Chapter 10

Accounting Cycle of a Merchandising Business

Comprehensive Activities for group

NAME: Date:
Professor: Section: Score:

QUIZ 1: STATEMENT OF COST OF GOODS SOLD AND GROSS PROFIT

The accounts of Entity A on December 31, 20x1 show the following balances:

Gross sales 5,800,000

Sales returns 116,000
Sales discounts 1,160,000
Gross purchases 2,200,000
Freight-in 110,000
Purchase discounts 66,000
Purchase returns 22,000
Inventory, beg. 460,000
Inventory, end. 320,000

Requirement: Prepare a statement of cost of goods sold and gross profit.

a. .

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 NAME: Date:
Professor: Section: Score:

QUIZ 2 WORKSHEET AND FINANCIAL STATEMENTS

Entity A started operations on November 1, 20x1. The following were the transactions during the
period:

Nov. Transactions
1 Provided ₱100,000 cash as initial investment to the business.
1 Acquired equipment for ₱72,000 cash. The equipment has a useful life of 4 years.
Entity A records depreciation expense only at year-end.
1 Paid a one-year insurance premium of ₱24,000. (Use ‘asset method’)
12 Purchased inventory costing ₱30,000 for cash. (Use periodic inventory system)
14 Sold goods for ₱30,000 cash.

Dec. Transactions
1 Sold goods with sale price of ₱24,000 in exchange for a ₱24,000, 10%, one-year note
receivable. Principal and interest are due at maturity.
5 Purchased inventory for ₱4,000 on account.
26 Sold goods for ₱34,000 on account.
27 Paid ₱2,000 account payable.
29 Collected ₱20,000 account receivable.

Additional information:
 There is no beginning inventory. The ending inventory per physical count is ₱21,000.
 Entity A determines at year-end that accounts receivable of ₱2,000 is doubtful of collection.
 Salaries earned by employees during the period but were not yet paid amounted to ₱20,000.

Requirements:
a. Provide the journal entries for the transactions.
b. Post the entries to the ledger using T-accounts.
c. Prepare the unadjusted trial balance using a worksheet.
d. Prepare the adjusting entries.
e. Complete the worksheet.
f. Prepare the closing entries.
g. Prepare the balance sheet and income statement.
h. Prepare the reversing entries to be recorded in the next accounting period.

Reminder! You may answer using 10-column worksheet and journal paper
for entries handwritten or in bond paper computerized. Any of the two
but should be in good form and clean!

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“Peace I leave with you; my peace I give you. I do not give to you as the world gives. Do not let your hearts be
troubled and do not be afraid.”
(John 14:27)
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