257-258.

Problem

COPIED FROM FUNDAMENTALS OF PROFESSOR ZENAIDA MANUEL

Arman Barzaga owns and operates the AB Meat Mat. He opened the business on January 1, 2007 selling
beef, pork, chicken, canned goods and dairy products. The following balances for the five months of its
operation are found in its generalledger and subsidiary ledger.
Account Title
Cash on Hand P75,000
Cash in Bank 154,734
Accounts Receivable 10,250
Merchandise Inventory 173,800
Prepaid Supplies 1,500
Furniture & Equipment 17,655
Delivery Jeep 215,200
Accounts Payable 7,350
Notes Payable dated May 15,18%, 45 days 150,000
Withholding Taxes Payable 2,990
SSS and PH Premiums Payable 2,700
Pag-ibig Premiums Payable 1,197
Barzaga, Capital 471,148
Barzaga, Drawing 20,000
Sales 258,650
Sales Discount 3,500
Purchases 64,210
Freight In 1,105
Purchases Returns & Allowances 3,000
Purchase Discount 1,550
Utilities Expense 1,810
Repairs & Maintenance 3,755
Taxes & Licenses Expense 3,000
Sales Salaries Expense 59,850
Input Tax 6,500
Commission Expense 14,500
Output Tax 15,800
Rent Expense 75,000
SSS and PH Premium Expense 8,516
HDMF Premium Expense 2,000

AccountsReceivable:

Auring Cold Store P 1,450 Dated May 25

Ben Sunga 2,500 April 12
Chit Grocery 3,750 May 5
Virgie Meat Mart 2,550 May 30

Accounts Payable:
Joffre’s Farm P 2,450 Dated May 29, 2/10, n/30
Josie’s Chicken House 2,500 May 25, 2/15, n/30
Johnny’s Piggery 2,400 May 25, 2/15, n/30

Open the subsidiary ledgers and place the balances of the customers and creditors
accounts. Journalized the following transactions and make immediate postings to the
subsidiary ledgers. Term of account sale is 2/10, n/30, for all customers. All collections are
immediately deposited. All payments payments are made by checks if over 5,000. VAT of
12% already included in all invoices.

June 1 Purchased beef from Joffre’s farm, P2,464.

Terms: 20% down, balance 2/10, n/30.
3 Purchased poultry products from Josie’s Chicken House, P3,360 list price.
Terms: Cash less 5% trade discount.
A helper got cash advance of P150
4 Sold goods on account to Auring Cold Store P6,160.
5 Paid for gas & oil, P336.
7 Sold goods to Myrna’s Variety Store, P 15,680 and received a 15 day 18%
promissory Note.
8 Chit Grocery paid for its account.
Paid BIR for the withholding taxSS, Philhealth and HDMF for the premiums.
9 Virgie Meat Mart paid P1,500 to apply to its account
10 Cash sales to date, P14,000
12 Paid for repairs and maintenance of jeep, P500.
Paid BIR for VAT.
14 Issued a credit memo to Myrna’s Variety Store for spoiled goods returned worth
P336.
15 Paid Josie’s Chicken House in full with a check.
18 Bought pork from Johnny’s Piggery, P3,080. Terms: 50% down, balance 2/15,
n/30.
Freight of P150, FOB Destination.
20 Cash purchases, P4,480.
21 Ben Sunga issued a 30 day 10% promissory note for his account which was past
due.
23 Myrna’s Variety Store paid for its note.
25 Delivered some goods to Chit grocery on account, P2,240.
28 Auring Cold Store paid its May account.
29 Paid note to PNB which matures today.
30 Paid for rent, P3,000 and utility, P850.
Cash sales to date, P13,440.
Paid for salaries, P5,000 less withholding tax P300, SS and Medicare premiums
P200 and the cash advance.
a) Using this problem, open the general ledger, and post the entries. Extract the
balances and prepare the trial balance as of June 30. Prepare a schedule of
accounts receivable and accounts payable and reconcile with the control accounts.
b) From the trial balance prepare financial statements assuming the goods on hand
amounted to P60,685. Close Output and Input tax to VAT Payable. Utilities,rent and
salaries are two-thirds selling expenses.