Easy

1. If an equipment costs P200,000 and accumulated depreciation amounts to P60,000, how much is the
book value of the equipment?
2.
3. At the beginning of 2017, an entity purchased a fire insurance policy covering a property for a period of
two years. The P5,600 cost of the policy was paid in cash. At the end of 2017, by how much will the
entity reduce its Prepaid Insurance?

4. Suppose your business has cash of P50,000, receivables of P60,000, and furniture totalling P200,000. The
store owes P80,000 on account and has a P100,000 note payable. How much is your equity?

Medium

1. The accounting clear of V Services recorded the collection of accounts receivable related to recorded
service income as 23,000 instead of 32,000. What effect will such error cause to total income, total assets
and total equity?

2. G Company has total assets amounting to P465, 000.00. If total liabilities amounted to 57% of total
assets, what is the amount of owner’s equity?

3. True or False
 In double entry bookkeeping, total of debits does not need to equal the total of credits.
 During posting, the bookkeeper (1) failed to post and entire entry, (2) posted an entry for a
transaction twice (3) posted an entry in reverse – meaning, what was supposes to be debited was
credited and vice versa. Total balance will not balance after these errors.

4. At the beginning of the year, a business has cash of 50,000, receivables of 60,000, and equipment
totaling 150,000. The liabilities of the business amounted to 75,000. On the same year, the owner
purchased a service vehicle of 25,000 in cash and earned and collected 100,000 for rendering service.
What is the amount of owner’s equity?

DIFFICULT

1. The following economic activities during the period:

 Cash investment of the owner in the servicing business 75,000
 Cash purchases of the office machine 20,000
 Cash collection for services rendered 50,000
 Cash payment for supplies used in rendering services 25,000
 Cash receipt from borrowings 35,000

Compute for the amount of cash and total assets.

2. The following economic activities during the period:

 Cash investment of the owner in the servicing business 300,000
 Cash purchases of the service vehicle 200,000
 Billed on account for services rendered 75,000
 Purchased supplies on account for 25,000
 Issued a note payable for a loan on a bank for 65,000

Compute for the amount of Owner’s Equity.