Instructions: Illustrate the entire accounting cycle of a merchandising business using sample transactions below of PHILASIA DISTRIBUTORS for the month of April, 2016 under Perpetual Inventory System CASE PROBLEM: PHILASIA DISTRIBUTORS April 1|Page 1 The business PHILASIA DISTRIBUTORS was registered as a single proprietorship with the Department of Trade and Industry. Juan Lopez invested P19,000 2 Bought computer equipment for 10,000 cash 2 Bought merchandise on account from LOWTON Supply Co., P15,900, terms 2/10, n/ 30 3 Bought office supplies on cash basis for P700 4 Sold merchandise on account P15,200, FOB Destination, terms 2/10, n/30. The cost of merchandise sold was P12,200 to Team Power 5 Paid P200 freight on April 4 sale. 6 Received credit from LOWTON Supply Co. for merchandise returned P300.00 11 Paid LOWTON 13 Collected from April 4 customers 14 Bought merchandise on cash basis for P14,400 15 Salaries paid P1,500 16 Borrowed money from RCBC Bank signed a promissory note for P12,000 17 Received refund from a supplier on cash purchase of April 14, P500 18 Bought merchandise from MESDA, P14,200, FOB Shipping point, terms 2/10, n/30 20 Paid freight on April 18 purchase P700 23 Sold merchandise for P16,400. The merchandise sold had a cost of P10,500 26 Bought merchnadise for cash P12,300 27 Paid MESDA on the April 18 purchase, P9,000. No discount allowed on partial payment. 28 J. Lopez got cash from the business P2,008 29 Made refund to cash customers for defective merchandise, P900 30 Sold merchandise on account P13,700, n/30 Cost of merchnadise sold is P11,000 30 Paid the following: Advertising P1,000, Utilities P400, Rent P3,500, Salaries, P1,500 PHILASIA DISTRIBUTORS CHART OF ACCOUNTS Use for Journalizing and Posting to the Ledger 100 101 105 115 120 150 200 210 202 300 310 302 ASSETS CASH ACCOUNT RECEIVABLE MERCHANDISE INVENTORY SUPPPLIES EQUIPMENT LIABILITIES ACCOUNTS PAYABLE NOTES PAYABLE EQUITY LOPEZ, CAPITAL LOPEZ, DRAWINGS 100 101 105 115 120 150 200 201 202 300 301 302 PHILASIA DISTRIBUTORS CHART OF ACCOUNTS Use for Financial Statement Preparation ASSESTS 400 INCOME Cash & Cash Equivalents 401 NET SALES Receivables 405 Inventories 410 Prepaid Expenses 500 EXPENSES Property, Plant & Equipment 501 Cost of Good Sold LIABILITIES 503 Advertising Expense Accounts Payable 506 Freight Out Notes Payable 510 Rent Expense EQUITY 530 Salaries Lopez, Capital 540 Utilities Lopez, Drawings 400 401 405 410 500 501 503 506 510 530 540 601 INCOME SALES SALES RETURNS AND ALLOWANCES SALES DISCOUNTS EXPENSES COST OF GOOD SOLS ADVSERTISING EXPENSE FREIGHT OUT RENT EXPENSES SALARIES UTILITIES INCOME SUMMARY GENERAL JOURNAL GENERAL JOURNAL PAGE NUMBER 1 PAGE NUMBER 2 DATE DATE 2|Page DESCRIPTION DESCRIPTION REF DEBIT DEBIT CREDIT CREDIT REF GENERAL JOURNAL PAGE NUMBER 3 DATE GENERAL LEDGER GL 1 Account DESCRIPTION REF DEBIT CREDIT 101 CASH Balance Date Item Post Account 105 Item Post Account 115 Item Post Debit Credits Debit Credit ACCOUNTS RECEIVABLE Balance Date Debit Credits Debit Credit MERCHANDISE INVENTORY Balance Date 3|Page Debit Credits Debit Credit GENERAL LEDGER LEDGER GL 2 GL 3 GENERAL AccountAccount120 Date Date Item Account Date Post Item SUPPLIES SALES 401 Post Debit Debit 150 ItemAccountPost Credits Credits Debit Balance Balance Credit Debit Credit EQUIPMENT Balance Credits DebitALLOWANCES Credit SALES RETURN AND 405 Debit Balance Date Item Account 201 Item Post Post Debit Credits Debit Credit ACCOUNTS PAYABLE Balance Date Debit Account 410 Item Post Credits Debit Credit SALES DISCOUNTS Balance Date Account 202 Item Post Debit Credits Debit Credit NOTES PAYABLE Balance Date Debit Account 501 Item Post Credits Debit Credit COST OF GOOD SOLS Balance Date Account 301 Item Post Debit Credits Debit Credit LOPEZ, CAPITAL Balance Date Account Account Date Date 4|Page Credits 503 Post Debit Credit ADVERTISING EXPENSE 302 Item Item Debit Balance LOPEZ, DRAWING Post Debit Debit Balance Debit Credits Credits Debit Credit Credit GENERAL LEDGER GL 4 Account 506 FREIGHT OUT Balance Date Item Post Account 510 Item Post Account 530 Item Post Account 540 Item Post Account 600 Item Post Debit Credits Debit Credit RENT EXPENSE Balance Date Debit Credits Debit Credit SALARIES Balance Date Debit Credits Debit Credit UTILITIES Balance Date Debit Credits Debit Credit INCOME SUMMARY Balance Date 5|Page Debit Credits Debit Credit PHILASIA DISTRIBUTORS TRIAL BALANCE APRIL 30, 2016 ACCOUNT TITLES 101 105 115 120 150 201 202 301 302 401 405 410 501 503 506 510 530 540 TOTALS 6|Page Cash Accounts Receivable Merchandise Inventory supplies Equipment Accounts Payable Notes Payable Lopez, Capital Lopez, Drawings SALES Sales Return Sales Discount Cost of Good Sold Advertising Freight Out Rent Salaries Utilities DEBIT CREDIT PHILASIA DSITRIBUTORS STATEMENT OF FINANCIAL POSITION APRIL 30, 2016 (IN PESOS) ASSETS CURRENT ASSETS CASH AND CASH EQUIVALENTS RECEIVABLES INVENTORIES PREPAID EXPENSES TOTAL CURRENT ASSETS NON CURRENT ASSETS PROPERTY, PLANT & EQUIPMENT TOTAL ASSETS LIABILITIES & EQUITY CURRENT LIABILITIES ACCOUNTS PAYABLE NON CURRENT LIABILITIES NOTES PAYABLE TOTAL LIABILITIES OWNER'S EQUITY LOPEZ CAPITAL TOTAL LIABILITIES AND EQUITY 7|Page PHILASIA DSITRIBUTORS STATEMENT OF PERFORMANCE FOR THE PERIOD ENDED APR 30, 2016 (IN PESOS) NET SALES LESS: COST OF SALES GROSS PROFIT LESS: OPERATING EXPENSES FREIGHT OUT ADVERTISING RENT SALARIES UTILITIES TOTAL EXPENSES NET PROFIT PHILASIA DSITRIBUTORS STATEMENT OF CASH FLOWS APRIL 30, 2016 (IN PESOS) CASH FLOW FROM OPERATING ACTIVITIES CASH RECEIVED FROM SALES RECEIVABLE COLLECTION REFUND FROM PURCHASES PAYMENT FOR OFFICE SUPPLIES FREIGHT ON SOLD GOODS GOODS BOUGHT OPEX OPERATING EXPENSES REFUND TO CUSTOMERS FREIGHT PURCHASES NET CASH FLOW FROM OPERATING ACTIVITIES CASH FLOW FROM INVESTING ACTIVITIES COMPUTER EQUIPMENT BOUGHT PHILASIA DSITRIBUTORS STATEMENT OF EQUITY FOR THE PERIOD ENDED APR 30, 2016 (IN PESOS) J. LOPEZ, CAPITAL INITIAL INVESTMENT DRAWINGS NET PROFIT J. LOPEZ, CAPITAL APRIL 30 8|Page CASH FLOW FROM FINANCING ACTIVITIES INITIAL INVESTMENTS BORROWINGS DRAWINGS NET CASH FLOW FROM FINANCING ACTIVITIES INCREASE IN CASH AND CASH EQUIVALENTS ADD CASH AND CASH EQUIVALENTS, BEG CASH AND CASH EQUIVALENTS, APR 30 GENERAL JOURNAL GJ 4 DATE DESCRIPTION April 30 SALES INCOME SUMMARY SALES RETURN & ALLOWANCES SALES DISCOUNTS INCOME SUMMARY COST OF GOOD SOLD ADVERTISING FREIGHT OUT RENT SALARIES UTILITIES INCOME SUMMARY J. LOPEZ, CAPITAL J. LOPEZ ,CAPITAL J. LOPEZ, DRAWING 9|Page REF CLOSING JOURNAL ENTRIES DEBIT CREDIT PHILASIA DISTRIBUTORS POST CLOSING TRIAL BALANCE APRIL 30, 2016 (IN PESOS) DEBIT 101 Cash 105 Accounts Receivable 115 Merchandise Inventory 120 supplies 150 Equipment 201 Accounts Payable 202 Notes Payable 301 Lopez, Capital TOTALS CREDIT CASE PROBLEM 2 SET 1 2.1 Fax company borrowed P100,000 on December 1 by signing a six month note that specifies interest at an annual percentage rate (APR) of 12%. No interest or principal payment is due until the note matures on May 31. FAX Company prepares financial statements at the end of each calendar month. Provide an answer for the month end of January only. ACCOUNTING PRACTICE SET 1 FOR MERCHANDISING BUSINESS 2.2 In December 1, box paid its insurance agent P2,400 for the annual insurance premuim covering the twelve month period beginning on December 1. The 2,400 payment was recorded on December 1 with a debit to the current asset Prepaid Insurance and a credit ton the current cash. Box Company prepares monthly financial statements at the end of each calendar month. Provide as answer for the month ean of March only. 2.3 On December 1, SOX began Operations. On December 4 , it purchased P1,500 of supplies and recorded the transaction with a debit to the income statement account supplies expense and a credit to the current liability account payable. SOX prepares monthly finacial statements at the end of each calendar month. At the end of the day on December 31, SOX Company estimated that P700 of the supplies were still on hand in the supply room. Requirement: answewr the questions pertaining tonthe adjustingf entries for each the three cases . Use the answer sheet provided for Case 2 Set1 What is the… CASE 2.1 CASE 2.2 CASE 2.3 NAME: ___________________________________________ GRADE/ SECTION: ________________________________________ Date of adjusting entry Debit account title Credit account title Debit & Credit Amount 10 | P a g e
