BOOKKEEPING

Mr. Emman P. Arimbuyutan

Steps in Accounting Cycle
Inventory Systems: Perpetual or Periodic
• Companies may use either the perpetual
system or the periodic system to account for
inventory. Under the periodic system,
merchandise purchases are recorded in the
purchases account, and the inventory account
balance is updated only at the end of each
accounting period.
• Perpetual inventory systems have
traditionally been associated with companies
that sell small numbers of high‐priced items,
but the development of modern scanning and
computer technology has enabled almost any
type of merchandiser to consider using this
system.
• Under the perpetual system, purchases,
purchase returns and allowances, purchase
discounts, sales, and sales returns are
immediately recognized in the inventory
account, so the inventory account balance
should always remain accurate, assuming
there is no theft, spoilage, or other losses.
Differences Between Perpetual
and Periodic System
• Inventory Account and Cost of Goods Sold Account are used in
both systems but they are updated continuously during the period in
perpetual inventory system whereas in periodic inventory system they
are updated only at the end of the period.
• Purchases Account and Purchase Returns and Allowances
Account are only used in periodic inventory system and are updated
continuously. In perpetual inventory system purchases are directly
debited to inventory account and purchase returns are directly
credited to inventory account.
• Sale Transaction is recorded via two journal entries in perpetual
system. One of them records the sale value of inventory whereas the
other records cost of goods sold. In periodic inventory system, only
one entry is made.
• Closing Entries are only required in periodic inventory system to
update inventory and cost of goods sold. Perpetual inventory system
does not require closing entries for inventory account.
Purchases
Purchase Returns & Allowances
Purchase Discounts
Sales
Sales Returns & Allowances
Sales Discounts
JMC General Merchandise
 Perpetual
• 1 – The owner Johan Miguel invested 450,000 in the business
named JMC General Merchandise.
• 2 – Purchased computer equipment for 70,000 cash
• 2 – Bought merchandise on account from LAGUNA Supply
Corporation 180,000 terms 2/10, n/30
JOURNAL: J-1
Date Account Titles and Explanations Ref Debit Credit
2018
March 1 Cash 101 450,000.00
Miguel, Capital 301 450,000.00
To record investment of cash to JMC General
Merchandise

2 Equipment 109 70,000.00

Cash 101 70,000.00
To record purchase of computer equipment

2 Merchandise Inventory 105 180,000.00

Accounts Payable 201 180,000.00
To record purchase from Laguna Supply Corp. on account
terms 2/10, n/30
• 3 – Purchased office supplies on cash basis for 2,500
• 4 – Sold merchandise on account P115,000, FOB Destination,
terms 2/10 n/30 (cost of merchandise 102,000)
• 5 – Paid 2,000 freight on March 4 sale.

3 Supplies 106 2,500.00

Cash 101 2,500.00
To record purchase of office supplies.

4 Accounts Receivable 103 115,000.00

Sales 402 115,000.00

Cost of Goods Sold 503 102,000.00

Merchandise Inventory 105 102,000.00
To record sales on account terms 2/10, n/30

5 Freight Out 506 2,000.00

Cash 101 2,000.00
To record payment of freight on March 4 sale.
• 6 – Received credit from LAGUNA Supply Corporation for
merchandise returned 5,000
• 11 – Paid LAGUNA Supply Corporation.
• 13 – Collected from March 4 customer
6 Accounts Payable 201 5,000.00
Merchandise Inventory 105 5,000.00
To record return of merchandise to Laguna Supply Corp.

11 Accounts Payable 201 175,000.00

Merchandise Inventory 105 3,500.00
Cash 101 171,500.00
To record payment to Laguna Supply Corp.
[ 180,000 – 5,000] = 175,000
Discount: 175,000 x .02 = 3,500.00

13 Cash 101 112,700.00

Sales Discount 403 2,300.00
Accounts Receivable 103 115,000.00
To record receipt of payment from March 4 sale.
Discount: 115,000 x .02 = 2,300
• 14 – Bought merchandise on cash basis for 104,000
14 Merchandise Inventory 105 104,000.00
Cash 101 104,000.00
To record purchase of merchandise for cash.

• 15 – Paid salaries and wages 8,000

• 16 – Borrowed money from CITI Bank, signed a promissory note for
100,000

JOURNAL : J-2

Date Account Titles and Explanations Ref Debit Credit

Mar
ch 15 Salaries 508 8,000.00
Cash 101 8,000.00
To record payment of salaries and wages.

16 Cash 101 100,000.00

Notes Payable 202 100,000.00
To record loans made from CITI Bank
• 17 – Received refund from a supplier on cash purchase of
March 14, P4,000
• 18 – Bought merchandise from STA. ROSA Company, 87,000,
FOB Shipping point, terms, 2/10, n/30
• 20 – Paid freight on March 18 purchase, P6,000
17 Cash 101 4,000.00
Merchandise Inventory 105 4,000.00
To record refund received from March 14
purchases.

18 Merchandise Inventory 105 87,000.00

Accounts Payable 201 87,000.00
To record purchases from STA ROSA Company
FOB Shipping Point Terms 2/10, n/30

20 Merchandise Inventory 105 6,000.00

Cash 101 6,000.00
To record payment of freight on March 18
purchases
• 23 – Sold merchandise for 136,000 (cost of merchandise 115,000)
• 26 – Bought merchandise for cash, 132,000
• 27 – Paid STA. ROSA Company on the March 18 purchase, 47,300.
No discount allowed on partial payment.

23 Cash 101 136,000.00

Sales 401 136,000.00

Cost of Goods Sold 503 115,000.00

Merchandise Inventory 105 115,000.00
To record sales.

26 Merchandise Inventory 105 132,000.00

Cash 101 132,000.00
To record purchases of merchandise for cash

27 Accounts Payable 201 47,300.00

Cash 101 47,300.00
To record partial payment to STA ROSA
Company
 28 – The owner got/withdraw cash from the business 11,310
29 – Made refund to cash customer for defective merchandise, P6,000
30 – Sold merchandise on account 123,000, n/30 (cost of merchandise
111,000)
31 – Paid the following: Advertising 2,000; Utilities 4,700; Rent 6,500;
Salaries 10,000
28 Miguel, Drawings 302 11,310.00
Cash 101 11,310.00
To record drawing of cash by the owner.

29 Sales Returns and Allowances 402 6,000.00

Cash 101 6,000.00

30 Accounts Receivable 103 123,000.00

Sales 401 123,000.00
To record sales on account terms n/30.

31 Advertising 504 2,000.00

Utilities 509 4,700.00
Rent Expense 507 6,500.00
Salaries 508 10,000.00
Cash 101 23,200.00
To record payment of advertising, utilities, rent
and salaries.
LEDGER

CASH
Balance
Date Item Ref Debit Credit
Debit Credit
March 1 Capital J-1 450,000.00 450,000.00
2 Computer J-1 70,000.00 380,000.00
3 Supplies J-1 2,500.00 377,500.00
5 Freight Out J-1 2,000.00 375,500.00
11 Laguna Payment J-1 171,500.00 204,000.00
13 Collection J-1 112,700.00 316,700.00
14 Merchandise J-1 104,000.00 212,700.00
15 Salaries J-2 8,000.00 204,700.00
16 Loans Citibank J-2 100,000.00 304,700.00
17 Refund J-2 4,000.00 308,700.00
20 Freight J-2 6,000.00 302,700.00
23 Cash Sales J-2 136,000.00 438,700.00
26 Merchandise J-2 132,000.00 306,700.00
27 Partial Payment J-2 47,300.00 259,400.00
28 Drawings J-2 11,310.00 248,090.00
29 Refund J-2 6,000.00 242,090.00
30 Various Expenses J-2 23,200 218,890.00
ACCOUNTS RECEIVABLE

Balance
Date Item Ref Debit Credit
Debit Credit
March 4 Sales on Account J-1 115,000.00 115,000.00
13 Receipt of payment J-1 115,000.00 0.00
30 Sales on Account J-2 123,000.00 123,000.00
MERCHANDISE INVENTORY

Balance
Date Item Ref Debit Credit
Debit Credit
180,000.00
March 2 Laguna Supply J-1 180,00.00
78,000.00
4 Sales on Account J-1 102,000.00
73,000.00
6 Merchandise Return J-1 5,000.00
69,500.00
11 Purchase Discount J-1 3,500.00
173,500.00
14 Cash Purchase J-1 104,000.00
169,500.00
17 Purchase Return J-2 4,000.00
256,500.00
18 STA ROSA Company J-2 87,000.00
262,500.00
20 Freight J-2 6,000.00
147,500.00
23 Cash Sales J-2 115,000.00
279,500.00
26 Cash Purchase J-2 132,000.00
30 Sales on Account J-2 111,000.00 168,500.00
SUPPLIES

Balance
Date Item Ref Debit Credit
Debit Credit
March 3 Office Supplies J-1 2,500.00 2,500.00

EQUIPMENT

Balance
Date Item Ref Debit Credit
Debit Credit
March 2 Computer J-1 70,000.00 70,000.00
ACCOUNTS PAYABLE

Balance
Date Item Ref Debit Credit
Debit Credit

March 2 Laguna Supply J-1 180,000.00

180,000.00

6 Purchase Return J-1 5,000.00

175,000.00
11 Payment to Laguna J-1 175,000.00 -
18 Sta Rosa J-2 87,000.00 87,000.00

27 Partial Payment Sta Rosa J-2 47,300.00

39,700.00
NOTES PAYABLE

Balance
Date Item Ref Debit Credit
Debit Credit
March 16 Citi Bank J-2 100,000.00 100,000.00

CAPITAL

Balance
Date Item Ref Debit Credit
Debit Credit
March 2 Investment J-1 450,000.00 450,000.00

DRAWINGS

Balance
Date Item Ref Debit Credit
Debit Credit
March 28 Drawings J-2 11,310.00 11,310.00
SALES

Balance
Date Item Ref Debit Credit
Debit Credit
March 4 Sales on Account J-1 115,000.00 115,000.00
23 Cash Sales J-2 136,000.00 251,000.00
30 Sales on Account J-2 123,000.00 374,000.00

SALE DISCOUNT

Balance
Date Item Ref Debit Credit
Debit Credit
March 13 March 4 Sales J-1 2,300.00 2,300.00

SALES RETURN & ALLOWANCES

Balance
Date Item Ref Debit Credit
Debit Credit
March 29 Refund to cash customer J-2 6,000.00 6,000.00
COST OF GOODS SOLD

Balance
Date Item Ref Debit Credit
Debit Credit
March 4 Sales on account J-1 102,000.00 102,000.00
23 Cash sales J-2 115,000.00 217,000.00
30 Sales on Account J-2 111,000.00 328,000.00

FREIGHTOUT

Balance
Date Item Ref Debit Credit
Debit Credit
March 5 Freight J-1 2,000.00 2,000.00

SALARIES

Balance
Date Item Ref Debit Credit
Debit Credit
March 15 Salaries and Wages J-1 8,000.00 8,000.00
30 Salaries and Wages J-2 10,000.00 18,000.00
RENT

Balance
Date Item Ref Debit Credit
Debit Credit
March 30 Rent J-2 6,500.00 6,500.00

ADVERTISING

Balance
Date Item Ref Debit Credit
Debit Credit
March 30 Advertising J-2 2,000.00 2,000.00

UTILITIES

Balance
Date Item Ref Debit Credit
Debit Credit
March 30 Utilities J-2 4,700.00 4,700.00
 COMPANY
TRIAL BALANCE
March 31, 2018

Ref. Account Titles Debit Credit

218,890.00
101 Cash
123,000.00
103 Accounts Receivable
168,500.00
105 Merchandise Inventory
2,500.00
106 Supplies
70,000.00
109 Equipment
39,700.00
201 Accounts Payable
100,000.00
202 Notes Payable
450,000.00
301 Miguel, Capital
11,310.00
302 Miguel, Drawings
374,000.00
401 Sales
6,000.00
402 Sales Returns & Allowances
2,300.00
403 Sales Discounts
328,000.00
503 Cost of Goods Sold
2,000.00
504 Advertising
2,000.00
506 Freight Out
6,500.00
507 Rent Expense
18,000.00
508 Salaries
4,700.00
509 Utilities

601 Income Summary

963,700.00 963,700.00
TOTAL
 COMPANY
STATEMENT OF PERFORMANCE
for the month ended March 31, 2018
Sales: 374,000.00
Less:
Sales Returns & Allowances 6,000.00
Sales Discounts 2,300.00 (8,300.00)
Net Sales 365,700.00
Less: Cost of Goods Sold (328,000.00)
Gross Profit 37,700.00
Less: Operating Expenses
Advertising 2,000.00
Freight Out 2,000.00
Rent Expense 6,500.00
Salaries 18,000.00
Utilities 4,700.00 (33,200)
Net Income/(Loss) 4,500.00
 COMPANY
STATEMENT OF CHANGES IN EQUITY
for the month ended April 30, 2018
Miguel, Capital (Beg) 0.00
Add: Investment 450,000.00
Net Income 4,500.00
Total 454,500.00
Less: Drawings (11,310.00)
Miguel, Capital (End) 443,190.00
 COMPANY
STATEMENT OF FINANCIAL POSITION
March 31, 2018
Assets
Current Assets
Cash 218,890.00
Accounts Receivable 0.00
Merchandise Inventory 168,500.00
Supplies 2,500.00
Total Current Assets 512,890.00
Non-Current Assets
Equipment 70,000.00
Total Non-Current Assets 70,000.00
Total Assets 582,890.00
Liabilities and Owners Equity
Liabilities
Accounts Payable 39,700.00
Notes Payable 100,000.00
Total Liabilities 139,700.00
Owner’s Equity
Miguel, Capital 443,190.00
Total Owners Equity 431,190.00
Total Liability & O.E. 582,890.00
 COMPANY
STATEMENT OF CASHFLOW
March 31, 2018
Cash Flows from Operating Activities
Cash Received from
Customers 248,700.00
Refund from Supplier 4,000.00 252,700.00
Less: Cash Paid for
Refund 6,000.00
Merchandise 460,800.00
Expenses 31,200.00
Freight 2,000.00
Supplies 2,500.00 (502,500.00)
Net cash used in operating activities (249,800.00)

Cash Flows from Investing Activities

Purchase of Computer (70,000.00)
Net cash used in investing activities (70,000.00)

Cash Flows from Financing Activities

Investment 450,000.00
Loans (Citibank) 100,000.00 550,000.00
Less: Drawings (11,310.00)
Net cash provided by financing
activities 538,690.00
Total Cash Flow 0.00
Cash Balance
(March 30, 2018) 218,890.00
CLOSING JOURNAL ENTRIES - J-3
Date Account Titles and Explanations Ref Debit Credit
March 30 Sales 401 374,000.00
Sales Returns & Allowances 402 6,000.00
Sales Discounts 403 2,300.00
Income Summary 604 365,700.00
To close the sales accounts to income
summary

30 Income Summary 601 328,000.00

Cost of Goods Sold 503 328,000.00
To close COGS to income summary

30 Income Summary 601 33,200.00

Advertising 504 2,000.000
Freight Out 506 2,000.00
Rent Expense 507 6,500.00
Salaries 508 18,000.00
Utilities 509 4,700.00
To close the expense accounts to income
summary

30 Income Summary 302 11,310.00

Miguel, Drawing 601 11,310.00
To close the drawing account to the income
summary

30 Miguel, Capital 302 6,810.00

Income Summary 601 6,810.00
To close the income summary account to the
capital account
CAPITAL

Balance
Date Item Ref Debit Credit
Debit Credit
March 2 Investment J-1 450,000.00 450,000.00
30 Closing J-3 6,810.00 443,190.00

DRAWINGS

Balance
Date Item Ref Debit Credit
Debit Credit
March 28 Drawings J-2 11,310.00 11,310.00
30 Closing Entry J-3 11,310.00 0.00
SALES

Balance
Date Item Ref Debit Credit
Debit Credit
March 4 Sales on Account J-1 115,000.00 115,000.00
23 Cash Sales J-2 136,000.00 251,000.00
30 Sales on Account J-2 123,000.00 374,000.00
30 Closing Entry J-3 378,000.00 0.00

SALE DISCOUNT

Balance
Date Item Ref Debit Credit
Debit Credit
March 13 March 4 Sales J-1 2,300.00 2,300.00
30 Closing Entry J-3 2,300.00 0.00

SALES RETURN & ALLOWANCES

Balance
Date Item Ref Debit Credit
Debit Credit
March 29 Refund to cash customer J-2 6,000.00 6,000.00
30 Closing Entry J-3 6,000.00 0.00
COST OF GOODS SOLD

Balance
Date Item Ref Debit Credit
Debit Credit
March 4 Sales on account J-1 102,000.00 102,000.00
23 Cash sales J-2 115,000.00 217,000.00
30 Sales on Account J-2 111,000.00 328,000.00
30 Closing Entry J-3 328,000.00 0.00

FREIGHTOUT

Balance
Date Item Ref Debit Credit
Debit Credit
March 5 Freight J-1 2,000.00 2,000.00
30 Closing Entry J-3 2,000.00 0.00

SALARIES

Balance
Date Item Ref Debit Credit
Debit Credit
March 15 Salaries and Wages J-1 8,000.00 8,000.00
30 Salaries and Wages J-2 10,000.00 18,000.00
30 Closing Entry J-3 18,000.00 0.00
RENT

Balance
Date Item Ref Debit Credit
Debit Credit
March 30 Rent J-2 6,500.00 6,500.00
30 Closing Entry J-3 6,500.00 0.00

ADVERTISING

Balance
Date Item Ref Debit Credit
Debit Credit
March 30 Advertising J-2 2,000.00 2,000.00
30 Closing Entry J-3 2,000.00 0.00

UTILITIES

Balance
Date Item Ref Debit Credit
Debit Credit
March 30 Utilities J-2 4,700.00 4,700.00
30 Utilities J-3 4,700.00 0.00

INCOME SUMMARY

Balance
Date Item Ref Debit Credit
Debit Credit
March 30 Closing sales account J-3 365,700.00 365,700.00
Closing COGS J-3 328,000.00 37,700.00
Closing expense accounts J-3 33,200.00 4,500.00
Closing drawing accounts J-3 11,310.00 6,810.00
Closing income summary to capital J-3 6,810.00 0.00
 COMPANY
POST CLOSING TRIAL BALANCE
March 31, 2018

Ref. Account Titles Debit Credit

218,890.00
101 Cash

123,000.00
103 Accounts Receivable
168,500.00
105 Merchandise Inventory
2,500.00
106 Supplies
70,000.00
109 Equipment
39,700.00
201 Accounts Payable
100,000.00
202 Notes Payable
443,190.00
301 Miguel, Capital
TOTAL 582,890.00 582,890.00
Periodic
JOURNAL: J-1
Date Account Titles and Explanations Ref Debit Credit
2018
March 1 Cash 101 450,000.00
Miguel, Capital 301 450,000.00
To record investment of cash to JMC General
Merchandise

2 Equipment 109 70,000.00

Cash 101 70,000.00
To record purchase of computer equipment

2 Purchases 105 180,000.00

Accounts Payable 201 180,000.00
To record purchase from Laguna Supply Corp. on
account terms 2/10, n/30

3 Supplies 106 2,500.00

Cash 101 2,500.00
To record purchase of office supplies.

4 Accounts Receivable 103 115,000.00

Sales 402 115,000.00
To record sales on account terms 2/10, n/30
3 Supplies 106 2,500.00
Cash 101 2,500.00
To record purchase of office supplies.

4 Accounts Receivable 103 115,000.00

Sales 402 115,000.00
To record sales on account terms 2/10, n/30

5 Freight Out 506 2,000.00

Cash 101 2,000.00
To record payment of freight on March 4 sale.

6 Accounts Payable 201 5,000.00

Purchase Returns & Allowances 105 5,000.00
To record return of merchandise to Laguna Supply
Corp.

11 Accounts Payable 201 175,000.00

Purchase Discounts 105 3,500.00
Cash 101 171,500.00
To record payment to Laguna Supply Corp.
[ 180,000 – 5,000] = 175,000
Discount: 175,000 x .02 = 3,500.00

13 Cash 101 112,700.00

Sales Discount 403 2,300.00
Accounts Receivable 103 115,000.00
To record receipt of payment from March 4 sale.
Discount: 115,000 x .02 = 2,300

14 Purchases 105 104,000.00

Cash 101 104,000.00
To record purchase of merchandise for cash.
JOURNAL : J-2
Date Account Titles and Explanations Ref Debit Credit
March 15 Salaries 508 8,000.00
Cash 101 8,000.00
To record payment of salaries and wages.

16 Cash 101 100,000.00

Notes Payable 202 100,000.00
To record loans made from CITI Bank

17 Cash 101 4,000.00

Purchase Returns & Allowances 105 4,000.00
To record refund received from March 14
purchases.

18 Purchases 105 87,000.00

Accounts Payable 201 87,000.00
To record purchases from STA ROSA
Company FOB Shipping Point Terms 2/10,
n/30

20 Freight In 105 6,000.00

Cash 101 6,000.00
23 Cash 101 136,000.00
Sales 401 136,000.00
To record sales.

26 Purchases 105 132,000.00

Cash 101 132,000.00
To record purchases of merchandise for
cash

27 Accounts Payable 201 47,300.00

Cash 101 47,300.00
To record partial payment to STA ROSA
Company

28 Miguel, Drawings 302 11,310.00

Cash 101 11,310.00
To record drawing of cash by the owner.

29 Sales Returns and Allowances 402 6,000.00

Cash 101 6,000.00

30 Accounts Receivable 103 123,000.00

Sales 401 123,000.00
To record sales on account terms n/30.

31 Advertising 504 2,000.00

Utilities 509 4,700.00
Rent Expense 507 6,500.00
Salaries 508 10,000.00
Cash 101 23,200.00
LEDGER
CASH
Balance
Date Item Ref Debit Credit
Debit Credit
450,000.00
March 1 Capital J-1 450,000.00
380,000.00
2 Computer J-1 70,000.00
377,500.00
3 Supplies J-1 2,500.00
375,500.00
5 Freight Out J-1 2,000.00
204,000.00
11 Laguna Payment J-1 171,500.00
316,700.00
13 Collection J-1 112,700.00
212,700.00
14 Merchandise J-1 104,000.00
204,700.00
15 Salaries J-2 8,000.00
304,700.00
16 Loans Citibank J-2 100,000.00
308,700.00
17 Refund J-2 4,000.00
302,700.00
20 Freight J-2 6,000.00
438,700.00
23 Cash Sales J-2 136,000.00
306,700.00
26 Merchandise J-2 132,000.00
259,400.00
27 Partial Payment J-2 47,300.00
248,090.00
28 Drawings J-2 11,310.00
242,090.00
29 Refund J-2 6,000.00
218,890.00
30 Various Expenses J-2 23,200
ACCOUNTS RECEIVABLE

Balance
Date Item Ref Debit Credit
Debit Credit
March 4 Sales on Account J-1 115,000.00 115,000.00
13 Receipt of payment J-1 115,000.00 0.00

MERCHANDISE INVENTORY

Balance
Date Item Ref Debit Credit
Debit Credit
170,000.00
March 30 Closing J-3 170,000.00

SUPPLIES

Balance
Date Item Ref Debit Credit
Debit Credit
March 3 Office Supplies J-1 2,500.00 2,500.00
EQUIPMENT

Balance
Date Item Ref Debit Credit
Debit Credit
March 2 Computer J-1 70,000.00 70,000.00

ACCOUNTS PAYABLE

Balance
Date Item Ref Debit Credit
Debit Credit
180,000.00
March 2 Laguna Supply J-1 180,000.00
175,000.00
6 Purchase Return J-1 5,000.00
-
11 Payment to Laguna J-1 175,000.00
87,000.00
18 Sta Rosa J-2 87,000.00
39,700.00
27 Partial Payment Sta Rosa J-2 47,300.00

NOTES PAYABLE

Balance
Date Item Ref Debit Credit
Debit Credit
March 16 Citi Bank J-2 100,000.00 100,000.00
CAPITAL

Balance
Date Item Ref Debit Credit
Debit Credit
March 2 Investment J-1 450,000.00 450,000.00
30 Closing J-3 5,310.00 444,690.00

DRAWINGS

Balance
Date Item Ref Debit Credit
Debit Credit
March 28 Drawings J-2 11,310.00 11,310.00
30 Closing Entry J-3 11,310.00 0.00
SALES

Balance
Date Item Ref Debit Credit
Debit Credit
March 4 Sales on Account J-1 115,000.00 115,000.00
23 Cash Sales J-2 136,000.00 251,000.00
30 Sales on Account J-2 123,000.00 378,000.00
30 Closing Entry J-3 378,000.00 0.00

SALE DISCOUNT

Balance
Date Item Ref Debit Credit
Debit Credit
March 13 March 4 Sales J-1 2,300.00 2,300.00
30 Closing Entry J-3 2,300.00 0.00

SALES RETURN & ALLOWANCES

Balance
Date Item Ref Debit Credit
Debit Credit
March 29 Refund to cash customer J-2 6,000.00 6,000.00
30 Closing Entry J-3 6,000.00 0.00
PURCHASES

Balance
Date Item Ref Debit Credit
Debit Credit
180,000.00
March 2 Laguna Supply J-1 180,00.00
284,000.00
14 Cash Purchase J-1 104,000.00
371,000.00
18 STA ROSA Company J-2 87,000.00
503,000.00
26 Cash Purchase J-2 132,000.00
0.00
30 Closing Entry J-3 503,000.00

PURCHASES DISCOUNT

Balance
Date Item Ref Debit Credit
Debit Credit
March 11 J-1 3,500.00 3,500.00
30 Closing Entry J-3 3,500.00 0.00

PURCHASE RETURN & ALLOWANCES

Balance
Date Item Ref Debit Credit
Debit Credit
March 6 Return J-1 5,000.00 5,000.00
17 Return J-2 4,000.00 9,000.00
30 Closing Entry J-3 9,000.00 0.00
FREIGHT IN

Balance
Date Item Ref Debit Credit
Debit Credit
March 20 Freight J-2 6,000.00 6,000.00
30 Closing Entry J-3 6,000.00 0.00

FREIGHTOUT

Balance
Date Item Ref Debit Credit
Debit Credit
March 5 Freight J-1 2,000.00 2,000.00
30 Closing Entry J-3 2,000.00 0.00

SALARIES

Balance
Date Item Ref Debit Credit
Debit Credit
March 15 Salaries and Wages J-1 8,000.00 8,000.00
30 Salaries and Wages J-2 10,000.00 18,000.00
30 Closing Entry J-3 18,000.00 0.00
RENT

Balance
Date Item Ref Debit Credit
Debit Credit
March 30 Rent J-2 6,500.00 6,500.00
30 Closing Entry J-3 6,500.00 0.00

ADVERTISING

Balance
Date Item Ref Debit Credit
Debit Credit
March 30 Advertising J-2 2,000.00 2,000.00
30 Closing Entry J-3 2,000.00 0.00

UTILITIES

Balance
Date Item Ref Debit Credit
Debit Credit
March 30 Utilities J-2 4,700.00 4,700.00
30 Utilities J-3 4,700.00 0.00
INCOME SUMMARY

Balance
Date Item Ref Debit Credit
Debit Credit
March 30 Closing sales account J-3 365,700.00 365,700.00
Closing COGS J-3 326,500.00 39,200.00
Closing expense accounts J-3 33,200.00 6,000.00
Closing drawing accounts J-3 11,310.00 5,810.00
Closing income summary to capital J-3 5,810.00 0.00
 COMPANY
TRIAL BALANCE
March 31, 2018

Ref. Account Titles Debit Credit

218,890.00
101 Cash
123,000.00
103 Accounts Receivable
0.00
105 Merchandise Inventory
2,500.00
106 Supplies
70,000.00
109 Equipment
39,700.00
201 Accounts Payable
100,000.00
202 Notes Payable
450,000.00
301 Miguel, Capital
11,310.00
302 Miguel, Drawings
374,000.00
401 Sales
6,000.00
402 Sales Returns & Allowances
2,300.00
403 Sales Discounts
503,000.00
501 Purchases
9,000.00
502 Purchase Returns & Allowances
3,500.00
503 Purchase Discounts
6,000.00
504 Freight In
2,000.00
504 Advertising
2,000.00
506 Freight Out
6,500.00
507 Rent Expense
18,000.00
508 Salaries
4,700.00
509 Utilities

601 Income Summary

976,200.00 976,200.00
TOTAL
 COMPANY
STATEMENT OF PERFORMANCE
for the month ended March 31, 2018
Sales: 374,000.00
Less:
Sales Returns & Allowances 6,000.00
Sales Discounts 2,300.00 (8,300.00)
Net Sales 365,700.00
Less: Cost of Goods Sold
Purchases 503,000.00
Add: FI 6,000.00
Less PRA (9,000.00)
Purchase Discount (3,500.00)
Inventory (End) (170,000.00) (326,500.00)
Gross Profit 39,200.00
Less: Operating Expenses
Advertising 2,000.00
Freight Out 2,000.00
Rent Expense 6,500.00
Salaries 18,000.00
Utilities 4,700.00 (33,200.00)
Net Income/(Loss) 6,000.00
 COMPANY
STATEMENT OF CHANGES IN EQUITY
for the month ended March 30, 2018
Miguel, Capital (Beg) 0.00
Add: Investment 450,000.00
Net Income 6,000.00
Total 456,000.00
Less: Drawings (11,310.00)
Miguel, Capital (End) 444,690.00
 COMPANY
STATEMENT OF FINANCIAL POSITION
March 31, 2018
Assets
Current Assets
Cash 218,890.00
Accounts Receivable 123,000.00
Merchandise Inventory 170,000.00
Supplies 2,500.00
Total Current Assets 514,390.00
Non-Current Assets
Equipment 70,000.00
Total Non-Current Assets 70,000.00
Total Assets 584,390.00
Liabilities and Owners Equity
Liabilities
Accounts Payable 39,700.00
Notes Payable 100,000.00
Total Liabilities 139,700.00
Owner’s Equity
Miguel, Capital 444,690.00
Total Owners Equity 444,690.00
Total Liability & O.E. 584,390.00
 COMPANY
STATEMENT OF CASHFLOW
March 31, 2018
Cash Flows from Operating Activities
Cash Received from
Customers 248,700.00
Refund from Supplier 4,000.00 252,700.00
Less: Cash Paid for
Refund 6,000.00
Merchandise 460,800.00
Expenses 31,200.00
Freight 2,000.00
Supplies 2,500.00 (502,500.00)
Net cash used in operating activities (249,800.00)

Cash Flows from Investing Activities

Purchase of Computer (70,000.00)
Net cash used in investing activities (70,000.00)

Cash Flows from Financing Activities

Investment 450,000.00
Loans (Citibank) 100,000.00 550,000.00
Less: Drawings (11,310.00)
Net cash provided by financing
activities 538,690.00
Total Cash Flow 0.00
Cash Balance
(March 30, 2018) 218,890.00
CLOSING JOURNAL ENTRIES - J-3
Date Account Titles and Explanations Ref Debit Credit
March 30 Sales 401 374,000.00
Sales Returns & Allowances 402 6,000.00
Sales Discounts 403 2,300.00
Income Summary 604 365,700.00
To close the sales accounts to income summary

30 Merchandise Inventory 105 170,000.00

Purchase Returns & Allowances 502 9,000.00
Purchase Discounts 503 3,500.00
Income Summary 601 326,500.00
Purchases 503 503,000.00
Freight In 504 6,000.00
To close COGS to income summary

30 Income Summary 601 33,200.00

Advertising 504 2,000.000
Freight Out 506 2,000.00
Rent Expense 507 6,500.00
Salaries 508 18,000.00
Utilities 509 4,700.00
To close the expense accounts to income
summary

30 Miguel, Drawing 302 11,310.00

Income Summary 601 11,310.00
To close the drawing account to the income
summary

30 Miguel, Capital 302 5,310.00

Income Summary 601 5,310.00
To close the income summary account to the
capital account
 COMPANY
POST CLOSING TRIAL BALANCE
March 31, 2018

Ref. Account Titles Debit Credit

218,890.00
101 Cash
123,000.00
103 Accounts Receivable
170,000.00
105 Merchandise Inventory
2,500.00
106 Supplies
70,000.00
109 Equipment
39,700.00
201 Accounts Payable
100,000.00
202 Notes Payable
444,690.00
301 Miguel, Capital
TOTAL 584,390.00 584,390.00