Journal Entry Drills (Level 3) 1-30

Owner invested ₱100,000 cash

Entry:

• Dr Cash 100,000

• Cr Capital 100,000

Explanation:

• Asset (Cash) ↑

• Equity ↑

This is financing, not performance.
If you treat this as revenue → your income is fake.

Paid ₱12,000 for 6 months rent

Entry:

• Dr Prepaid Rent 12,000

• Cr Cash 12,000

Explanation:

• Cash ↓

• Asset (Prepaid) ↑

Nothing is consumed yet.
If you expense it immediately → Month 1 looks terrible, next 5 months look artificially good.

Earned ₱30,000 (₱20k cash, ₱10k receivable)

Entry:

• Dr Cash 20,000

• Dr Accounts Receivable 10,000

• Cr Revenue 30,000

Explanation:

• You earned value → Equity ↑ (Revenue)

• Cash and Receivable are just forms of asset

If you only record ₱20k → you understate income.
If you wait for cash → you’re not using accrual accounting.

Paid salaries ₱8,000

Entry:

• Dr Salaries Expense 8,000

• Cr Cash 8,000

Explanation:

• Expense = value consumed (labor)

• Equity ↓

Simple—but dangerous if part was unpaid (you’d need accrual).

End of month: 1 month rent used

Entry:

• Dr Rent Expense 2,000

• Cr Prepaid Rent 2,000

Explanation:

• Asset ↓ (you used it)

• Expense ↑

This is matching principle in action.
You’re aligning cost with the period it benefits.

Received ₱15,000 advance

Entry:

• Dr Cash 15,000

• Cr Unearned Revenue 15,000

Explanation:

• Cash ↑

• Liability ↑

You didn’t earn anything—you owe service.
If recorded as revenue → overstated income + no liability = double error.

Completed ₱9,000 of service

Entry:

• Dr Unearned Revenue 9,000

• Cr Revenue 9,000

Explanation:

• Liability ↓ (you fulfilled obligation)

• Equity ↑

This is conversion, not new cash.

Paid ₱5,000 utilities, ₱2,000 from last month

Entry:

• Dr Utilities Payable 2,000

• Dr Utilities Expense 3,000

• Cr Cash 5,000

Explanation:
Break it:

• ₱2k → settles past liability

• ₱3k → current expense

If you expense all ₱5k → this month is overstated.

Accrued salaries ₱4,000 unpaid

Entry:

• Dr Salaries Expense 4,000

• Cr Salaries Payable 4,000

Explanation:

• Work already done → expense NOW

• Liability created

Timing beats payment.

Paid ₱6,000 salaries (includes ₱4,000 accrued)

Entry:

• Dr Salaries Payable 4,000

• Dr Salaries Expense 2,000

• Cr Cash 6,000

Explanation:
Split again:

• ₱4k → clears old obligation

• ₱2k → new expense

If you expense ₱6k → double count ₱4k.

Sold services ₱25,000 on account

Entry:

• Dr Accounts Receivable 25,000

• Cr Revenue 25,000

Explanation:
Earned already.
Receivable = right to collect.

Customer pays ₱24,000 (₱1,000 discount)