurred PHP15,000 expenses and
paid in cash.
6. Paid liabilities worth PHP53,000.
7. The owner withdrew supplies worth PHP8,000 or the business used supplies worth PHP8,000.

EXERCISE 5 Garcia started a new business and completed these transactions during August:
Aug. 1 Garcia invested PHP48,000 cash in the business.
1 Rented office space and paid PHP800 cash for the August rent.
3 Purchased exploration equipment for PHP22,000 by paying PHP12,000 cash and agreeing to
pay the balance in 3 months.
5 Purchased office supplies by paying PHP1,500 cash.
6 Completed exploration work and immediately collected PHP420 cash for the work.
8 Purchased PHP1,350 of office equipment on credit.
15 Completed exploration work on credit in the amount of PHP8,000.
18 Purchased PHP700 of office supplies on credit.
20 Paid cash for the office equipment purchased on August 8.
24 Billed a client PHP2,400 for work completed; the balance is due in 30 days.
28 Received PHP5,000 cash for the work completed on August 15.
30 Paid the assistant’s salary of PHP1,100 cash for this month.
30 Paid PHP340 cash for this month’s utility bill.
30 Garcia withdrew PHP1,050 cash from the business for personal use.

Required
1. Arrange the following asset, liability, and equity titles in a table: Cash; Accounts Receivable;
Office Supplies; Office Equipment; Exploration Equipment; Accounts Payable; Jerome Garcia,
Capital; Jerome Garcia, Withdrawals; Revenues; and Expenses.

2. Use additions and subtractions to show the effects of each transaction on the accounts in the
accounting equation. Show new balances after each transaction.