SOLUTION: B. Problem Solving: Compute the value of assets, liabilities, and equity for the Adventure Ads owned by Mrs. Suarez. Write your answer on the yellow paper. 1. On May 5, The Adv

Question 1179643: B. Problem Solving: Compute the value of assets, liabilities, and equity for the
Adventure Ads owned by Mrs. Suarez. Write your answer on the yellow paper.
1. On May 5, The Adventure Ads borrowed cash ₱500,000.00 from A+ Lending Corp.
to purchase printing machine for his business amounting to ₱120,000.00.
a. Illustrate the basic accounting equation.
2. On May 15, the company rendered printing services for ₱200,000.00 in cash and
paid ₱65,000.00 for his employee’s salary.
b. Illustrate the expanded accounting equation at the end of the accounting
period
Answer by CPhill(1959) (Show Source): You can put this solution on YOUR website!
Absolutely! Let's break down the accounting equations for Adventure Ads.
**1. May 5th Transactions**
* **Borrowed cash:** ₱500,000.00 (This increases both cash and liabilities)
* **Purchased printing machine:** ₱120,000.00 (This converts cash into a fixed asset)
**a. Basic Accounting Equation (Assets = Liabilities + Equity)**
* **Assets:**
* Cash: ₱500,000.00
* Printing Machine: ₱120,000.00
* Total Assets: ₱620,000.00
* **Liabilities:**
* Loan from A+ Lending Corp.: ₱500,000.00
* **Equity:**
* ₱120,000.00 (The value of the purchased printing machine. This is the difference between the assets and liabilities)
**2. May 15th Transactions**
* **Rendered printing services (cash):** ₱200,000.00 (This increases cash and revenue, which increases equity)
* **Paid employee salary (cash):** ₱65,000.00 (This decreases cash and increases expenses, which decreases equity)
**b. Expanded Accounting Equation (Assets = Liabilities + Owner's Capital + Revenues - Expenses)**
* **Assets:**
* Cash: ₱500,000.00 + ₱200,000.00 - ₱65,000.00 = ₱635,000.00
* Printing Machine: ₱120,000.00
* Total Assets: ₱755,000.00
* **Liabilities:**
* Loan from A+ Lending Corp.: ₱500,000.00
* **Equity:**
* Initial Equity: ₱120,000.00
* Revenue: ₱200,000.00
* Expenses (Salary): ₱65,000.00
* Total Equity: ₱120,000 + ₱200,000 - ₱65,000 = ₱255,000.00

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