ACCOUNTING CYCLE (MERCHANDISING)
A trial balance and other data of Demo Limited are as follows:
Demo Limited
Trial Balance
December 31, 2020
Accounts payable
Accounts receivable
Accumulated depreciation,
Equipment
Advertising expense
Cash
Delivery expense
Equipment
Mary Mason, Capital
Mary Mason, Drawings
Merchandise Inventory, Jan. 1, 2020
Notes payable
Prepaid Insurance
Purchase discounts
Purchases
Rent expense
Salaries expense
Sales
Sales discounts
Utilities expense
P5,110
P 4,810
2,940
450
22,160
375
7,800
19,945
4,800
9,720
1,000
630
390
13,425
1,200
6,400
44,050
980
685
Data for adjustments:
A. Depreciation expense on equipment for the year, P300
B. Prepaid insurance at December 31, 2020, P310.
C. Ending merchandise inventory, P8,310.
D. Rent expense for the year, P700.
E. Accrued salaries at year-end, P280.
F. Allowance for Bad Debts should be 10% of Accounts Receivable.
Instructions:
A. Make a 12 column worksheet with the following headings, “Unadjusted trial balance,
Adjustments, Adjusted trial balance, Cost of Sales, Income statement and Balance
Sheet”.
B. Journalize the Adjusting entries
C. Present your closing entries
D. Make your post closing trial balance
E. Make your reversing entries.