ACCOUNTING PROBLEM
NC III (Bookkeeping)
LEARNING OBJECTIVE: The purpose of this illustrative problem is to provide an illustration
of the complete accounting cycle for merchandising concern by providing an illustration from
the journalization process up to preparation of post-closing trial balance.
MATUTINA’S GENERAL MERCHANDISE is a merchandising concern organized a year ago
by Ms.. Maria Matutina for a wholesale grocery and fruit business. The booked used are twocolumn general journals and a general ledger with the inclusion of subsidiary ledgers for
accounts receivable and accounts payable balances.
1. To start the business, Ms. Matutina owned a business name MATUTINA’S GENERAL
MERCHANDISE and had the following transactions for the month of February, 2017
February 2
Matutina invested P500,000 in cash in the business.
February 4
Purchase goods worth P455,700 on account from Maharlika: Terms 2/10, n/30
February 7
Purchased P105,800 worth of goods from Matino on account, with terms 3/15,
2/25, n/30
February 10
Sold goods to Makabayan Management worth P550,400 in cash. The cost of the
goods is P180,900
February 12
The business returned P20,000 worth of goods to Maharlika
February 14
Makabayan returned P165,120 goods. Cost of the returned merchandise is
P54,270
February 18
Paid the following expenses: Salaries, P27,900; Advertising, P93,780; and
delivery, P85,400
February 19
Sold goods to Matikas Inc. P690,800 on account. The cost of goods is P289,590
February 21
Paid Matino in full
February 24
Collected 30% of the account of Matikas Inc.
February 25
Withdrawal made by the business, P55,890
February 27
Purchased goods worth P190, 800 in cash and sold the goods to a customer in
cash, P450,700
Required:
1. Journalize the various transactions in a 2 columns journal using the given chart of
accounts and then post in the general ledger and subsidiary ledger.
a. Under Perpetual Inventory Method
b. Under Periodic Inventory Method
2. Prepare trial balance
3. Prepare the four basic financial statements
a. Balance Sheet
b. Income Statement
c. Statement of Changes on Owners’ Equity
d. Statement of Cash Flow
4. Prepare closing entries
5. Prepare post-closing trial balance
2. Prepare the adjusting entries for each of the following:
a. A premium of P12,000 for a one year insurance policy was paid on December 1 and
debited to Prepaid Insurance, Compute for the adjusting entry at December 31
b. The unadjusted trial balance of Danda shows an Unearned rent account of P450,000 at
July 31, 2017, 1/3 of the Unearned rent has been earned as of that date.
c. On January 1 of the current year, Yakult purchased office equipment which cost
P160,000 with an expected life of 4 years and no salvage value. What is the accumulated
depreciation on June 30, 2018
End of Examination
CHART OF ACCOUNTS:
Note: Use the following CHART OF ACCOUNTS for journalizing, posting, trial balance,
closing entries and post closing trial balance
Code
Account Title
Code
Account Title
10
Cash
61
Sales Discount
11
Accounts Receivable
62
Sales Returns & Allowances
12
Notes Receivable
70
Cost of Goods Sold
13
Merchandise Inventory
71
Purchases
20
Office Equipment
72
Freight In
21
Furniture & Fixture
73
Purchase Discounts
30
Accounts Payable
74
Purchase Returns and
Allowance
50
Matutina, Capital
75
Freight Out
51
Matutina, Drawing
76
Salaries Expense
52
Income Summary
77
Utilities Expense
60
Sales
78
Advertising Expense
79
Office Supplies Expense
Note: Use the following CHART OF ACCOUNTS for Financial Statement Preparation
Code
Account Title
Code
Account Title
10
Cash and Cash Equivalent
70
Cost of Goods Sold
11
Accounts Receivable
71
Purchases
12
Notes Receivable
72
Freight In
13
Merchandise Inventory
73
Purchase Discounts
20
Property, Plant &
74
Purchase Returns and
Equipment
Allowance
30
Accounts Payable
75
Freight Out
50
Matutina, Capital
76
Salaries Expense
51
Matutina, Drawing
77
Utilities Expense
52
Income Summary
78
Advertising Expense
60
Sales
79
Office Supplies Expense
61
Sales Discount
62
Sales Returns & Allowances
GENERAL JOURNAL
Periodic Inventory Method
Date
Feb 2
Feb 4
Feb 7
Feb 10
Feb 12
Feb 14
Feb 18
Feb 19
Feb 21
Feb 24
Feb 25
Feb 27
Particulars
Cash
Matutina,Capital
Investment made by
Matutina
Purchases
Accounts Payable
Purchased goods on
account
Purchases
Accounts Payable
Purchased goods on
account
Cash
Sales
Sold goods in cash
Accounts payable
Purchase Returns &
Allowances
Returned goods
Sales Returns &
Allowances
Cash
Makabayan
returned
goods
Freight out
Salaries Expense
Advertising Expense
Cash
Paid various expenses
Accounts Receivable
Sales
Sold goods on account
Accounts Payable
Cash
Purchase Discount
Merchandise invty
Paid Matino in full
Cash
Accounts receivable
Collected its account
Matutina, Drawing
Cash
Withdrawal made by
Matutina
Purchases
Cash
Purchase goods
Cash
Sales
Sold goods
F
10
50
Debit
500,000
71
30
455,700
71
30
105,800
10
60
550,400
30
20,000
Debit
500,000
13
30
455,700
13
30
105,800
10
60
550,400
Cost of goods sold
Merchandise Invty
Cost of goods sold
Accounts payable
Merchandise Invty
Returned goods
70
13
180,900
30
13
20,000
Sales Returns &
Allowances
Cash
Makabayan
returned
goods
Freight out
Salaries Expense
Advertising Expense
Cash
Paid various expenses
62
Accounts Receivable
Sales
Sold goods on account
11
60
690,800
Cost of goods sold
Merchandise inty
Cost of goods sold
Accounts Payable
Cash
Merchandise invty
Paid Matino in full
70
13
289,590
30
10
13
105,800
Cash
Accounts receivable
Collected its account
Matutina, Drawing
Cash
Withdrawal made by
Matutina
Merchandise Inventory
Cash
Purchase goods
10
11
207,240
51
10
55,890
13
10
190,800
450,700
Cash
Sales
Sold goods
10
60
450,700
190,800
Cost of goods sold
Merchandise Invty
Cost of goods sold
70
13
190,800
455,700
105,800
550,400
20,000
165,120
10
75
76
78
10
F
10
50
500,000
74
62
Perpetual Inventory Method
Credit
165,120
85,400
27,900
93,780
11
60
690,800
70
13
289,590
30
10
73
105,800
10
11
207,240
51
10
55,890
71
10
190,800
10
60
450,700
70
13
190,800
207,080
690,800
289,590
102,626
3,174
207,240
55,890
190,800
Particulars
Cash
Matutina,Capital
Investment made by
Matutina
Merchandise Inventory
Accounts Payable
Purchased goods on
account
Merchandise Inventory
Accounts Payable
Purchased goods on
account
Cash
Sales
Sold goods in cash
500,000
455,700
105,800
550,400
180,900
20,000
165,120
10
75
76
78
10
Credit
165,120
85,400
27,900
93,780
207,080
690,800
289,590
102,626
3,174
207,240
55,890
190,800
450,700
190,800
PERPETUAL INVENTORY METHOD
GENERAL LEDGER
CASH
Date
Feb 2
Feb 10
Feb 14
Feb 18
Feb 21
Feb 24
Feb 25
Feb 27
Feb 27
Particulars
Investment made by
Matutina
Sold goods in cash
Makabayan returned
goods
Paid various expenses
Paid Matino
Collected its account
Withdrawal made by
Matutina
Purchased goods
Sold goods
F
J1
Debit
500,000
J1
J1
550,400
J1
J1
J1
J1
J1
J1
Credit
165,120
207,080
102,626
207,240
55,890
190,800
450,700
ACCOUNTS RECEVABLE
Date
Feb 19
Feb 24
Particulars
Sold goods
Collected its account
F
J1
J1
Debit
690,800
Credit
297,240
MERCHANDISE INVENTORY
Date
Feb 4
Feb 7
Feb 10
Feb 12
Feb 19
Feb 21
Feb 27
Feb 27
Particulars
Purchased goods
Purchased goods
Cost of goods sold
Returned goods
Cost of goods sold
Paid Matino
Purchased goods
Sold goods
F
J1
J1
J1
J1
J1
J1
J1
J1
Debit
455,700
105,800
Credit
180,900
20,000
289,590
3,174
190,800
190,800
ACCOUNTS PAYABLE
Date
Feb 4
Feb 7
Feb 12
Feb 21
Particulars
Purchased goods
Purchased goods
Returned goods
Paid Matino
F
J1
J1
J1
J1
Debit
Credit
455,700
105,800
20,000
105,800
MATUTINA CAPITAL
Date
Feb 2
Particulars
Investment made by
Matutina
F
J1
Debit
Credit
Particulars
Withdrawals made by
Matutina
1,050,400
885,280
678,200
575,574
782,814
726,924
536,124
986,824
ACCOUNT NO. 11
Debit
Credit
(Balance)
(Balance)
690,800
483,560
ACCOUNT NO. 13
Debit
Credit
(Balance)
(Balance)
455,700
561,500
380,600
360,600
71,010
67,836
258,636
67,836
ACCOUNT NO. 30
Debit
Credit
(Balance)
(Balance)
455,700
561,500
541,500
435,700
ACCOUNT NO. 50
Debit
Credit
(Balance)
(Balance)
500,000
MATUTINA, DRAWING
Date
Feb 2
ACCOUNT NO. 10
Debit
Credit
(Balance)
(Balance)
500,000
F
J1
Debit
55,890
Credit
500,000
ACCOUNT NO. 51
Debit
Credit
(Balance)
(Balance)
55,890
SALES
Date
Feb 10
Feb 19
Feb 27
Particulars
Cash sales
Accounts sales
Cash sales
F
J1
J1
J1
Debit
Credit
550,400
690,800
450,700
SALE RETURNS AND ALLOWANCES
Date
Feb 14
Particulars
Returned goods
F
J1
Debit
165,120
Credit
COST OF GOODS SOLD
Date
Feb 10
Feb 19
Feb 27
Particulars
Cost of goods sold
Accounts sales
Cash sales
F
J1
J1
J1
Debit
180,900
289,590
190,800
Credit
FREIGHT OUT
Date
Feb 18
Particulars
Cash sales
F
J1
Debit
85,400
Credit
SALARIES EXPENSE
Date
Feb 18
Particulars
Paid salaries
F
J1
Debit
27,900
Credit
ADVERTISING EXPENSE
Date
Feb 18
Particulars
Paid Advertsing
F
J1
Debit
93,780
Credit
ACCOUNT NO. 60
Debit
Credit
(Balance)
(Balance)
550,400
1,241,200
1,691,900
ACCOUNT NO. 68
Debit
Credit
(Balance)
(Balance)
165,120
ACCOUNT NO. 70
Debit
Credit
(Balance)
(Balance)
180,900
470,490
661,290
ACCOUNT NO. 75
Debit
Credit
(Balance)
(Balance)
85,400
ACCOUNT NO. 76
Debit
Credit
(Balance)
(Balance)
27,900
ACCOUNT NO. 78
Debit
Credit
(Balance)
(Balance)
93,780
SUBSIDIARY LEDGER FOR ACCOUNTS PAYABLES
MAHARLIKA
Date
Feb 4
12
Particulars
2/10; N/30
Returned goods
F
J1
J1
Debit
Credit
455,700
Debit
(Balance)
Credit
(Balance)
455,700
435,700
Debit
(Balance)
Credit
(Balance)
105,800
0
Debit
(Balance)
690,800
483,560
Credit
(Balance)
20,000
MATINO
Date
Feb 4
21
Particulars
3/15;2/25;N/30
Paid the account in
full
F
J1
J1
Debit
Credit
105,800
105,800
SUBSIDIARY LEDGER FOR ACCOUNTS PAYABLES
MATIKAS INC.
Date
Feb 19
24
Particulars
Sold goods on account
Collected its account
F
J1
J1
Debit
690,800
Credit
297,240
TRIAL BALANCE
MATUTINA GENERAL MERCHANDISE
TRIAL BALANCE
FEBRUARY 28, 2017
Account No.
10
11
12
30
50
51
60
62
70
75
76
78
Account Title
Cash
Accounts Receivable
Merchandise Inventory
Accounts Payable
Matutina, Capital
Matutina, Drawing
Sales
Sales Returns & Allowances
Cost of Goods Sold
Freight Out
Salaries Expense
Advertising Expense
TOTAL
Debit
P 986,824
483,560
67,836
P
1,691,900
165,120
661,290
85,400
27,900
93,780
2,627,600
MATUTINA GENERAL MERCHANDISE
INCOME STATEMENT
FOR THE MONTH ENDED FEBRUARY 28, 2017
P 1,691,900
165,120
P1,526,780
661,290
865,490
85,400
27,900
93,780
207,080
P 658,410
MATUTINA GENERAL MERCHANDISE
STATEMENT OF OWNERS’ EQUITY
AS OF FEBRUARY 28, 2017
Matutina, Capital Beginning
Add: Net Income
Total
Less: Matutina, Drawing
MATUTINA, CAPITAL END
435,700
500,000
55,890
FINANCIAL STATEMENTS:
Sales
Less: Sales Returns & Allowances
Net Sales
Less: Cost of Goods Sold
Gross Profit
Less: Operating Expenses
Freight Out
Salaries
Advertising
Net Operating Expenses
NET INCOME
Credit
P
500,000
658,410
1,158,410
55,890
P 1,102,520
2,627,600
MATUTINA GENERAL MERCHANDISE
BALANCE SHEET
AS OF FEBRUARY 28, 2017
ASSETS
Current Assets
Cash and Cash Equivalent
Accounts Receivable
Merchandise Inventory
P 986,824
483,560
67,836
TOTAL ASSETS
P1,538,220
LIABILITIES AND OWNERS’ EQUITY
Current Liabilities
Accounts Payable
P435,700
Owners’ Equity
Matutina, Capital
1,102,520
TOTAL LIABILITIES AND OWNERS’ EQUITY
P1,538,220
MATUTINA GENERAL MERCHANDISE
STATEMENT OF CASH FLOW
AS OF FEBRUARY 28, 2017
Cash flows from Operating Activities:
Cash received from sales
Cash collections from customers
Cash refund from sales return
Cash payment of accounts payable
Cash payment of expenses
Cash purchased of goods
P 1,001,100
207,240
(165,120)
(102,626)
(207,080)
(190,800)
Net Cash Used in Operating Activities
Cash flows from Financing Activities:
Cash investments made by Matutina
Cash withdrawals made by Matutina
P 542,714
P
500,000
( 55,890)
Net Cash Provided by Financing Activities
444,110
Total Cash flows from all activities
986,824
Add: Cash beginning
CASH BALANCE, FEBRUARY 28, 2017
0
P 986,824
CLOSING ENTRIES:
Periodic Inventory Method
Date
Feb 28
Feb 28
Feb 28
Feb 28
Particulars
F
Debit
Perpetual Inventory Method
Credit
Particulars
Sales
Income Summary
To close accounts
with credit balances
and to establish the
ending balances
Income Summary
Sales Return and
Allowances
Cost of goods sold
Freight out
Salaries expense
Advertising expense
To close accounts with
debit balances
Income Summary
Matutina, Capital
To close the income
summary account
Matutina, Capital
Matutina, Drawing
To close the withdrawal
account
F
60
52
Debit
1,691,000
52
1,033,490
Credit
1,691,000
62
70
75
76
78
165,120
661,290
85,400
27,900
93,780
52
50
658,410
50
51
55,890
658,410
55,890
After the preparation of Closing Entries, the next step is to post all entries made to the
general ledger.
GENERAL LEDGER
CASH
Date
Feb 2
Feb 10
Feb 14
Feb 18
Feb 21
Feb 24
Feb 25
Feb 27
Feb 27
Particulars
Investment made by
Matutina
Sold goods in cash
Makabayan returned
goods
Paid various expenses
Paid Matino
Collected its account
Withdrawal made by
Matutina
Purchased goods
Sold goods
F
J1
Debit
500,000
J1
J1
550,400
J1
J1
J1
J1
J1
J1
Credit
165,120
207,080
102,626
207,240
55,890
190,800
450,700
ACCOUNTS RECEVABLE
Date
Feb 19
Feb 24
Particulars
Sold goods
Collected its account
F
J1
J1
Debit
690,800
Credit
297,240
MERCHANDISE INVENTORY
Date
Feb 4
Feb 7
Feb 10
Feb 12
Feb 19
Feb 21
Feb 27
Feb 27
Particulars
Purchased goods
Purchased goods
Cost of goods sold
Returned goods
Cost of goods sold
Paid Matino
Purchased goods
Sold goods
F
J1
J1
J1
J1
J1
J1
J1
J1
Debit
455,700
105,800
Credit
180,900
20,000
289,590
3,174
190,800
190,800
ACCOUNTS PAYABLE
Date
Feb 4
Feb 7
Feb 12
Feb 21
Particulars
Purchased goods
Purchased goods
Returned goods
Paid Matino
F
J1
J1
J1
J1
Debit
Credit
455,700
105,800
20,000
105,800
MATUTINA CAPITAL
Date
Feb 2
Feb 28
Feb 28
Particulars
Investment made by
Matutina
To close the income
summary
To close withdrawal
F
J1
CE
1
CE
1
Debit
Credit
500,000
658,410
55,890
ACCOUNT NO. 10
Debit
Credit
(Balance)
(Balance)
500,000
1,050,400
885,280
678,200
575,574
782,814
726,924
536,124
986,824
ACCOUNT NO. 11
Debit
Credit
(Balance)
(Balance)
690,800
483,560
ACCOUNT NO. 13
Debit
Credit
(Balance)
(Balance)
455,700
561,500
380,600
360,600
71,010
67,836
258,636
67,836
ACCOUNT NO. 30
Debit
Credit
(Balance)
(Balance)
455,700
561,500
541,500
435,700
ACCOUNT NO. 50
Debit
Credit
(Balance)
(Balance)
500,000
1,158,410
1,102,520
MATUTINA, DRAWING
Date
Feb 2
Feb 28
Particulars
withdrawals made by
Matutina
To close withdrawal
F
J1
Debit
Credit
55,890
CE
1
55,890
INCOME SUMMARY
Date
Feb 28
Feb 28
Feb 28
Particulars
To close all credit
balances
To close all debit
balances
To close the income
summary
F
CE
1
CE
1
CE
1
Debit
Credit
1,691,900
1,033,490
Particulars
Cash sales
Accounts sales
Cash sales
658,410
F
J1
J1
J1
Debit
Particulars
F
Returned goods
J1
To close the sales
CE1
returns and allowances
Credit
550,400
690,800
450,700
Debit
165,120
Credit
165,120
COST OF GOODS SOLD
Date
Feb 10
Feb 19
Feb 27
Particulars
Cost of goods sold
Accounts sales
Cash sales
F
J1
J1
J1
Debit
180,900
289,590
190,800
Credit
FREIGHT OUT
Date
Feb 18
Feb 28
Particulars
Cash sales
To close the freight
F
J1
CE
1
Debit
85,400
Credit
85,400
SALARIES EXPENSE
Date
Feb 18
Feb 28
Particulars
Paid salaries
To close the salaries
F
J1
CE
1
Debit
27,900
Credit
27,900
ADVERTISING EXPENSE
Date
Feb 18
Feb 28
Particulars
Paid Advertising
To close advertising
F
J1
CE
1
Debit
93,780
ACCOUNT NO. 52
Debit
Credit
(Balance)
(Balance)
1,691,900
0
SALE RETURNS AND ALLOWANCES
Date
Feb 14
Feb 28
55,890
0
658,410
SALES
Date
Feb 10
Feb 19
Feb 27
ACCOUNT NO. 51
Debit
Credit
(Balance)
(Balance)
Credit
93,780
ACCOUNT NO. 60
Debit
Credit
(Balance)
(Balance)
550,400
1,241,200
1,691,900
ACCOUNT NO. 68
Debit
Credit
(Balance)
(Balance)
165,120
0
ACCOUNT NO. 70
Debit
Credit
(Balance)
(Balance)
180,900
470,490
661,290
ACCOUNT NO. 75
Debit
Credit
(Balance)
(Balance)
85,400
0
ACCOUNT NO. 76
Debit
Credit
(Balance)
(Balance)
27,900
0
ACCOUNT NO. 78
Debit
Credit
(Balance)
(Balance)
93,780
0
POST CLOSING TRIAL BALANCE
MATUTINA GENERAL MERCHANDISE
POST-CLOSING TRIAL BALANCE
FEBRUARY 28, 2017
Account No.
10
11
13
30
50
Account Title
Cash
Accounts Receivable
Merchandise Inventory
Accounts Payable
Matutina, Capital
Debit
P986,824
483,560
67,836
Credit
P 435,700
1,102,520
TOTAL
P1,538,220
P1,538,220
ADJUSTING ENTRIES:
Item # 1
Item # 2
Adjusting Entry
Date
December 31, 2017
July 31, 2017
Debit
Insurance Expense
Unearned Rent
Credit
Prepaid Insurance
Rent Income
Amount
Solution:
1. December 1
P1,000
Prepaid Insurance
Cash
Note: 1 month expired
December 31 Insurance Expense
Prepaid Insurance
2. July 31
Cash
Unearned Rent
P150,000
12,000
12,000
1,000
1,000
450,000
Note: 1/3 of P450,000 is considered earned
Unearned Rent
150,000
Rent Income
450,000
150,000
3. Cost/Useful life = 160,000/4 = 40,000 x 6/12 = 20,000
Note: 6 months depreciated
Item # 3
June 30, 2018
Depreciation
Expense-Office
Equipment
Accumulated
Depreciation –
Office Equipment
P20,000
PERIODIC INVENTORY METHOD
GENERAL LEDGER
CASH
Date
Feb 2
Feb 10
Feb 14
Feb 18
Feb 21
Feb 24
Feb 25
Feb 27
Feb 27
Particulars
Investment made by
Matutina
Sold goods in cash
Makabayan returned
goods
Paid various expenses
Paid Matino
Collected its account
Withdrawal made by
Matutina
Purchased goods
Sold goods
F
J1
Debit
500,000
J1
J1
550,400
J1
J1
J1
J1
J1
J1
Credit
165,120
207,080
102,626
207,240
55,890
190,800
450,700
ACCOUNTS RECEVABLE
Date
Feb 19
Feb 24
Particulars
Sold goods
Collected its account
F
J1
J1
Debit
690,800
Credit
297,240
ACCOUNTS PAYABLE
Date
Feb 4
Feb 7
Feb 12
Feb 21
Particulars
Purchased goods
Purchased goods
Returned goods
Paid Matino
F
J1
J1
J1
J1
Debit
Credit
455,700
105,800
20,000
105,800
MATUTINA CAPITAL
Date
Feb 2
Particulars
Investment made by
Matutina
F
J1
Debit
Credit
Particulars
Withdrawals made by
Matutina
F
J1
Debit
Credit
55,890
Particulars
Cash sales
Accounts sales
Cash sales
F
J1
J1
J1
Debit
Credit
550,400
690,800
450,700
SALE RETURNS AND ALLOWANCES
Date
Feb 14
Particulars
Returned goods
678,200
575,574
782,814
726,924
536,124
986,824
ACCOUNT NO. 11
Debit
Credit
(Balance)
(Balance)
690,800
483,560
ACCOUNT NO. 30
Debit
Credit
(Balance)
(Balance)
455,700
561,500
541,500
435,700
ACCOUNT NO. 50
Debit
Credit
(Balance)
(Balance)
F
J1
Debit
165,120
500,000
ACCOUNT NO. 51
Debit
Credit
(Balance)
(Balance)
55,890
SALES
Date
Feb 10
Feb 19
Feb 27
1,050,400
885,280
500,000
MATUTINA, DRAWING
Date
Feb 2
ACCOUNT NO. 10
Debit
Credit
(Balance)
(Balance)
500,000
Credit
ACCOUNT NO. 60
Debit
Credit
(Balance)
(Balance)
550,400
1,241,200
1,691,900
ACCOUNT NO. 68
Debit
Credit
(Balance)
(Balance)
165,120
PURCHASE
Date
Feb 4
Feb 7
Feb 27
Particulars
Puchased goods
Purchased goods
Purchased goods
F
J1
J1
J1
Debit
455,700
105,800
190,800
Credit
PURCHASE DISCOUNT
Date
Feb 21
Particulars
Paid Matino full
F
Debit
Credit
3,174
PURCHASE RETURNS AND ALLOWANCE
Date
Feb 12
Particulars
Returned goods
F
Debit
Credit
20,000
FREIGHT OUT
Date
Feb 18
Particulars
Cash sales
F
J1
Debit
85,400
Credit
SALARIES EXPENSE
Date
Feb 18
Particulars
Paid salaries
F
J1
Debit
27,900
Credit
ADVERTISING EXPENSE
Date
Feb 18
Particulars
Paid Advertising
F
J1
Debit
93,780
Credit
ACCOUNT NO. 71
Debit
Credit
(Balance)
(Balance)
455,700
561,500
752,300
ACCOUNT NO. 73
Debit
Credit
(Balance)
(Balance)
3,174
ACCOUNT NO. 74
Debit
Credit
(Balance)
(Balance)
20,000
ACCOUNT NO. 75
Debit
Credit
(Balance)
(Balance)
85,400
ACCOUNT NO. 76
Debit
Credit
(Balance)
(Balance)
27,900
ACCOUNT NO. 78
Debit
Credit
(Balance)
(Balance)
93,780
TRIAL BALANCE
MATUTINA GENERAL MERCHANDISE
TRIAL BALANCE
FEBRUARY 28, 2017
Account No.
10
11
30
50
51
60
62
71
73
74
75
76
78
Account Title
Cash
Accounts Receivable
Accounts Payable
Matutina, Capital
Matutina, Drawing
Sales
Sales Returns & Allowances
Purchases
Purchase Discount
Purchase Returns & Allowances
Freight Out
Salaries Expense
Advertising Expense
TOTAL
Debit
P 986,824
483,560
P
435,700
500,000
55,890
1,691,900
165,120
752,300
3,174
20,000
85,400
27,900
93,780
2,650,774
FINANCIAL STATEMENTS:
MATUTINA GENERAL MERCHANDISE
INCOME STATEMENT
FOR THE MONTH ENDED FEBRUARY 28, 2017
Sales
P 1,691,900
Less: Sales Returns & Allowances
165,120
Net Sales
1,526,780
Less: Cost of Goods Sold
Purchases
752,300
Less: Purchase Returns & Allowance 20,000
Purchase Discount
3,174
23,174
Total Goods Available for Sales
729,126
Less: Merchandise Inventory, end
67,836
661,290
Gross Profit
865,490
Less: Operating Expenses
Freight Out
85,400
Salaries
27,900
Advertising
93,780
Net Operating Expenses
207,080
NET INCOME
P 658,410
MATUTINA GENERAL MERCHANDISE
STATEMENT OF OWNERS’ EQUITY
AS OF FEBRUARY 28, 2017
Matutina, Capital Beginning
Add: Net Income
Total
Less: Matutina, Drawing
MATUTINA, CAPITAL END
Credit
P
500,000
658,410
1,158,410
55,890
P 1,102,520
2,650,774
MATUTINA GENERAL MERCHANDISE
BALANCE SHEET
AS OF FEBRUARY 28, 2017
ASSETS
Current Assets
Cash and Cash Equivalent
Accounts Receivable
Merchandise Inventory, end
P 986,824
483,560
67,836
TOTAL ASSETS
P1,538,220
LIABILITIES AND OWNERS’ EQUITY
Current Liabilities
Accounts Payable
P435,700
Owners’ Equity
Matutina, Capital
1,102,520
TOTAL LIABILITIES AND OWNERS’ EQUITY
P1,538,220
MATUTINA GENERAL MERCHANDISE
STATEMENT OF CASH FLOW
AS OF FEBRUARY 28, 2017
Cash flows from Operating Activities:
Cash received from sales
Cash collections from customers
Cash refund from sales return
Cash payment of accounts payable
Cash payment of expenses
Cash purchased of goods
P 1,001,100
207,240
(165,120)
(102,626)
(207,080)
(190,800)
Net Cash Used in Operating Activities
Cash flows from Financing Activities:
Cash investments made by Matutina
Cash withdrawals made by Matutina
P 542,714
P
500,000
( 55,890)
Net Cash Provided by Financing Activities
444,110
Total Cash flows from all activities
986,824
Add: Cash beginning
CASH BALANCE, OCTOBER 31, 2017
0
P 986,824
CLOSING ENTRIES:
Periodic Inventory Method
Date
Feb 28
Feb 28
Feb 28
Feb 28
Particulars
Merchandise Inventory
Sales
Purchase Discount
Purchase Returns &
Allowances
Income Summary
To close accounts
with credit balances
and to establish the
ending balances
Income Summary
Sales Return and
Allowances
Purchases
Freight out
Salaries expense
Advertising expense
To close accounts with
debit balances
F
13
60
73
Debit
67,836
1,691,900
3,174
74
52
20,000
52
1,124,500
Income Summary
Matutina, Capital
To close the income
summary account
Matutina, Capital
Matutina, Drawing
To
close
the
withdrawal account
52
50
658,410
50
51
55,890
Perpetual Inventory Method
Credit
1,782,910
62
71
75
76
78
165,120
752,300
85,400
27,900
93,780
658,410
55,890
Particulars
F
Debit
Credit
After the preparation of Closing Entries, the next step is to post all entries made to the
general ledger.
GENERAL LEDGER
CASH
Date
Feb 2
Feb 10
Feb 14
Feb 18
Feb 21
Feb 24
Feb 25
Feb 27
Feb 27
Particulars
Investment made by
Matutina
Sold goods in cash
Makabayan returned
goods
Paid various expenses
Paid Matino
Collected its account
Withdrawal made by
Matutina
Purchased goods
Sold goods
F
J1
Debit
500,000
J1
J1
550,400
J1
J1
J1
J1
J1
J1
Credit
165,120
207,080
102,626
207,240
55,890
190,800
450,700
ACCOUNTS RECEVABLE
Date
Feb 19
Feb 24
Particulars
Sold goods
Collected its account
F
J1
J1
Debit
690,800
Credit
297,240
ACCOUNTS PAYABLE
Date
Feb 4
Feb 7
Feb 12
Feb 21
Particulars
Purchased goods
Purchased goods
Returned goods
Paid Matino
F
J1
Debit
Credit
455,700
105,800
20,000
105,800
MATUTINA, CAPITAL
Date
Feb 2
Feb 28
Feb 28
Particulars
Investment made by
Matutina
To close the income
summary
To close withdrawal
F
J1
CE
1
CE
1
Debit
Credit
Feb 28
Particulars
withdrawals made by
Matutina
To close withdrawal
F
J1
Feb 28
Feb 28
Particulars
To close all credit
balances
To close all debit
balances
To close the income
summary
536,124
986,824
ACCOUNT NO. 11
Debit
Credit
(Balance)
(Balance)
690,800
483,560
ACCOUNT NO. 30
Debit
Credit
(Balance)
(Balance)
455,700
561,500
541,500
435,700
ACCOUNT NO. 50
Debit
Credit
(Balance)
(Balance)
500,000
1,158,410
1,102,520
Debit
Credit
55,890
CE
1
F
CE
1
CE
1
CE
1
678,200
575,574
782,814
726,924
55,890
55,890
INCOME SUMMARY
Date
Feb 28
1,050,400
885,280
500,000
658,410
MATUTINA, DRAWING
Date
Feb 2
ACCOUNT NO. 10
Debit
Credit
(Balance)
(Balance)
500,000
Debit
1,033,490
658,410
Credit
1,691,900
ACCOUNT NO. 51
Debit
Credit
(Balance)
(Balance)
55,890
0
ACCOUNT NO. 52
Debit
Credit
(Balance)
(Balance)
1,691,900
658,410
0
SALES
Date
Feb 10
Feb 19
Feb 27
Feb 28
Particulars
Cash sales
Accounts sales
Cash sales
To close the sales
F
J1
CE1
Debit
Credit
550,400
690,800
450,700
1,691,900
SALE RETURNS AND ALLOWANCES
Date
Feb 14
Feb 28
Particulars
F
Returned goods
J1
To close the sales
CE1
returns and allowances
Debit
165,120
Credit
165,120
PURCHASE
Date
Feb 4
Feb 7
Feb 27
Feb 28
Particulars
Puchased goods
Purchased goods
Purchased goods
To close the purchases
F
J1
Debit
455,700
105,800
190,800
CE1
Credit
752,300
PURCHASE DISCOUNT
Date
Feb 21
Feb 28
Particulars
Paid Matino full
To close the purchase
discount
F
CE1
Debit
Credit
3,174
3,174
PURCHASE RETURNS AND ALLOWANCE
Date
Feb 12
Feb 28
Particulars
F
Returned goods
To close the purchase CE1
returns and allowances
Debit
Credit
20,000
20,000
FREIGHT OUT
Date
Feb 18
Feb 28
Particulars
Cash sales
To close the freight
F
J1
CE
1
Debit
85,400
Credit
85,400
SALARIES EXPENSE
Date
Feb 18
Feb 28
Particulars
Paid salaries
To close the salaries
F
J1
CE
1
Debit
27,900
Credit
27,900
ADVERTISING EXPENSE
Date
Feb 18
Feb 28
Particulars
Paid Advertising
To close advertising
F
J1
CE
1
Debit
93,780
Credit
93,780
ACCOUNT NO. 60
Debit
Credit
(Balance)
(Balance)
550,400
1,241,200
1,691,900
0
ACCOUNT NO. 68
Debit
Credit
(Balance)
(Balance)
165,120
0
ACCOUNT NO. 71
Debit
Credit
(Balance)
(Balance)
455,700
561,500
752,300
0
ACCOUNT NO. 73
Debit
Credit
(Balance)
(Balance)
3,174
0
ACCOUNT NO. 74
Debit
Credit
(Balance)
(Balance)
20,000
0
ACCOUNT NO. 75
Debit
Credit
(Balance)
(Balance)
85,400
0
ACCOUNT NO. 76
Debit
Credit
(Balance)
(Balance)
27,900
0
ACCOUNT NO. 78
Debit
Credit
(Balance)
(Balance)
93,780
0
MATUTINA GENERAL MERCHANDISE
POST-CLOSING TRIAL BALANCE
FEBRUARY 28, 2017
Account No.
10
11
13
30
50
Account Title
Cash
Accounts Receivable
Merchandise Inventory, end
Accounts Payable
Matutina, Capital
Debit
P986,824
483,560
67,836
Credit
P 435,700
1,102,520
TOTAL
P1,538,220
P1,538,220
ADJUSTING ENTRIES:
Item # 1
Item # 2
Adjusting Entry
Date
December 31, 2017
July 31, 2017
Debit
Insurance Expense
Unearned Rent
Credit
Prepaid Insurance
Rent Income
Amount
Solution:
1. December 1
P1,000
Prepaid Insurance
Cash
Note: 1 month expired
December 31 Insurance Expense
Prepaid Insurance
2. July 31
Cash
Unearned Rent
P150,000
12,000
12,000
1,000
1,000
450,000
Note: 1/3 of P450,000 is considered earned
Unearned Rent
150,000
Rent Income
450,000
150,000
3. Cost/Useful life = 160,000/4 = 40,000 x 6/12 = 20,000
Note: 6 months depreciated
Item # 3
June 30, 2018
Depreciation
Expense-Office
Equipment
Accumulated
Depreciation –
Office Equipment
P20,000