ACCOUNTING CYCLE OF A MERCHANDISING BUSINESS

Merchandising business accounts

Jan 1- Shoelina Magdangal established a shoe business

Date Particulars
01-Jan Cash
Shoelina, Capital
Shoelina made an initial investment, P680,000

Jan 2- Bought ballpens, papers, and shoe rock to display shoes for P100 and P5,000
Date Particulars
02-Jan Ballpens-Supplies
Shoe Rack-Furniture and Fixture
Cash
Bought supplies and Furniture & Fixtures on cash P5,100

Jan 3- Bought 100 pair of shoes for selling purposes worth P20,000
Date Particulars
03-Jan Purchases
Cash
Purchased 100 pair of shoes for selling purposes, P20,000

Jan 4- Sold 3 pair of shoes, the price of each shoes is with 125% of markup
Date Particulars
04-Jan Cash
Accounts Receivable
Sales
Sold 3 pair of shoes on cash basis, P750 and sold 2 pair of shoes on account to Marian Hilera, P500

Jan 6- Received a payment from Marian Hilera

Date Particulars
06-Jan Cash
Accounts Receivable
Payment from Marian Hilera, P500

Jan 7- Made a 3 months advance payment of rent to Rentucky, P10,000 each month
Date Particulars
07-Jan Prepaid Rent
Cash
Made a 3 months advance payment for rent P30,000

Jan 8- Used up all the ballpens bought on January 2

Date Particulars
08-Jan Supplies Expenses
Supplies- Ballpens
Used up all the ballpens bought on Jan 3, P100

Jan 9- Purchased Land for the future expansion, in the name of the business P250,000, with attach building worth P200,000 w
Date Particulars
09-Jan Land
Building
Cash
Purchased land and building worth, P450,000

Jan 10- Acquired 2 electric fans for P700 each with 2 years of useful life
Date Particulars
10-Jan Electric Fan- Equipment
Cash
Acquired 2 electric fans, P1,400

Jan 11- Bought cabinets to be used for stocking of other shoes P7,000 with useful life of 10 years on account
Date Particulars
11-Jan Cabinets-Furniture and Fixture
Accounts Payable
Bought cabinets, P7,000

Jan 12-Acquired car for transporting products, P800,000 with useful life of 10 years. Made a down payment of 25% of the pric
Date Particulars
12-Jan Transportation Vehicle
Cash
Notes Payable
PURCHASED TRANSPORTATION VEHICLE AND MADE A 25% DOWN PAYMENT AND ISSUE A NOTE FO

Jan 13- Received an advance payment for 2 shoes from a customer but the shoe will be delivered after 10 days P500
Date Particulars
13-Jan Cash
Unearned Income
RECEIVED AN ADVANCED PAYMENT FOF 2 SHOES,P500

Jan 14- Deliver the shoe to customer who made an advance payment January 13
Date Particulars
14-Jan Unearned Income
Sales
DELIVER THE SHOE TO CUSTOMER WHO MADE AN ADVANCE PAYMENT ON JAN. 3
Jan 15- Received meralco bill P2,000
Date Particulars
15-Jan Utilities Expenses
Utilities Payable
RECEIVED MERALCO BILL,P2,000

Jan 16-Hired 2 employees with the contract of P6,000 salary monthly

Jan 17- Made a loan to a bank worth P200,000 with the title of the land bought on January 9 as mortgage
Date Particulars
17-Jan Cash
Mortgage Payable
MADE A LOAN TO A BANK,P200,000 AND USE THE TITLE OF THE LAND AS MORTGAGE

Jan 18- Shoelina withdrew cash for personal use P5,000

Date Particulars
18-Jan Shoelina, Withdrawal
Cash
WITHDREW CASH FOR PERSONAL USE,P5,000

Jan 19- Purchased a telephone to communicate with other customer, P20,000 with discount of 20%
Date Particulars
19-Jan Telephone-Equipment
Cash
Purchase Discount
PURCHASED A TELEPHONE,P20,000 WITH 20% DISCOUNT

Jan 20- Sold a 10 pair of shoes with 5% discount

Date Particulars
20-Jan Cash
Sales Discount
Sales
SOLD A 10 PAIR OF SHOES WITH 5% DISCOUNT,P2,500

ADJUSTMENTS FOR THE PERIOD:

DATE PARTICULARS
31-Jan DEPRECIATION EXPENSE-BUILDING
ACCUMULATED EXPENSE-BUILDING

DATE PARTICULARS
 31-Jan DEPRECIATION EXPENSE-EQUIPMENT (ELECTRIC FAN)
ACCUMULATED EXPENSE-EQUIPMENT (ELECTRIC FAN)

DATE PARTICULARS
31-Jan DEPRECIATION EXPENSE-FURNITURES AND FIXTURES (CABINETS)
ACCUMULATED EXPENSE-FURNITURES AND FIXTURES (CABINETS)

DATE PARTICULARS
31-Jan DEPRECIATION EXPENSE-TRANSPORTATION VEHICLE
ACCUMULATED EXPENSE- TRANSPORTATION VEHICLE

DATE PARTICULARS
31-Jan RENT EXPENSE
PREPAID EXPENSE

DATE PARTICULARS
31-Jan SALARIES EXPENSE
SALARIES PAYABLE
 P.R Debit Credit
101 ₱680,000
301 ₱680,000

P.R Debit Credit

102 ₱100
103 ₱5,000
101 ₱5,100

P.R Debit Credit

501 ₱20,000
101 ₱20,000

P.R Debit Credit

101 ₱750
104 ₱500
401 ₱1,250
es on account to Marian Hilera, P500

P.R Debit Credit

101 ₱500
104 ₱500

P.R Debit Credit

105 ₱30,000
101 ₱30,000
 P.R Debit Credit
502 ₱100
102 ₱100

with attach building worth P200,000 with 10 years of useful life

P.R Debit Credit
106 ₱250,000
107 ₱200,000
101 ₱450,000

PR. Debit Credit

108 ₱1,400
101 ₱1,400

of 10 years on account
P.R Debit Credit
103 ₱7,000
201 ₱7,000

ade a down payment of 25% of the price and issue a note for the remaining balance
PR. Debit Credit
109 ₱800,000
101 ₱200,000
202 ₱600,000
OWN PAYMENT AND ISSUE A NOTE FOR THE REMAINING BALANCE

e delivered after 10 days P500

P.R Debit Credit
101 ₱500
203 ₱500

P.R Debit Credit

203 ₱500
401 ₱500
YMENT ON JAN. 3
 P.R Debit Credit
503 ₱2,000
204 ₱2,000

uary 9 as mortgage
P.R Debit Credit
101 ₱200,000
105 ₱200,000
LAND AS MORTGAGE

P.R Debit Credit

302 ₱5,000
101 ₱5,000

count of 20%
P.R Debit Credit
108 ₱20,000
101 ₱16,000
504 ₱4,000

P.R Debit Credit

101 ₱2,375
402 ₱125
401 ₱2,500

P.R CREDIT DEBIT YEARLY MONTHLY

505 ₱ 1,666.67 200000-0 20000 ₱ 1,666.67
110 ₱ 1,666.67 10

P.R CREDIT DEBIT YEARLY MONTHLY

 506 ₱ 58.33 1400-0 700 ₱ 58.33
111 ₱ 58.33 2

P.R CREDIT DEBIT YEARLY MONTHLY

507 ₱ 58.33 7000-0 700 ₱ 58.33
112 ₱ 58.33 10

P.R CREDIT DEBIT YEARLY MONTHLY

508 ₱ 6,666.67 800000-0 80000 ₱ 6,666.67
113 ₱ 6,666.67 10

P.R CREDIT DEBIT

509 ₱ 10,000.00
105 ₱ 10,000.00

P.R CREDIT DEBIT

501 ₱ 6,000.00
206 ₱ 6,000.00
 ASSETS

CASH (101)
Debit Credit
01-Jan ₱680,000 ₱5,100 02-Jan
04-Jan ₱750 ₱20,000 03-Jan
06-Jan ₱500 ₱30,000 07-Jan
13-Jan ₱500 ₱450,000 09-Jan
17-Jan ₱200,000 ₱1,400 10-Jan
20-Jan ₱2,375 ₱200,000 12-Jan
₱5,000 18-Jan
₱16,000 19-Jan
₱884,125 ₱727,500
Jan-21 ₱156,625

PREPAID RENT (105)

Debit Credit
07-Jan ₱30,000

TRANSPORTATION VEHICLE (109)

Debit Credit
12-Jan ₱800,000

BUILDING (107)
Debit Credit
09-Jan ₱200,000

LIABILITIES

ACCOUNTS PAYABLE (201)

Debit Credit
₱7,000 11-Jan

UNEARNED INCOME (203)

Debit Credit
14-Jan ₱500 ₱500 13-Jan

MORTGAGE PAYABLE (205)

Debit Credit
₱200,000 17-Jan
 EQUITY

SHOELINA, CAPITAL (301)

Debit Credit
₱680,000 01-Jan

REVENUE

SALES (401)
Debit Credit
₱1,250 04-Jan
₱500 14-Jan
₱2,500 20-Jan
₱4,250 Jan-31

EXPENSES

PURCHASES (501)
Debit Credit
03-Jan ₱20,000

PURCHASE DISCOUNT (504)

Debit Credit
₱4,000 19-Jan

T-ACCOUNTS OF ADJUSTMENT ENTRIES

ACCU. DEPRECIATION-BUILDING (110)

Debit Credit
₱1,666.67 31-Jan

ACCU. DEPRECIATION-CABINETS (112)

Debit Credit
₱58.33 31-Jan

SALARIES PAYABLE (206)

Debit Credit
₱6,000 31-Jan

DEPRECIATION EXPENSE-BUILDING (505)

Debit Credit
31-Jan ₱1,666.67

DEPRECIATION EXPENSE-CABINET(507)
Debit Credit
31-Jan ₱58.33

RENT EXPENSE(509)
Debit Credit
31-Jan ₱10,000.00
 ACCOUNT RECEIVABLE (104)
Debit Credit
04-Jan ₱500 ₱500 06-Jan P.R

EQUIPMENT (108) 101

Debit Credit 102
10-Jan ₱1,400 103
19-Jan ₱20,000 104
31-Jan ₱21,400 105
106
FURNITURE AND FIXTURE (103) 107
Debit Credit 108
02-Jan ₱5,000 109
11-Jan ₱7,000 201
Jan-31 ₱12,000 201
203
LAND (106) 204
Debit Credit 205
09-Jan ₱250,000 301
302
SUPPLIES (102) 401
Debit Credit 402
02-Jan ₱100 ₱100 08-Jan 501
502
503
504
LIABILITIES
505
NOTES PAYABLE (202) 110
Debit Credit 506
₱600,000 12-Jan 111
507
UTILITIES PAYABLE (204) 112
Debit Credit 508
₱2,000 15-Jan 113
509
510
206
 SHOELINA ,WITHDRAWAL (302)
Debit Credit
18-Jan ₱5,000

SALES DISCOUNT (402)

Debit Credit
20-Jan ₱125

UTILITIES EXPENSES (503)

Debit Credit
15-Jan ₱2,000

SUPPLIES EXPENSES (502)

Debit Credit
08-Jan ₱100

OF ADJUSTMENT ENTRIES

ACCU. DEPRECIATION-ELECTRIC FAN (111)

Debit Credit
₱58.33 31-Jan

ACCU. DEPRECIATION-TRANS.VEHICLE (113)

Debit Credit
₱1,666.67 31-Jan

DEP. EXPENSE-ELECTRIC FAN (506)

Debit Credit
31-Jan ₱58.33

DEP. EXPENSE-TRANS.VEHICLE (508)

Debit Credit
31-Jan ₱6,666.67

SALARIES EXPENSE(510)
Debit Credit
31-Jan ₱6,000.00
 SHOELINA’S SHOE BUSINESS
WORKSHEET
FOR THE MONTH ENDED JANUARY 31 202X
(In Philippine Peso)
ACCOUNT TITLE UNADJUSTED
PARTICULARS Debit Credit
CASH ₱156,625
SUPPLIES
FURNITURE & FIXTURES ₱12,000
ACCOUNTS RECEIVABLE
PREPAID RENT ₱30,000
LAND ₱250,000
BUILDING ₱200,000
EQUIPMENT ₱21,400
TRANSPORTATION VEHICLE ₱800,000
ACCOUNTS PAYABLE ₱7,000
NOTES PAYABLE ₱600,000
UNEARNED INCOME
UTLITIES PAYABLE ₱2,000
MORTGAGE PAYABLE ₱200,000
SHOELINA, CAPITAL ₱680,000
SHOELINA, WITHDRAWAL ₱5,000
SALES ₱4,250
SALES DISCOUNT ₱125
PURCHASES ₱20,000
SUPPLIES EXPENSE ₱100
UTILITIES EXPENSE ₱2,000
PURCHASE DISCOUNT ₱4,000
TOTAL ₱1,497,250 ₱1,497,250
DEPRECIATION EXPENSES-BUILDING
ACCUMULATED DEPRECIATION-BUILDING
DEPRECIATION- EXPENSE-ELECTRIC FAN
ACCUMULATED DEPRECIATION-ELECTRIC FAN
DEPRECIATION EXPENSE-CABINETS
ACCUMULATED DEPRECIATION-CABINETS
DEPRECIATION EXPENSE-TRANSPORTATION VEHICLE
ACCUMULATED DEPRECIATION-TRANSPORTATION VEHICLE
RENT EXPENSE
SALARIES EXPENSE
SALARIES PAYABLE
TOTAL
NESS SHOELI
INCO
ARY 31 202X
) P.R
ADJUSTMENTS ADJUSTED 401
Debit Credit Debit Credit 402
₱156,625 501
502
₱12,000 503
504
₱10,000 ₱20,000 505
₱250,000 506
₱200,000 507
₱21,400 508
₱800,000 509
₱7,000 510
₱600,000

₱2,000
₱200,000
₱680,000
₱5,000
₱4,250
₱125
₱20,000
₱100
₱2,000
₱4,000

₱1,666.67 ₱1,666.67
₱1,666.67 ₱1,666.67
₱58.33 ₱58.33
₱58.33 ₱58.33
₱58.33 ₱58.33
₱58.33 ₱58.33
₱6,666.67 ₱6,666.67
₱6,666.67 ₱6,667
₱10,000 ₱10,000
₱6,000 ₱6,000
₱6,000 ₱6,000
₱24,450 ₱24,450 ₱1,511,700 ₱1,511,700.00
 SHOELINA SHOE BUSINESS SHOELI
INCOME STATEMENT CHANGES
31-Jan-21
ACCOUNT TITLE P.R
SALES 4250 301
SALES DISCOUNT 125 302
PURCHASES -20000
SUPPLIES EXPENSE -100
UTILITIES EXPENSE -2000
PURCHASE DISCOUNT -4000
DEPRECIATION EXPENSE-BUILDING -1666.67
DEPRECIATION EXPENSE-ELECTRIC FAN -58.33
DEPRECIATION EXPENSE-CABINETS -58.33
DEPRECIATION EXPENSE-TRANSPORTATION VEHICLE -6666.33
RENT EXPENSE -₱ 10,000
SALARIES EXPENSE -₱ 6,000.00
TOTAL -₱ 46,175
 SHOELINA SHOE BUSINESS
CHANGES IN OWNER'S EQUITY
31-Jan-21
ACCOUNT TITLE P.R
SHOELINA, CAPITAL (BEG. BALANCE) 680000 CURRENT ASSET
SHOELINA, WITHDRAWAL -5000 101
NETLOSS -38425 102
SHOELINA, CAPITAL (END BALANCE) ₱636,575 104
105
TOTAL CURRENT ASSET
NON-CURRENT ASSET
103
106
107
108
109
110
111
112
113
TOTAL NON-CURRENT ASSET
TOTAL ASSET
CURRENT LIABILITIES
201
202
203
204
206
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
205
TOTAL LIABILITIES
EQUITY
301
302

TOTAL EQUITY
TOTAL LIABILITIES AND EQUITY
 SHOELINA SHOE BUSINESS
BALANCE SHEET
31-Jan-21
ACCOUNT TITLE

CASH ₱156,000.00
SUPPLIES
ACCOUNTS RECEIVABLE
PREPAID RENT ₱20,000.00
₱176,625

FURNITURE AND FIXTURES ₱12,000.00

LAND ₱250,000.00
BUILDING ₱200,000.00
EQUIPMENT ₱21,400.00
TRANSPORTATION VEHICLE ₱800,000.00
ACCUMULATED DEPRECIATION-BUILDING ₱1,666.67
ACCUMULATED DEPRECIATION-ELECTRIC FAN ₱58.33
ACCUMULATED DEPRECIATION-CABINETS ₱58.33
ACCUMULATED DEPRECIATION-TRANSPORTATION VEHICLE ₱6,666.67
₱1,274,950

ACCOUNTS PAYABLE 7000

NOTES PAYABLE ₱600,000
UNEARNED INCOME
UTILITIES PAYABLE ₱2,000
SALARIES PAYABLE ₱6,000
₱615,000

MORTGAGE PAYABLE ₱200,000

₱815,000

SHOELINA, CAPITAL ₱680,000

SHOELINA WITHDRAWAL -₱5,000
NET LOSS -₱38,425
₱636,575
 SHOELINA SHOE BUSINESS
STATEMENT OF FINANCIAL PERFORMANCE
(In Php)
For the month-ended January 31

REVENUES
Sales
Less: Sales Discount

COST
Purchases
Less: Purchase Discount

EXPENSES
Supplies Expenses
Utilities Expenses
Rent Expenses
Salaries Expense
Depreciation Expenses-Building
Depreciation Expenses-Electric Fan
Depreciation Expense-Cabinets
₱1,451,575 Depreciation Expense- Transportation Vehicle
NET LOSS

₱1,451,575
the month-ended January 31
2021 P.R

₱4,250 101
₱125 ₱4,125 102
103
104
₱20,000 105
₱4,000 ₱16,000 106
-₱11,875 107
108
₱100 109
₱2,000 201
₱10,000 201
₱6,000 203
₱1,666.67 204
₱58.33 205
₱58.33 301
₱6,666.67 ₱26,550 302
-₱38,425 401
402
501
502
503
504
505
110
506
111
507
112
508
113
509
510
206
 SHOELINA’S SHOE BUSINESS
WORKSHEET
FOR THE MONTH ENDED JANUARY 3
(In Philippine Peso)
ACCOUNT TITLE UNADJUSTED
PARTICULARS Debit Credit
CASH ₱156,625
SUPPLIES
FURNITURE & FIXTURES ₱12,000
ACCOUNTS RECEIVABLE
PREPAID RENT ₱30,000
LAND ₱250,000
BUILDING ₱200,000
EQUIPMENT ₱21,400
TRANSPORTATION VEHICLE ₱800,000
ACCOUNTS PAYABLE ₱7,000
NOTES PAYABLE ₱600,000
UNEARNED INCOME
UTLITIES PAYABLE ₱2,000
MORTGAGE PAYABLE ₱200,000
SHOELINA, CAPITAL ₱680,000
SHOELINA, WITHDRAWAL ₱5,000
SALES ₱4,250
SALES DISCOUNT ₱125
PURCHASES ₱20,000
SUPPLIES EXPENSE ₱100
UTILITIES EXPENSE ₱2,000
PURCHASE DISCOUNT ₱4,000
DEPRECIATION EXPENSES-BUILDING
ACCUMULATED DEPRECIATION-BUILDING
DEPRECIATION- EXPENSE-ELECTRIC FAN
ACCUMULATED DEPRECIATION-ELECTRIC FAN
DEPRECIATION EXPENSE-CABINETS
ACCUMULATED DEPRECIATION-CABINETS
DEPRECIATION EXPENSE-TRANSPORTATION VEHICLE
ACCUMULATED DEPRECIATION-TRANSPORTATION VEHICLE
RENT EXPENSE
SALARIES EXPENSE
SALARIES PAYABLE
TOTAL ₱1,497,250 ₱1,497,250
PROFIT OR LOSS
GRAND TOTAL
 SHOELINA’S SHOE BUSINESS
WORKSHEET
OR THE MONTH ENDED JANUARY 31 202X
(In Philippine Peso)
ADJUSTMENTS ADJUSTED INCOME STATEMENT
Debit Credit Debit Credit Debit Credit
₱156,625

₱12,000

₱10,000 ₱20,000
₱250,000
₱200,000
₱21,400
₱800,000
₱7,000
₱600,000

₱2,000
₱200,000
₱680,000
₱5,000
₱4,250 ₱4,250
₱125 ₱125
₱20,000 ₱20,000
₱100 ₱100
₱2,000 ₱2,000
₱4,000 ₱4,000
₱1,666.67 ₱1,666.67 ₱1,666.67
₱1,666.67 ₱1,666.67
₱58.33 ₱58.33 ₱58.33
₱58.33 ₱58.33
₱58.33 ₱58.33 ₱58.33
₱58.33 ₱58.33
₱6,666.67 ₱6,666.67 ₱6,666.67
₱6,666.67 ₱6,667
₱10,000 ₱10,000 ₱10,000
₱6,000 ₱6,000 ₱6,000
₱6,000 ₱6,000
₱24,450 ₱24,450 ₱1,511,700 ₱1,511,700.00 ₱8,250
-₱38,425
₱46,675.00 ₱46,675.00
 BALANCE SHEET
Debit Credit
₱156,625

₱12,000

₱20,000
₱250,000
₱200,000
₱21,400
₱800,000
₱7,000
₱600,000

₱2,000
₱200,000
₱680,000
₱5,000

₱1,666.67

₱58.33

₱58.33

₱6,666.67

₱6,000

-₱38,425
₱1,503,450.00 ₱1,503,450