Bernas Karla Pauline 11 Bonifacio FABM1 Q4

Republic of the Philippines
Department of Education
Region V (Bicol)
Division of City Schools
MASBATE NATIONAL COMPREHENSIVE HIGH SCHOOL
Masbate City
FUNDAMENTALS OF ACCOUNTANCY, BUSINESS & MANAGEMENT – 1

2nd SEMESTER, SY. 2020-2021
4th QUARTER
PREPARES THE ADJUSTING ENTRIES

Name of Learner: Karla Pauline Bernas Grade Level: 11
Section: ABM BONIFACIO
EXERCISE 1
1.
December 31 Supplies Expense P9,000
Supplies P9,000
Supplies Expense = Initial Supplies Inventory – Ending Supplies Inventory on hand

Supplies Expense = P12,000 – P3,000
Supplies Expense = P9,000
2.
December 31 Utilities Expense P2,000
Accrued Utilities Payable P2,000
The utilities expense of P2,000 pertains to utilities used for the second half of December. In the adjusting
entry above, Utilities Expense is debited to recognize the expense, and Accrued utilities payable is
credited for the used internet for the half month
3.
December 31 Accrued Service Revenue P63,000
Service Revenue P63,000

4.
December 31 Accrued interest income P6,000
Interest Income P6,000
5.
December 31 Insurance Expense P3,000
Prepaid Insurance P3,000
EXERCISE 2
Cost of Asset−Residual Value
1. Depreciation cost =
Uselife life of an Asset
60,000−6,000
Depreciation cost = 10
Depreciation cost = 5,400 per year or 450 per Month (5,400/12)
8
May 1, 2019 to December 31, 2021 consists of 32 months or years. It will be used to
3
compute for the accumulated depreciation.
8
Accumulated Depreciation = 5,400 × or 450 × 32 months
3
Accumulated Depreciation = P14,400
2. Amount of uncollected receivables = 1,300,000 × 40%

Amount of uncollected receivables = 520,000
Doubtful Account Expense = 520,000 × 3%

Doubtful Account Expense = 15,600
53
3. Balance for Prepaid Insurance = × (150,000)
60
Balance for Prepaid Insurance = 132,500

EXERCISE 3
Adjusting Entries
a. Depreciation of Office Equipment, P2,000
January 31 Depreciation Expense P2,000
Accumulated Depreciation P2,000
b. Bad Debt Expense id estimated at 2% of the Accounts Receivable balance

January 31 Doubtful Accounts P246
Allowance for Doubtful

P246
Accounts
c. The unused supplies balance is P5,300

January 31 Supplies Expense P4,200
Supplies P4,200
d. Unearned Service Revenue, P3,000

January 31 Service Revenue P3,000
Unearned Service Revenue P3,000
e. Insurance Premium expired during the month, P500

December 31 Insurance Expense P500
Prepaid Insurance P500
Adjusted Trial Balance

Praca General Services
As of January 31, 2020
ACCOUNT TITLE DEBIT CREDIT
Cash P 84,500
Accounts Receivable 12,300

Allowance for Doubtful Accounts 246
Supplies 5,300
Prepaid Insurance 5,500
Office Equipment 24,000
Accumulated Depreciation-Office Equipment P 2,000
Accounts Payable 12,200
Unearned Service Revenue 3,000
Praca, Capital 106,000
Praca, Drawings 10,000
Service Revenue 42,200
Salaries Expense 14,000
Rent Expense 1,500
Utilities Expense 1,600
Depreciation Expense for Office Equipment 2,000
Doubtful Accounts Expense 246
Supplies Expense 4,200
Insurance Expense 500
Total P 165,646 P 165,646
REFLECTION
I’ve learned that adjusting” should not be used interchangeably with “correcting”. Adjusting
entries are adjustments to bring the assets, liabilities, revenue and expenses up to. Adjusting” should not
be used interchangeably with “correcting”. Adjusting entries are adjustments to bring the assets,
liabilities, revenue and expenses up to.
COMPLETE THE ACCOUNTING CYCLE

EXERCISE 1
Praca General Services
Statement of Financial Performance
For the Month ended, January 31, 2020
Service
Revenue P 42,200.00
Less: operating Expenses

Salaries Expense P 14,000
Rent Expense 1,500
Utilities expense 1,600
Depreciation expense-Office
Equipment 2,000
Bad Debt Expense 246
Total Expenses 24,046

Net Income P 21,254
EXERCISE 2
Sherwin’s Delivery Services
Statement of Financial Position
As of November 30,2019
ASSETS
Current Assets
Cash P 90,000
Accounts Receivable P 70,000
Less: All. All for Doubtful Accounts 5,000 65,000
Prepaid Expense
Liabilities 30,000
Total Current
Accounts PayableAssets P 170,000 P185,000
Non-Current Assets
Notes Payable 30,000
LandLiabilities
Total 160,000 P 200,000
Owner’sBuilding
equity 200,000
Less:
Sherwin’s, Acc. Depreciation-Building
Capital 20,000 180,000
300,000
add: NetTotal
IncomeNon-Current Assets 55,000 340,000
Total
TotalAssets 355,000 P525,000
Less: Drawings 30,000
Total Owners Equity LIABILITIES AND OWNER’S EQUITY 325,000
Total Liabilities and Owner’s Equity P525,000
EXERCISE 3
General Journal
GJ-1
Date Account Title and Explanation PR Debit Credit
06-Jan Cash 101 P 200,000
Kan, Capital 301 P 200,000
To record investment of capital
7 Office Equipment 151 33,000
Accounts payable 201 33,000
To record purchase of equip. on account
9 Supplies 121 19,500
Cash 101 19,500
To record purchase of supplies

13 Prepaid Insurance 131 12,000
Cash 101 12,000
To record advance payment of insurance
15 Accounts Receivable 111 50,000
Service Revenue 401 50,000
To record service rendered on account
16 Cash 101 40,000
Accounts Receivable 111 40,000
To record collection of services account
20 Accounts Payable 201 20,000
Cash 101 20,000
To record payment of equipment
Service Revenue 401 30,000

To record services rendered on account
23 Cash 101 15,000
Loans Payable 211 15,000
Borrowed from the bank
31 Salaries Expense 501 16,000
Cash 101 16,000
To record payment of salaries to employees
GJ-2
31 Drawings 311 P 11,000
Cash 101 P 11,000
To record withdrawals by the owner
Utilities Expense 512 2,500
Cash 101 2,500
To record payment of telephone bill

Supplies Expense 511 7,500
Supplies 121 7,500
To record supplies expense
GENERAL LEDGERS
Account Name: CASH
Account No. 101 Balance

Date Particulars Post Debit Credit Debit Credit
06-Jan Investment of Capital GJ-1 P200,000 P200,000
9 Purchase of supplies GJ-1 P19,500 180,500
13 Payment for insurance GJ-1 12,000 168,500
16 Collection for service rendered GJ-1 40,000 208,500
20 Partial Payment for Equipment GJ-1 20,000 188,500
23 Loans from a Bank GJ-1 15,000 203,500
31 Payment of Salaries GJ-1 16,000 187,500
31 Withdrawal by the owner GJ-2 11,000 176,500
31 Payment of telephone bill GJ-2 2,500 174,000
Account Name: ACCOUNTS RECEIVABLE

15-Jan Rendered services on account GJ-1 P50,000 P50,000
16 Collection of receivables GJ-1 P40,000 10,000
22 Rendered services on account GJ-1 30,000 40,000
Account Name: SUPPLIES

09-Jan Purchase of Supplies GJ-1 P19,500 P19,500
31 Supplies Expense GJ-2 7,500 12,000
Account Name: PREPAID INSURANCE

13-Jan Purchase of Insurance GJ-1 P12,000 P12,000
31 Adjustments GJ-3 P1,000 11,000
Account Name: OFFICE EQUIPMENT

07-Jan Purchase of Equipment GJ-1 P33,000 P33,000
Account Name: ACCUMULATED DEPRECIATION-OFFICE EQUIPMENT

31-Jan Depreciation of equipment GJ-3 P500 P500
Account Name: ACCOUNTS PAYABLE

07-Jan Purchase of Equipment on account GJ-1 P33,000 P33,000
20 Partial payment to supplier GJ-1 P20,000 13,000
Account Name: LOANS PAYABLE

23-Jan Loans from the bank GJ-1 P15,000 P15,000
Account Name: KAN, CAPITAL


1-Jan Investment GJ-1 P200,000 P200,000
31 Closing GJ-4 52,500 252,500
31 Closing GJ-4 P11,000 241,500
Account Name: KAN DRAWINGS

28-Jan Withdrawal GJ-2 P12,000 P12,000
31 Closing GJ-4 P12,000 P –
Account Name: INCOME AND EXPENSE SUMMARY

31-Jan Closing GJ-4 P80,000 P80,000
31 Closing GJ-4 27,500 52,500
31 Closing GJ-4 52,500 0
Account Name: SERVICE REVENUE

15-Jan Service rendered on account GJ-1 P50,000 P50,000
22 Service rendered on account GJ-1 30,000 80,000
31 Closing GJ-4 80,000
Account Name: SALARIES EXPENSE

31-Jan Payment of advertisement GJ-1 P16,000 P16,000
31 Closing 16,000
Account Name: SUPPLIES EXPENSE
31-Jan Payment of supplies GJ-2 P2,500 P2,500
Account Name: UTILITIES EXPENSE

31-Jan Payment of telephone bill GJ-2 P7,500 P7,500
Account Name: INSURANCE EXPENSE

31-Jan Expired Insurance GJ-3 P1,000 P1,000
31 Closing GJ-4 1,000 P –
Account Name: DEPRECIATION EXPENSE

31-Jan Depreciation of asset GJ-3 P500 P500
31 Closing GJ-4 P500
Kan Taxes and Accounting Firm

Unadjusted Trial Balance
January 31, 2020
Account Title Debit Credit
Cash P 174,000
Supplies 12,000
Accounts Payable P 13,000
Loans Payable 15,000
Kan, Capital 200,000
Kan, Drawings 11,000
Total P 308,000 P 308,000
ADJUSTING ENTRIES
GJ-3
31-Jan Depreciation Expense 152 P 500
Accumulated Dep’n-Office Equipment 514 P 500
To recognize the depreciated amount of office
equipment
31 Insurance Expense 131 1,000

Prepaid Insurance 513 1,000
To record expired portion of prepaid insurance

January 31, 2020
Cash P 174,000
Supplies 12,000
Accumulated Depreciation-Office
Equipment 500
Kan, Drawings 11,000
Insurance Expense 1,000
Depreciation Expense 500
P 308,500 P 308,500
Total

Statement of Financial Performance
For the Month ended, January 31, 2020
Service Revenue P80,000.00
Less: operating Expenses

Salaries Expense P 16,000
Utilities expense 7,500
Depreciation Expense 1,000
Total Expenses 27,500

Net Income P 52,500

Statement of Changes in Equity
For the Month Ended, January 31, 2020
Kan, Capital, 4/30/2020 P –
Initial Investment 200,000
Add: Net Profit 52,500
Total 252,500
Less: Kan, Drawing 11,000
Villa, Capital 05/31/2020 P 241,500

Cash Flow Statement
January 31, 2020
Cash Flow from Operating Activities:

Cash received from customers P 40,000.00
Payment of supplies 19,500
Payment for Insurance 12,000
Payment of Salaries 16,000
Payment of Utilities 2,500
Total Cash from Operating Activities (10,000)
Cash Flow from Investing Activities
Payment to acquire Equipment 5,000 (5,000)
Cash Flow from Financing Activities
Investment made by the owner 200,000
Cash Loan from the Banks 15,000
Payment for withdrawals by owner 11,000
Total Cash from Financing Activities 204,000
Increase in Cash 174,000
Cash Balance, January 31, 2020 0
Cash Balance, January 31, 2020 174,000
CLOSING ENTRIES
GJ-4
31-Jan Service Revenue 401 P 80,000
Income and Expense Summary 601 P 80,000
To close Revenue account
31 Income and Expense Summary 151 27,500

Salaries Expense 501 16,000
Supplies Expense 511 2,500
Utilities Expense 512 7,500
Insurance Expense 513 500
Depreciation Expense 514 1,000
To close expenses
31 Income and Expense Summary 601 52,500

Kan, Capital 301 52,500
To close net income
31 Kan, Capital 301 12,000

Kan, Drawings 311 12,000
To close owner’s withdrawal

January 31, 2020
Cash P 174,000
Supplies 12,000
Accumulated Depreciation-Office
Equipment 500
Total P 270,000 P 270,000
REFLECTION
I’ve learned that at the end of the accounting period, all temporary (nominal) are closed, then,
Post-Closing Trial Balance is prepared after recording and posting all the closing entries. The balances of
permanent or real accounts become the starting balances for the next accounting period.
NATURE OF TRANSACTIONS IN A MERCHANDISING BUSINESS

ACTIVITY 1
1. Service Business
 Service based business
 Simple accounting system
 Sells or renders service to earn
Merchandising Business
 Presence of inventory
 Two ways accounting system involving inventory recording
 Sells goods at a mark-up to gain profits
 Merchandising business operations includes purchasing, selling, collecting and payment

activities. The two method of its inventory accounting is designed depending on the bulk of its
stocks of goods maintained held for sale.
2. The two examples of merchandising business are car dealers and grocery stores.
ACTIVITY 2
1. Cost of Goods Available for Sale (CGAS)
2. Cost of Goods Sold (COGS)
3. Gross Profit
4. Net Income/(Loss)
5. Beginning Inventory
ACTIVITY 3
1. True
2. True
3. False
4. False
5. True
REFLECTION
I’ve learned about the two accounting inventory systems of a merchandising business which are:
(1) periodic inventory method and (2) perpetual inventory method The Periodic Inventory System is
generally used when the individual inventory items have small peso value. On the other hand, the
Perpetual Inventory System is generally used when the individual items have relatively large values.
RECORDING TRANSACTIONS OF A MERCHANDISING

ACTIVITY 1
General Journal – PERPETUAL METHOD
GJ-1
Date Account Title and Explanation Ref Debit Credit
01-Mar Cash 101 P 40,000

Lopez, Capital 301 P 40,000
Investment of capital
2 Computer Equipment 104 10,000

Cash 101 10,000
Purchase of equipment
2 Merchandise Inventory 501 15,900

Accounts Payable 201 15,900
Purchase of inventory on account
3 Office Supplies 103 700

Cash 210 700
Purchase of supplies

Sales 401 15,200
Sales of merchandise
Cost of Sales 500 12,160

Merchandise Inventory 130 12,160
Cost of merchandise sold
5 Freight out 601 200

Cash 101 200
Payment of freight
6 Accounts Payable 201 300
Merchandise Inventory 502 300
To record returned inventory

Cash 101 15,000
Payment of merchandise

Cash 101 13,400
Purchase of goods
GJ-2
Cash 101 1,500
Payment of salary
16 Cash 101 12,000

Notes Payable 202 12,000
Borrowed money from the bank
17 Cash 101 500

Return Inventory

Purchase of goods on account
20 Merchandise Inventory 504 700

Cash 101 700
Payment of freight
23 Cash 101 16,400

Sales 401 16,400
Sale of merchandise
Cost of Merchandise 500 12,000

Cost of goods sold

Cash 101 12,300
Purchase of inventory

Cash 101 9,000
Partial Payment of merchandise bought
28 J. Lopez, Drawing 302 2,008

Cash 101 2,008
Withdrawal from the owner
29 Sales returns and Allowances 403 900

Cash 101 900
Return of goods from Foggia’s Merchandise

Cost of sales 500 780
Purchase of inventory
30 Account Receivable 102 13,700
Sales 101 13,700
Sale of merchandise
Cost of Sales 500 9,000

Cost of merchandise sold
GJ-3
30 Advertising Expense 602 1,000
Utilities Expense 603 400
Rent Expense 604 3,500
Cash 101 6,400
Payment of expenses
ACTIVITY 2
JOURNAL ENTRIES – PERIODIC METHOD
GJ-1
01-Mar Cash 101 P 40,000

Lopez, Capital 301 P 40,000
Initial contribution from the owner
2 Computer Equipment 104 10,000

Cash 101 10,000
Purchase of Equipment

Purchase of merchandise on account
3 Office Supplies 103 700

Cash 210 700

Sales 401 15,200
Sold merchandise to customers

Cash 101 200
Payment of freight

Purchase Returns and Allowance 502 300
To record return of merchandise to supplier

Cash 101 15,000
Purchase Discount 503 312
Payment of Merchandise
14 Purchases 501 13,400

Cash 101 13,400
Purchase of merchandise
GJ-2
Cash 101 1,500
Payment of salary
16 Cash 101 12,000
Borrowed money from the bank
17 Cash 101 500

Purchase Returns and Allowances 502 500
Returned goods to supplie
18 Purchases 501 14,200

Purchase of goods on account
20 Freight In 504 700

Cash 101 700
Payment of freight
23 Cash 101 16,400

Sales 401 16,400
Sold goods to customer
26 Purchases 501 12,300

Cash 101 12,300
Purchase of goods

Cash 101 9,000
Partial Payment of merchandise bought
28 J. Lopez, Drawing 302 2,008

Cash 101 2,008
Withdrawal of capital
29 Sales returns and Allowances 403 900

Cash 101 900
Return of goods from Foggia’s Merchandise
30 Account Receivable 102 13,700

Sales 101 13,700
Sale of merchandise
GJ-3
Rent Expense 604 3,500
Cash 101 6,400
Payment of expenses
ACTIVITY 3
Cash Receipts Journal
Cr. Accounts Cr. Other
Date Account Credited Ref Dr. Cash Cr. Sales
Receivable Accounts
March 1 Lopez, Capital P20,000 P200,000

13 LB Leverage Company 14,896 P15,200 304
16 CIM Bank/Note Payable 12,000 12,000
17 E. Perol Enterprises 500 500
23 Foggia’s Merchandise 16,400 P16,400
Cash Payments Journal
Check Dr. Accounts
Date Account Debited Ref Dr. Other Cr. Cash
No. Payable
2020
March 2 Equipment 10000 10000
3 Supplies 700 700
5 Freight-out 200 200
11 Andrew Supply 15600 312 15288
14 E.Perrol Enterprises 13400 13400
15 Salaries 1500 1500
20 Freight-in 700 700
26 My Souki 12300 12300
27 Mia Lovella Distributors 9000 9000
28 Lopez, withdrawal 2008 2008
29 Foggia’s Merchandise 900 900
30 Advertising 1000 1000
Utilities 400 400
Rent 3500 3500
Salaries 1500 1500
Sales Journal
Dr. Accounts
Date Account Debited Invoice No. Ref Receivable & Cr.
Sales
2020
March 4 LB.Leverage Company 0001 P15,200
30 Collete’s Creations 0002 13,700
Purchases Journal
Dr. Accounts
Date Account Debited Invoice No. Ref Receivable & Cr.
Sales
2020
March 2 Andrew Supplies Company 2/10 n/30 P15,900
18 Mia Sovella Distributors 2/10 n/30 14,200
General Journal
GJ-1
2020
March 6 Purchase Returns and Allowances 300

Accounts Payable 300
REFLECTION
I’ve learned that for businesses with repetitive transactions, just like in a merchandising business,
the company may use special journals. Special journals record transactions of a specific type. The four
special journals are cash receipts journal, cash disbursements journal, purchases journal and sales journal.
POSTS TRANSACTIONS IN THE GENERAL LEDGERS AND

SUBSIDIARY LEDGERS
ACTIVITY 1
General Journal – PERIODIC METHOD
GJ-1
01-Jul Cash 101 P 128,000

Villa, Capital 310 P 128,000
Initial investment
Office Equipment 140 21,000
Cash 101 5,000
Purchase of Equipment
2 Supplies 120 1,200

Cash 101 1,200
3 Purchases 510 81,900

Purchase from Lowkey company
Terms:2/10;n/30,FOB Destination

Sales 400 48,600
Sold merchandise to Thore
Terms:2/10;n/30,FOB Destination

Cash 101 550
Payment of freight
7 Cash 101 47,628

Sales Discount 410 972
Accounts Receivable 110 48,600
Collection from Thore

To record returned inventory
Cash 101 79,890
Purchase of Discount 520 1,630
Payment Lowkey company
GJ-2
13 Purchases 510 P 12,300
Supplies 120 450
Cash 101 12,750
Purchases of goods and supplies

Cash 101 8,000
Payment of salary
16 Cash 101 870

Return of goods
18 Cash 101 24,300

Sales 400 24,300
Sold goods to various customers
19 Purchases 510 15,800

Purchase of goods from Eleanor shop
Terms:2/10;n/30,FOB shipping point
23 Sales returns and Allowances 420 3,800

Cash 101 3,800
Return of goods from customers
24 Cash 101 13,500

To record borrowed money
24 Freight In 540 580

Cash 101 580
Payment of freight

Sales 400 36,800
Sale of merchandise
28 Villa, Drawings 320 9,000

Cash 101 9,000
Withdrawal of capital

Cash 101 15,800
Payment of Leonor
GJ-3
Cash 101 8,000
Payment of salary

Cash 101 1,580
Payment of advertisement
31 Rent Expense 640 2,800

Cash 101 3,500
Payment of expenses
ACTIVITY 2
General Ledger – PERIODIC METHOD
Account Name: CASH

01-Jul Investment of Capital GJ-1 P128,000 ₱128,000
2 Purchase of equipment GJ-1 5,000 123,000
2 Purchase of supplies GJ-1 1.200 121,800
5 Payment of freight GJ-1 550 121,250
7 Collection of receivable GJ-1 47,628 168,878
11 Payment of merchandise GJ-1 79,890 ₱88,988
13 Purchase of merchandise GJ-2 12,750 ₱76,238
15 Payment of salary GJ-2 8,000 ₱68,238
16 Return of merchandise GJ-2 870 ₱69,108
18 Sale of merchandise GJ-2 24,300 ₱93,408
23 Return of merchandise GJ-2 3,800 ₱89,608
24 Borrowed money GJ-2 13,500 ₱103,108
24 Payment of freight GJ-2 580 ₱102,528
28 Withdrawal GJ-3 9,000 ₱93,528
30 Payment of merchandise GJ-3 15,800 ₱77,728
31 Payment of salary GJ-3 8,000 ₱69,728
31 Payment of advertisement GJ-3 1,580 ₱68,148
Account Name: ACCOUNTS RECEIVABLE

5-Jul Sale of merchandise GJ-1 ₱48,600 ₱48,600
7 Collection of receivable GJ-1 48,600 ₱-
Account Name: SUPPLIES

02-Jul Purchase of supplies ₱1,200 1,200
13 Purchase of inventory 450 1,650
Account Name: OFFICE EQUIPMENT

02-Jul Purchase of Equipment GJ-1 P21,000 P21,000
Account Name: ACCOUNTS PAYABLE

07-Jul Purchase of inventory GJ-1 ₱81,900 ₱81,900
9 Returned inventory GJ-1 380 ₱81,520
11 Payment of merchandise GJ-1 81,520 ₱-
19 Purchase of inventory GJ-2 15,800 ₱15,800
30 Payment of merchandise GJ-3 15,800 ₱-
Account Name: NOTES PAYABLE

02-Jul Purchase of equipment GJ-1 ₱16,000.00 ₱16,000.00
24 Borrowed money GJ-2 ₱13,500 ₱29,500
Account Name: VILLA, CAPITAL

1-Jul Investment GJ-1 ₱128,000 ₱128,000
31 Closing GJ-4 24,078 ₱152,078
31 Closing GJ-4 9,000 ₱143,078
Account Name: VILLA, DRAWINGS

28-Jul Withdrawal GJ-3 ₱9,000 ₱9,000
31 Closing GJ-4 9,000 P –
Account Name: INCOME SUMMARY

31-Jul Closing GJ-4 ₱104,928 ₱104,928
31 Closing GJ-4 59,220 ₱45,708
31 Closing GJ-4 21,630 ₱24,078
GJ-4 24,078 ₱-
Account Name: SALES

05-Jul Sale of merchandise GJ-1 ₱48,600 ₱48,600
31 Closing GJ-4 109,700 ₱-
Account Name: SALES DISCOUNT

07-Jul Collection of receivable GJ-1 972 ₱972
31 Closing GJ-4 972 ₱-
Account Name: SALES RETURNS

23-Jul Payment of supplies GJ-2 ₱3,800 3,800
31 Closing GJ-4 3,800 0
Account Name: PURCHASES

03-Jul Purchase of inventory GJ-1 ₱81,900 ₱81,900
31 Closing GJ-4 61,520 48,480
Account Name: PURCHASES DISCOUNT

11-Jul Payment of merchandise GJ-1 ₱1,630 ₱1,630
31 Closing GJ-4 1,630 ₱-
Account Name: PURCHASES RETURNS AND ALLOWANCES
09-Jul Return of inventory GJ-1 ₱380 ₱380
16 Return of inventory GJ-2 870 ₱1,250
31 Closing GJ-4 1,250 ₱-
Account Name: FREIGHT IN

24-Jul Payment of freight GJ-2 ₱580 ₱580
Account Name: SALARIES EXPENSE

15-Jul Payment of salary GJ-1 ₱8,000 ₱8,000
31 Payment of salary GJ-3 8,000 16,000
31 Closing GJ-4 16,000 0
Account Name: FREIGHT OUT

05-Jul Payment of freight GJ-1 ₱550 ₱550
Account Name: ADVERTISING EXPENSE

31-Jul Payment of advertisement GJ-3 ₱1,580 ₱1,580
31 Closing GJ-4 1580 ₱-
Account Name: RENT EXPENSE

31-Jul Payment of expense GJ-3 ₱2,800 ₱2,800
31 Closing GJ-4 2,800 ₱-
Account Name: UTILITIES EXPENSE

31-Jul Payment of expense GJ-3 ₱700 ₱700
ACTIVITY 3
SV Merchandising Store
Cost of Goods Sold Schedule
For the month ended July 31,2019
Cost of Goods Sold
Merchandise Inventory 0
Purchases 110,000
Less: Purchase Discounts 1,630
Purchase Returns and Allowances 1,250 2,880
Net Purchases 107,120
Add: Freight In 580
Goods Available for Sale 107,700
Less: Merchandise Inventory. 7/31/19 48,480
Cost of Goods Sold 59,220
REFLECTION
I’ve learned that merchandising entities may use either of the following inventory systems:
Perpetual System--Detailed records of the cost of each item are maintained, and the cost of each item sold
is determined from records when the sale occurs. At the end of the period, no entry is made except to
adjust inventory for losses. Periodic System--Cost of goods sold is determined only at the end of an
accounting period. The cost of goods sold must be computed, meaning, the cost of goods sold on hand at
the beginning of the accounting period must be determined.
ACCOUNTING CYCLE OF A MERCHANDISING BUSINESS

ACTIVITY 1
KAYLEE LIM MERCHANDISING COMPANY
Trial Balance
December 31, 2019

Account Titles Dr Cr Answer
Cash ₱ 645,300 √
Accounts Receivable 10,000 ₱ 10,000
Merchandise Inventory 513,300 √
Store Supplies 10,000 √
Furniture and Fixtures 80,000 80,000
Equipment 450,000 450,000
Accounts Payable 265,000 265,000
Kaydee Lim, Capital 1,500,000 1,500,000
Kaydee Lim, Drawings 50,000 50,000
Sales 610,000 √
Sales Returns and Allowances 5,000 √
Sales Discount 2,400 √
Cost of Goods Sold 452,500 452,500
Salaries Expense 30,000 √
Advertising Expense 1,500 √
Freight Out 5,000 5,000
KAYLEE LIM MERCHANDISING COMPANY
Trial Balance
December 31, 2019

Account Titles Dr Cr
Cash ₱ 645,300
Merchandise Inventory 513,300
Store Supplies 10,000
Furniture and Fixtures 80,000
Accounts Payable ₱ 265,000
Kaydee Lim, Capital 930,000
Kaydee Lim, Drawings 50,000
Sales 610,000
Sales Returns and Allowances 5,000
Sales Discount 2,400
Advertising Expense 1,500

5,000
Freight Out
₱ 1,805,000 ₱ 1,805,000
ACTIVITY 2
AVERILL MERCHANDISING
Trial Balance
December 31, 2019

Cash ₱ 60,532
Store Supplies 750
Equipment 30,000
Averill, Capital 150,000
Averill, Drawings 5,000
Sales 71,900
Sales Returns and Allowances 800
Sales Discount 714
Purchases 109,000
Purchase Returns and Allowances 1,080
Purchase Discount 1,116
Freight In 850
Freight Out 650
Utilities Expense 700
Rent Expense 2,500
Total ₱ 258, 196 ₱ 258, 196
ACTIVITY 3
PREPARING TRIAL BALANCE (PERIODIC INVENTORY SYSTEM) MAE
MERCHANDISING
Trial Balance
July 31, 2019

Cash ₱ 45,180
Store Supplies 800
Equipment 15,000
Mae, Capital 80,000
Mae, Drawings 5,000
Sales 67,200
Sales Discount 320
Purchases 70,900
Purchase Returns and Allowances 880
Purchase Discount 320
Freight In 850
Freight Out 650
Rent Expense 2,500
₱ 174,400 ₱ 174,400
Total
ACTIVITY 4
PREPARING TRIAL BALANCE (PERPETUAL INVENTORY SYSTEM) MAE
MERCHANDISING
Trial Balance
July 31, 2019

Cash ₱ 45,180
Store Supplies 800
Equipment 15,000
Mae, Capital 80,000
Mae, Drawings 5,000
Sales 67,200
Sales Discount 320
Freight Out 650
Rent Expense 2,500
₱ 173,200 ₱ 173,200
Total
REFLECTION
In the preparation of trial balance we get the balances from the ledger balances then from the trial
balance we move the balances of the accounts to their respective financial statements. A careful transfer
of account balances from the ledger to the trial balance must be observed.
ACCOUNTING CYCLE OF A MERCHANDISING BUSINESS

ACTIVITY 1
Owner’s Equity
Adjustment Asset Liability
Income Expense
1. Accrued Income I NO I NO
2. Accrued Expense NO I NO I
3. Accumulated Depreciation D NO NO I
4. Prepaid Expense – Asset Method D NO NO I
5. Prepaid Expense – Expense Method I NO NO D
ACTIVITY 2
A
A C
L C
S U P P L I E S E X P E N S E U
O M
W U
A L
R E N T E X P E N S E A
C T
D E P R E C I A T I O N E X P E N S E
F D
S O D
S A L A R I E S E X P E N S E E
L D R U P
A O E P R
R U P P E
I B A L C
E T I I I
S F D E A
P U R S T
A L E I
Y A N O
A C T N
B C
L O
E U
N
D O U B T F U L A C C O U N T S
S
ACTIVITY 3
Credit Account
Debit Account Title Amount Computation
Title
Total Store Supplies 20,750

1. Store Supplies Less: Unused Store Supplies 5,250
Store Supplies ₱ 15,500
Expense
Used Store Supplies 15,500
Accrued Used internet service from Dec. 16 –
2. Utilities Expense Utilities ₱ 1,000 Dec. 31 = 1,000
Expense
Insurance Premium 36,600

3. Unearned Insurance Divide: # of months 12
₱ 3,050
Insurance Income Income
Monthly Insurance 3,050
Principal 24,600
Multiply: Annual Interest Rate
12%
4. Interest Expense Interest Payable ₱ 2,400
Monthly Interest 28,800
Divide: # of months 12
Monthly Interest 2,400

Insurance Premium 24,000
5. Insurance Prepaid Divide: # of months 12

₱ 2,000
Expense Insurance
Monthly Insurance 2,000
ACTIVITY 4
Adjusting Entries
Date
2020
Salaries Expense ₱ 7,000
Dec 31 Salaries Payable ₱ 7,000
To record accrued salaries expense.

Store Supplies Expense 2,300
31 Salaries Payable
2,300
To record expired portion of store supplies.
Depreciation Expense-Store Equipment 750
31 Accumulated Depreciation-Store Equipment 750
To record depreciation for the month of December.

31 Rent Expense 7,500 7,500
Prepaid Rent
To record expired portion of prepaid rent.
31 Utilities Payable 6,000
To record accrued utilities expense.

Doubtful Accounts 24,300
31 Allowance for Doubtful Accounts 24,300
To record bad debts provision
Mema Company
Work Sheet
For the month ended December 31, 2020
Adjustments Adjusted Trial Balance

Account Titles
Dr Cr Dr Cr
Cash ₱ 735,500
Prepaid Rent ₱ 7,500 37,500
Store Supplies 2,300 7,700
Store Equipment 50,000

Accumulated Depreciation – Store
750 ₱ 750
Equipment
Mema, Capital 1,105,000
Mema, Drawings 50,000
Sales 835,745
Sales Returns and Allowances 4,000
Sales Discount 1,620

Salaries Expense 695,000 27,000
Utilities Expense 6,000 11,000
Freight Out 4,500
Salaries Payable 7,000 7,000
Utilities Payable 6,000 6,000
Store Supplies Expense 2,300 2,300
Depreciation Expense 750 750
Rent Expense 7,500 7,500
Doubtful Accounts 24,300 24,300
Allowance for Doubtful Accounts 24,300 24,300
₱47,850.00 ₱47,850.00 ₱2,277,570.00 ₱2,277,570.00
REFLECTION
I’ve learned that at end of the accounting period, some accounts would require updating.
Adjusting entries are journal entries that reflect this kind of updating. Adjustments for these accounts are
for income and expenses to be reported in the correct period and to ensure that the accrual-basis of
accounting and the time period principle are followed. This ensures that income is recognized in the
period in which they are earned and that expenses are recognized in the period in which they are incurred.

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Republic of the Philippines

FUNDAMENTALS OF ACCOUNTANCY, BUSINESS & MANAGEMENT – 1

PREPARES THE ADJUSTING ENTRIES

December 31 Supplies Expense P9,000

Supplies Expense = Initial Supplies Inventory – Ending Supplies Inventory on hand

December 31 Utilities Expense P2,000

Accrued Utilities Payable P2,000

December 31 Accrued Service Revenue P63,000

Service Revenue P63,000

December 31 Accrued interest income P6,000

Interest Income P6,000

December 31 Insurance Expense P3,000

Prepaid Insurance P3,000

Depreciation cost = 5,400 per year or 450 per Month (5,400/12)

2. Amount of uncollected receivables = 1,300,000 × 40%

Doubtful Account Expense = 520,000 × 3%

Balance for Prepaid Insurance = 132,500

Accumulated Depreciation P2,000

b. Bad Debt Expense id estimated at 2% of the Accounts Receivable balance

Allowance for Doubtful

c. The unused supplies balance is P5,300

d. Unearned Service Revenue, P3,000

Unearned Service Revenue P3,000

e. Insurance Premium expired during the month, P500

Prepaid Insurance P500

Adjusted Trial Balance

ACCOUNT TITLE DEBIT CREDIT

Accounts Receivable 12,300

COMPLETE THE ACCOUNTING CYCLE

For the Month ended, January 31, 2020

Less: operating Expenses

Total Expenses 24,046

Date Account Title and Explanation PR Debit Credit

06-Jan Cash 101 P 200,000

Kan, Capital 301 P 200,000

To record investment of capital

7 Office Equipment 151 33,000

Accounts payable 201 33,000

To record purchase of equip. on account

9 Supplies 121 19,500

Cash 101 19,500

To record purchase of supplies

Cash 101 12,000

To record advance payment of insurance

15 Accounts Receivable 111 50,000

Service Revenue 401 50,000

To record service rendered on account

16 Cash 101 40,000

Accounts Receivable 111 40,000

To record collection of services account

20 Accounts Payable 201 20,000

Cash 101 20,000

To record payment of equipment

22 Accounts Receivable 111 30,000

Service Revenue 401 30,000

23 Cash 101 15,000

Loans Payable 211 15,000

Borrowed from the bank