MERCHANDISING PROBLEM

PERIODIC INVENTORY

The transactions of A. Arias for the month of December, 2018 were the following:

Dec. 1 - Started business under the name of ARIAS Trading with the investments of
cash P600,000 and merchandise of Php 100,000. Paid rent for the month, Php 4,000.
Bought furniture and equipment from F.E. Company on credit, Php 40,000.
Dec. 3 - Purchased merchandise in cash, Php 200,000.
Dec. 3 - purchased merchandise on account from Jose Brown, Php 100,000. Terms: 2/10, n/30.
Dec. 4 - Sold merchandise onaccount to Juan Cruz. Php 60,000. Terms: 3/10, n/30.
Dec. 6 - Sold merchandise for cash to various customers, Php 110,000.
Dec. 7 - Returned to Jose Brown merchandise worth Php 10,000 on account of defect in quality.
Jose Brown issued a credit memo for the same amount.
Dec. 7 - Purchased merchandise on account from Perdro Oria, Php 160,000. Terms: 2/10, 1/20,
n/60.
Dec. 7 - Paid Php 3,000 freight to Serrano Trucking for the delivery of the merchandise bought
from pedro Oria.
Dec. 10 - Paid general expenses, Php 9,000.
Dec. 12 - Sold to various customers, Php 120,000.
Dec. 13 - A, Arias withdrew for personal use the following : cash, Php 4,000 and merchandise
costing, Php 2,000.
Dec. 13 - Paid account to Jose brown in full less the discount of 2%.
Dec. 14 - Collected account from Juan Cruz in full the discount allowed.
Dec. 15 - Paid salaries of employees, Php 10,000.
Dec. 15 - Purchased merchandise on account from Jose brown, Php 240,000. Terms: 2/10, n/30.
Dec. 16 - Soldto Mary David on account, Php 150,000. Tems n/60. Cash Sales, Php 40,000.
Dec. 16 - Paid selling expenses, Php 4,000.
Dec. 18 - Issued a credit memo to mary David for merchandise returned , Php 12,000.
Dec. 18 - Sold to Nick Trono on account. Php 30,000. Terms: 2/10, n/30.
Dec. 22 - Paid Php 18,000 to F.E. company to apply partially on account. Cash sales Php 80,000.
Dec. 25 - Paid general expenses, Php 3,000.
Dec. 27 - Paid in full, the account to Pedro Oria.
Dec. 31 - Paid salaries of Employees, Php 10,000. Cash sales, Php 40, 000.
Dec. 31 - Sold on account to Ted Cloma, Php 40,000. Terms: 2/10, n/30 (actual count showed
merchandise inventory on December 31 of Php 271,400).

REQUIRED:
1. Journal Entries
2. Ledger
3. Trial Balance
4. Statement of Cost of Good Sold
5. Statement of Financial Performance
6. Statement of Changes in Owners Equity
7. Statement of Financial Position
8. Statement of Cash flows
9. Closing Entries
10. Post-Closing Trial Balance
 Page 1
Date Account Title and Explanations P.R. Debit Credit
20A
December 1 Cash 110 600,000
Merchandise Inventory 130 100,000
Arias, Capital 310 700,000

1 Rent Expense 620 4,000

Cash 110 4,000

1 Furniture and Equipment 140 40,000

Accounts Payable 210 40,000

3 Purchases 510 200,000

Cash 110 200,000

3 Purchases 510 100,000

Accounts Payable 210 100,000

4 Accounts Receivables 120 60,000

Sales 410 60,000

6 Cash 110 110,000

Sales 410 110,000

7 Accounts Payable 210 10,000

Purchase Returns and Allowances 511 10,000

7 Purchases 510 160,000

Accounts Payable 210 160,000

7 Freight In 516 3,000

Cash 110 3,000
 Page 2
Date Account Title and Explanations P.R. Debit Credit
20A
December 10 General Expense 610 9,000.00
Cash 110 9,000.00

12 Cash 110 120,000

Sales 410 120,000

13 Arias, Drawings 320 6,000

Cash 110 4,000
Purchases 510 2,000

13 Accounts Payable 210 90,000

Cash 110 88,200
Purchase Discount 512 1,800

14 Cash 110 58,200

Sales Discount 412 1,800
Accounts Receivable 120 60,000

15 Salaries Expense 630 10,000

Cash 110 10,000

15 Purchases 510 240,000

Accounts Payable 210 240,000

16 Accounts Receivable 120 150,000

Sales 410 150,000

16 Cash 110 40,000

Sales 410 40,000

16 Selling Expenses 640 4,000

 Cash 110 4,000

Page 3
Date Account Title and Explanations P.R. Debit Credit
20A
December 18 Sales Returns and Allowances 411 12,000
Accounts Receivable 120 12,000

18 Accounts Receivable 120 30,000

Sales 410 30,000

22 Accounts Payable 210 18,000

Cash 110 18,000

22 Cash 110 80,000

Sales 410 80,000

25 General Expenses 610 3,000

Cash 110 3,000

27 Accounts Payable 210 160,000

Cash 110 158,400
Purchase Discount 1,600

31 Salaries Expense 630 10,000

Cash 110 10,000

31 Cash 110 40,000

Sales 410 40,000

31 Accounts Receivable 120 40,000

Sales 410 40,000
NOTE:
PESOS SIGN AT THE FIRST AMOUNT OF DEBIT, CREDIT FOR EACH PAGE
DON’T FORGET TO INDICATE THE POST REFERENCE (ACCOUNT NO. OF EACH ACCOUNT)
 3

Cash
110 Balances
Date Explanations Post Debit Credit Debit Credit
1 GJ-1 600,000 600,000
1 GJ-1 4,000 596,000
3 GJ-1 200,000 396,000
6 GJ-1 110,000 506,000
7 GJ-1 3,000 503,000
10 GJ-2 9,000 494,000
12 GJ-2 120,000 614,000
13 GJ-2 4,000 610,000
13 GJ-2 88,200 521,800
14 GJ-2 58,200 580,000
15 GJ-2 10,000 570,000
16 GJ-2 40,000 610,000
16 GJ-2 4,000 606,000
22 GJ-3 18,000 588,000
22 GJ-3 80,000 668,000
25 GJ-3 3,000 665,000
27 GJ-3 158,400 506,600
31 GJ-3 10,000 496,600
31 GJ-3 40,000 536,600

Accounts Receivable
120 Balances
Date Items Post Debit Credit Debit Credit
4 GJ-1 60,000 60,000
14 GJ-2 60,000 -
16 GJ-2 150,000 150,000
18 GJ-3 12,000 138,000
18 GJ-3 30,000 168,000
31 GJ-3 40,000 208,000

Merchandise Inventory
130 Balances
Date Items Post Debit Credit Debit Credit
1 GJ-1 100,000 100,000
31 Closing GJ-4 271,400 371,400
 31 Closing GJ-4 100,000 271,400

Furniture and Equipment

140 Balances
Date Items Post Debit Credit Debit Credit
1 GJ-1 40,000 40,000

Accounts Payable
210 Balances
Date Items Post Debit Credit Debit Credit
1 GJ-1 40,000 40,000
3 GJ-1 100,000 140,000
7 GJ-1 10,000 130,000
7 GJ-1 160,000 290,000
13 GJ-2 90,000 200,000
15 GJ-2 240,000 440,000
22 GJ-3 18,000 422,000
27 GJ-3 160,000 262,000

Arias, Capital
310 Balances
Date Items Post Debit Credit Debit Credit
1 GJ-1 700,000 700,000
31 Closing GJ-4 100,000 800,000
31 Closing GJ-4 6,000 794,000

Arias, Drawings
320 Balances
Date Items Post Debit Credit Debit Credit
13 GJ-2 6,000 6,000
31 Closing GJ-4 6,000 0

Sales
410 Balances
 Date Items Post Debit Credit Debit Credit
4 GJ-1 60,000 60,000
6 GJ-1 110,000 170,000
12 GJ-2 120,000 290,000
16 GJ-2 150,000 440,000
16 GJ-2 40,000 480,000
18 GJ-3 30,000 510,000
22 GJ-3 80,000 590,000
31 GJ-3 40,000 630,000
31 GJ-3 40,000 670,000
31 Closing GJ-4 670,000 0

Sales Returns and Allowances

411 Balances
Date Items Post Debit Credit Debit Credit
18 GJ-3 12,000 12,000
31 Closing GJ-4 12,000 0

Sales Discount
412 Balances
Date Items Post Debit Credit Debit Credit
14 GJ-2 1,800 1,800
31 Closing GJ-4 1,800 0

Purchase
510 Balances
Date Items Post Debit Credit Debit Credit
3 GJ-1 200,000 200,000
3 GJ-1 100,000 300,000
7 GJ-1 160,000 460,000
13 GJ-2 2,000 458,000
15 GJ-2 240,000 698,000
31 Closing GJ-4 698,000 0

Purchases Returns and Allowances

511 Balances
Date Items Post Debit Credit Debit Credit
 7 GJ-1 10,000 10,000
31 Closing GJ-4 10,000 0

Purchases Discount
512 Balances
Date Items Post Debit Credit Debit Credit
13 GJ-2 1,800 1,800
27 GJ-3 1,600 3,400
31 Closing GJ-4 3,400 0

Freight In
516 Balances
Date Items Post Debit Credit Debit Credit
7 GJ-1 3,000 3,000
31 Closing GJ-4 3,000 0

General Expenses
610 Balances
Date Items Post Debit Credit Debit Credit
10 GJ-2 9,000 9,000
25 GJ-3 3,000 12,000
31 Closing GJ-4 12,000 0

Rent Expense
620 Balances
Date Items Post Debit Credit Debit Credit
1 GJ-1 4,000 4,000
31 Closing GJ-4 4,000 0

Salaries Expenses
630 Balances
Date Items Post Debit Credit Debit Credit
15 GJ-2 10,000 10,000
31 GJ-3 10,000 20,000
31 Closing GJ-4 20,000 0
Selling Expenses
640 Balances
Date Items Post Debit Credit Debit Credit
16 GJ-2 4,000 4,000
31 Closing GJ-4 4,000 0

Income Summary
710 Balances
Date Items Post Debit Credit Debit Credit
31 Closing GJ-4 656,200 656,200
31 Closing GJ-4 416,200 240,000
31 Closing GJ-4 140,000 100,000
31 Closing GJ-4 100,000 0
NOTE:
NO PESOS SIGN
NO DOUBLE RULE
DON’T FORGET TO POST THE CLOSING ENTRIES
 Arias Trading
Trial Balance
December 31, 20A

Account No. Account Title Debit Credit

110 Cash 536,600
120 Accounts Receivable 208,000
130 Merchandise Inventory 100,000
140 Furniture and Equipment 40,000
210 Accounts Payable 262,000
310 Arias, Capital 700,000
320 Arias, Drawings 6,000
410 Sales 670,000
411 Sales Returns and Allowances 12,000
412 Sales Discount 1,800
510 Purchase 698,000
511 Purchases Returns and Allowances 10,000
512 Purchases Discount 3,400
516 Freight In 3,000
610 General Expenses 12,000
620 Rent Expense 4,000
630 Salaries Expenses 20,000
640 Selling Expenses 4,000
TOTAL 1,645,400 1,645,400
 A, Arias Merchandising
Statement of Cost of Goods Sold
For the Month Ended December 31, 20A

Merchandise Inventory, December 1, 20A 100,000

Purchases 698,000
Less:Purchase Returns and Allowances 10,000
Purchases Discounts 3,400 13,400
Net Purchases 684,600
Add: Freight In 3,000 687,600
Goods Available for Sale 787,600
Less: Merchandise Inventory, Dec. 31. 20A 271,400
Cost of Goods Sold 516,200

A, Arias Merchandising
Statement of Financial Performance
For the Month Ended December 31, 20A

Sales 670,000
Less: Sales Returns and Allowances 12,000
Sales Discounts 1,800 13,800
Net Sales 656,200
Cost of Goods Sold 516,200
Gross Profit 140,000
Operating Expenses
General Expenses 12,000
Rent Expenses 4,000
Salaries Expenses 20,000
Selling Expenses 4,000
Total Operating Expenses 40,000
Net Profit 100,000

A, Arias Merchandising
Statement of Financial Performance
For the Month Ended December 31, 20A

Arias, Capital December 1, 20A 700,000

Add: Additional Investment
Less: Arias, Drawings 6,000
Total 694,000
Add: Net Profit 100,000
Arias, Capital , December 31, 20A 794,000

A, Arias Merchandising
Statement of Financial Position
As of December 31, 20A

Current Assets
Cash 536,600
Accounts Receivable 208,000
Merchandise Inventory 271,400
Total Current Assets 1,016,000
Noncurrent Assets
Furniture and Equipment 40,000
Total Assets 1,056,000

Current Liabilities
Accounts Payable 262,000

Arias, Capital. December 31, 20A 794,000

Total Liablities And Owners Equity 1,056,000

A, Arias Merchandising
Statement of Cash Flows
For the Month Ended December 31, 20A

Cash flows from operating activities

Sales 390,000
Receivables from customers 58,200
Payment for purchase of merchandise (200,000)
Payment for freight in purchase (3,000)
Payment to creditors (246,600)
Operating Expenses (40,000)
Total Cash flows from operating Activities (41,400)

Cash flows from investing activities

Acquisition of furniture and equipment (18,000)

Cash flows from financing activities

 Initial investment 600,000
Withdrawals by the owner (4,000)
net increase in cash 536,600
Cash balance, December 1, 2018 0
Cash balance, December 31, 2018 536,600
REQUIRED STATEMENTS FOR PERPETUAL INVENTORY
1. Statement of Cost of Good Sold
2. Statement of Financial Performance
3. Statement of Changes in Owners Equity
4. Statement of Financial Position
5. Statement of Cash flows
 Page 4
Date Account Title and Explanations P.R. Debit Credit
December 31 Sales 410 670,000
Income Summary 710 656,200
Sales Return and Allowances 411 12,000
Sales Discount 412 1,800
To close sale account

31 Merchandise Inventory, end 130 271,400

Purchases Returns and Allowances 511 10,000
Purchases Discounts 512 3,400
Income Summary 710 416,200
Purchases 510 698,000
Freight In 516 3,000
To close purchase accounts

31 Income Summary 710 140,000

Merchandise Inventory, beginning 130 100,000
General Expenses 610 12,000
Rent Expenses 620 4,000
Salaries Expenses 630 20,000
Selling Expenses 640 4,000
To close expense account

31 Income Summary 710 100,000

Arias, Capital 310 100,000
To close clearing account

Arias, Capital 310 6,000

31 Arias, Drawings 320 6,000
To close Drawing account
NOTE: FOR PERIODIC, ACCOUNT TO BE CLOSED
1. Sales Account
2. Purchases Account (with inventory end account)
3. Expenses Accounts
4. Clearing account (To Transfer income to Capital)
5. Drawings Accounts
 Arias Trading
Post-ClosingTrial Balance
December 31, 20A

Account No. Account Title Debit Credit

110 Cash 536,600
120 Accounts Receivable 208,000
130 Merchandise Inventory 271,400
140 Furniture and Equipment 40,000
210 Accounts Payable 262,000
310 Arias, Capital 794,000
Total 1,056,000 1,056,000