Journal Entry Drills (Level 2) 1-20

Received ₱12,000 from a client for future services.

Entry:

• Dr Cash 12,000

• Cr Unearned Revenue 12,000

Explanation:
You did NOT earn anything yet.
If you record revenue → you inflate income prematurely.
Reality: you now owe service, so it’s a liability.

Later, ₱5,000 of that service is completed.

Entry:

• Dr Unearned Revenue 5,000

• Cr Service Revenue 5,000

Explanation:
Now you’ve earned it.
You’re converting liability → equity (revenue).
If you don’t reverse the liability, you’ll double count.

Paid ₱10,000 for 5 months rent in advance.

Entry:

• Dr Prepaid Rent 10,000

• Cr Cash 10,000

Explanation:
Nothing is “used” yet.
This is future benefit, not expense.
Monthly adjustment later = ₱2,000 expense.

End of month: 1 month of rent used.

Entry:

• Dr Rent Expense 2,000

• Cr Prepaid Rent 2,000

Explanation:
You’re converting asset → expense.
If you expensed ₱10,000 earlier, you already failed matching principle.

Received ₱15,000 from a customer who owed ₱10,000. Excess is advance.

Entry:

• Dr Cash 15,000

• Cr Accounts Receivable 10,000

• Cr Unearned Revenue 5,000

Explanation:
Split it. Don’t be lazy.
₱10k = settlement
₱5k = new obligation
If you credit all to revenue → completely wrong.

Paid ₱8,000 utilities. ₱3,000 was from last month.

Entry:

• Dr Utilities Payable 3,000

• Dr Utilities Expense 5,000

• Cr Cash 8,000

Explanation:
You must separate past vs current.
If you expense all ₱8k → you distort this period’s profit.

Bought equipment ₱60,000, paid ₱20,000 cash, rest payable.

Entry:

• Dr Equipment 60,000

• Cr Cash 20,000

• Cr Accounts Payable 40,000

Explanation:
One asset, two sources of financing.
People mess up by recording only what they paid.

Customer pays ₱9,800 to settle ₱10,000 (discount allowed).

Entry:

• Dr Cash 9,800

• Dr Sales Discount 200

• Cr Accounts Receivable 10,000

Explanation:
You didn’t “lose cash”—you gave a price concession.
That ₱200 reduces revenue (contra).

Estimated bad debts ₱4,000.

Entry:

• Dr Bad Debt Expense 4,000

• Cr Allowance for Doubtful Accounts 4,000

Explanation:
This is prediction, not actual loss.
You’re matching expected losses to current revenue.
Allowance = contra asset, not liability.

Wrote off ₱1,500 from a specific customer.

Entry:

• Dr Allowance for Doubtful Accounts 1,500

• Cr Accounts Receivable 1,500

Explanation:
No new expense.
You already anticipated it in #9.
If you expense again → double counting.

Received ₱2,000 from previously written-off account.

Entry:

• Dr Accounts Receivable 2,000

• Cr Allowance for Doubtful Accounts 2,000

• Dr Cash 2,000

• Cr Accounts Receivable 2,000

Explanation:
You must restore it first before collecting.
Otherwise your records won’t reconcile.

Paid ₱12,000 salaries, ₱3,000 was accrued before.

Entry:

• Dr Salaries Payable 3,000

• Dr Salaries Expense 9,000

• Cr Cash 12,000

Explanation:
Split past vs present again.
If you expense ₱12k → overstate current expense.

Received bill ₱6,000, only ₱2,000 applies this month.

Entry:

• Dr Expense 2,000

• Dr Prepaid Expense 4,000

• Cr Accounts Payable 6,000

Explanation:
This is reverse thinking: part is future.
Most people miss this and expense everything.

Owner withdraws ₱7,000 cash.

Entry:

• Dr Drawing 7,000

• Cr Cash 7,000

Explanation:
NOT expense.
This is equity reduction, not business cost.

Purchased supplies ₱10,000, ₱6,000 used.

Entry:

• Dr Supplies Expense 6,000

• Dr Office Supplies 4,000

• Cr Cash/Payable 10,000

Explanation:
You split immediately if usage is known.
Asset = unused portion only.

Accrued revenue ₱5,000, later collected ₱5,000.

Entry:

• Dr Accounts Receivable 5,000

• Cr Revenue 5,000

Later:

• Dr Cash 5,000

• Cr Accounts Receivable 5,000

Explanation:
Revenue is recorded once—at earning.
Collection is just asset swap.

Paid ₱24,000 insurance for 12 months.

Entry:

• Dr Prepaid Insurance 24,000

• Cr Cash 24,000

Monthly:

• Dr Insurance Expense 2,000

• Cr Prepaid Insurance 2,000

Explanation:
If you expense all upfront → your profit is garbage for 11 months.

Borrowed ₱80,000 from bank.

Entry:

• Dr Cash 80,000

• Cr Notes Payable 80,000

Explanation:
Not revenue.
This is obligation, not income.
If you confuse this → automatic rejection in interviews.

Paid ₱5,000 interest.

Entry:

• Dr Interest Expense 5,000

• Cr Cash 5,000

Explanation:
This is cost of borrowing, not reduction of loan principal.

Paid ₱10,000 loan principal.

Entry:

• Dr Notes Payable 10,000

• Cr Cash 10,000

Explanation:
No expense here.
You’re just reducing liability.