I. Prepare the journal entries and post them accordingly to the general ledger.

Sept 1 Daryl Arandia invested P100,000 worth of furniture & fixtures and P 60,000 cash of which
P20,000 was deposited in the bank for his business, DA Trading Corp. DA Trading uses
the perpetual inventory system.

1 He hired three employees with a monthly salary of P12,000 each.

2 Purchased computer equipment from Ali Bautista for P40,000. He paid P20,000 cash,
balance 2/5, n/15
3 Purchased 10,000 worth of merchandise. Terms 2/10, n/30 FOB Destination
4 Paid 3,000 rent for the month of September by issuing a check.
5 Bought office supplies worth P1,500 from Pael Corp. (Use asset method)
6 Sold merchandise costing 5,000 to CD Corp. The company’s mark up on regular sales is
25% on cost. Terms 2/10, n/30, FOB Destination. Da Trading paid for the freight of P500.
7 Additional Investment : Cash deposited in the bank P20,000
8 Purchased merchandise with a list price of P25,000 from WR Inc. Term, 5%. 2/10, n/30,
FOB Shipping Point, Freight Collect.
9 Received a P1,000 allowance from Ali for the slightly damaged equipment which is to be
deducted from the balance of the unpaid account.
10 Daryl withdrew cash P2,000 from the bank.
11 Check was issued to pay Ali in full.
12 Sold merchandise to WR Corp. costing 10,000 for a 25% mark up rate. Terms 2/10, n/30.
Two days after the customer returned goods costing 1,000 due to defective quality.
13 An employee applied for a cash advance and was immediately approved, P1,500.
14 Paid salaries of employees. Said amount was withdrawn from the bank.
15 Borrowed P80,000, 12%, one year loan from the bank. Said amount was directly credited
to the bank.
16 CD paid its account in full.
17 Deposited P3,000 in the bank.
18 Paid Meralco bill, P2,000; PLDT P1,500
30 Paid salaries of employees less SSS/EC, Philhealth, Pagibig. Pagibig deduction is P100 per
employee. Employee salary advances is also deducted.
31 Paid one year insurance P12,000 (Asset method)
SSS – 3.36% of month salary
Philhealth – 2.5% of monthly salary

Additional information:
a. The engineering equipment was estimated to have a useful life of 5 years
b. Unused supplies at the end of the period amounted to P500.
c. It is estimated that 2% of services on account are uncollectible.

Chart of Accounts

Account No. Account Title

01 Cash on Hand
02 Cash in Bank
03 Accounts receivable
04 Allowance for Doubtful Accounts
05 Advances to employees
06 Prepaid office supplies
07 Prepaid insurance
08 Merchandise Inventory
09 Furniture and Fixtures
10 Accumulated depreciation – Furniture and Fixtures
11 Computer Equipment
12 Accumulated depreciation - Computer equipment
20 Accounts payable
21 Notes payable
22 SSS Contribution Payable
23 Pagibig Contributions Payable
24 Philhealth Contributions Payable
25 Withholding Tax Payable
26 Loan Payable
30 Daryl Arandia, Drawing
31 Daryl Arandia, Capital
40 Sales
41 Sales Discount
42 Sales Returns and Allowances
50 Cost of Goods Sold
51 Salaries Expense
52 Office supplies Expense
53 Utilities expense
54 Rent expense
55 SSS Contribution Expense
56 Philhealth Contribution Expense
57 EC Contribution Expense
58 Pagibig Contribution Expense
59 Insurance Expense
60 Depreciation Expense
61 Interest Expense

I. Prepare bank reconciliation for the month of August.

The bank statement for August 2018 shows an ending balance of P3,490.

On August 31 the bank statement shows charges of P35 for the service charge for maintaining the
checking account.

On August 28 the bank statement shows a return item of P100 plus a related bank fee of P10. The
return item is a customer's check that was returned because of insufficient funds. The check was
also marked "do not redeposit."

The bank statement shows a charge of P80 for check printing on August 20.

The bank statement shows that P8 was added to the checking account on August 31 for interest
earned by the company during the month of August.

The bank statement shows that a note receivable of P1,000 was collected by the bank on August 29
and was deposited into the company's account. On the same day, the bank withdrew P40 from the
company's account as a fee for collecting the note receivable.

The company's Cash account at the end of August shows a balance of P967.

During the month of August the company wrote checks totaling more than P50,000. As of August 31
P3,021 of the checks written in August had not yet cleared the bank and P200 of checks written in
June had not yet cleared the bank.
The P1,450 of cash received by the company on August 31 was recorded on the company's books
as of August 31. However, the P1,450 of cash receipts was deposited at the bank on the morning of
September 1.

On August 29 the company's Cash account shows cash sales of P145. The bank statement shows
the amount deposited was actually P154. The company reviewed the transactions and found that
P154 was the correct amount.