Account Titles Code Amount

Accounts Payable L 1, 570,000

Accounts Receivable A 2, 550,500
Accumulated Depreciation- Office Furniture and Fixtures CA 75,000
Accumulated Depreciation Delivery Equipment CA 540,000
Allowance for Bad Debts CA 335,000
A. Grande, Capital, January 1, 2016 OE 2,750,000
A. Grande, Drawing OE 110,000
Cash A ?
Delivery Equipment A 3,700,000
Depreciation Expense - Office Furniture and Fixtures E 98,000
Depreciation Expense Delivery Equipment E 150,000
Dividend Income R 32,500
Bad Debts Expense E 125,800
Freight in COS 120,000
Freight out E 76,400
Office Furniture and Fixtures A 580,000
Office Supplies Expense A 56,700
Interest Expense (Loans) E 43,000
Interest Expense (Notes) E 23,700
Interest Income R 25,800
Investment in Trading Securities A 520,000
Interest Payable L 44,000
Loans Payable (due on 2018) L 540,000
Merchandise Inventory, January 1, 2014 COS 623,000
Notes Payable L 90,000
Notes Payable ( due on 2018) L 100,000
Notes Receivable A 135,000
Prepaid Insurance A 66,000
Prepaid Rent A 120,000
Purchases COS 7,900,000
Purchase Discounts COS 322,600
Purchase Returns and Allowances COS 96,000
Rent Expense E 235,000
Salaries Expense Office Personnel E 224,000
Salaries Expense Sales and Marketing Personnel E 335,000
Sales R 12,540,000
Sales Discounts CR 330,000
Sales Returns and Allowances CR 220,000
Store Supplies Expense E 95,000
Utilities Expense E 230,000
Unearned Sales Revenue L 220,000

Additional information:
(1) Based on the physical count, remaining goods on hand at year ending December 31, 2016
amounted to P1,200,000.

(2) Cash receipts and payment records for the year are as follows:
Cash Receipts
a. Cash Sales CF 5,550,000
b. Collections of Accounts Receivables CF 2,456,000
c. Sale of Equipment CF 35,000
d. Proceeds of Bank Loan CF 2,500,000
e. Interest on Notes Receivable CF 42,500
Cash Payment
a. Purchase of merchandise CF 1. 670,000
b. Payment of accounts payable CF 3,450,000
c. Payment of operating expense CF 3,990,000
d. Payment of interest on notes payable CF 75,000
e. Cash Withdrawal of the owner CF 110,000
f. Payment for the purchase of furniture CF 190,500
g. Payment of Principal of bank loan CF 760,000

Cash Balance January 1 275,800

PREPARATION OF FINANCIAL STATEMENT

Using 10 col worksheets, prepare the following financial statements for A. GRANDE
MERCHANDISING based on the following adjusted balances as of December 31, 2014.

1. Worksheet #1 Left side Income Statement (functional form)

2. Worksheet#1 Left side lower portion Statement of Changes in Owners Equity
3. Worksheet #1 Right side Statement of Financial Position
4. Worksheet #2 Right and Left sides Notes to Financial Statement
5. Worksheet #3 Left side Statement of Cash Flows

Use the following codes to facilitate the preparation of the financial statements: A- assets,
L-Liabilities; OE- Owners Equity, R- Revenue, E- Expenses; CA- Contra Asset; CR Contra
Revenue ; COS part of Cost of Sales; CF Cash Flows

PART 2: JOURNALIZING TRANSACTIONS

Record the following transactions of LE FESTIN MERCHANDISING for the month of April
2016.

Date Transactions
April Leslie Festina, owner of the Le Festin Apparel invested the following to the
1 business : Cash amounting to P 1,200,000 , an two (2) second hand
airconditioning units costing P50,000 but with a fair market value of P30,000 , a
transport vehicle costing P450,000, but has a fair market value of P250,000 and
merchandise worth P 170,000. The business will also assume the outstanding
liability on the transport vehicle amounting to 105,000.
2 Purchased 2 units of cash registers for the store from SKINNER APPLIANCE at
P20,000 each, on credit term of 2/10, n/30.
4 Returned one cash register to SKINNER APPLIANCE due to defects.
5 Purchased merchandise from ALFREDO LINGUINI amounting to P 150,000, less 2-
2. Paying 50% downpayment, balance is on credit term of 2/5, 1/10, n/30.
5 Issued 25-day, 18%, P200,000 promissory note for money borrowed.
6 Sold merchandise to COLLETE TATOU amounting to P 80,000 less 5-5. Received
P10,000 cash downpayment, a 12% 10- day promissory note for P20,000 , while
the balance is on credit term 2/10, 1/15, n/30.
7 Made partial payment of account with ALFREDO LINGUINI amounting to P30,000.
8 Issued a Debit Memo to ALFREDO LINGUINI for defective merchandise returned,
P5,000.
15 Paid account with ALFREDO LIGUINI in full.
16 Collected the note of COLLETE TATOU that matures today.
21 Collected the account of COLLETE TATOU in full.
30 Le Festin AppArrel dishonored the note issued.
PART 3: ADJUSTING JOURNAL ENTRIES

Prepare necessary adjusting entries for LOVE SPELL Merchandising as of December 31,
2016 , end of accounting period.

1. Prepaid Subscription at year end has a balance P45 ,000. This amount represents
60 months subscription of Apparel Magazine . The payment was made on May 15,
2016. The first month subscription was received was June 2016.

2. Store supplies purchased amounting to P95,890 was recorded using REAL account.
Approximately 2/3 remain of these supplies were remain unused by the end of the
calendar year.

3. Records of advance collection of sales revenue are as follow:

From PRETTY IN PINK TRADING , P120,000 of which 20% delivered
From COUNTRY APPLE APPAREL , P250,000 - of which 50% delivered
Real account was used in recording advance collection of income.

4. Interest accrued on these promissory notes issued has not yet been recorded

PAYEE Date of Issue Principal Term Interest rate

BEAUTIFUL Oct. 15, 2016 P 200,000 120 days 18%
PEAR GLACE Nov. 18, 2016 250,000 60 days 12%

5. Interest accrued on these promissory notes received has not yet been recorded.

PAYEE Principal Date of Receipt Rate Term

ENCHANTING P 120,000 October 25, 2016 12% 120 days
STRAWBERRY 200,000 November 30, 2016 10% 90 days

6. DEPRECIATION

The Property, Plant and Equipment balances as of December 31, 2016, BEFORE adjusting
entries were as follows:

Cost Accumulated Depreciation

Office Furniture P 250,000 ---
Office Equipment 125,000 P25,000

Additional information on PPE:

Life Salvage Value Date of Purchase
Office Furniture 5 years P50,000 March 1, 2016
Office Equipment 4 years 25,000 January 1, 2015

7. LOVE SPEILL estimates it uncollectible accounts to be 10% of the outstanding Accounts

Receivable. On December 31, 2016, the trial balance showed the following balances:

Account Ending Balance

Accounts Receivable P 2,500,000
Allowance for Doubtful Account ( BEG. BALANCE) 175,000