STA.

TERESA COLLEGE
Bauan, Batangas
COLLEGE DEPARTMENT
Practice Set 3
Required:
1. Journal Entries
2. T-account
3. Unadjusted Trial Balance
4. Adjusting Entries (if applicable)
5. Financial Statements
6. Closing Entries
7. Reversing Entries (as needed)

Exercise 1
Refer to Module 5 (Exercise 3)

Boy Barios established the BARIOS TRADING. The following is the chart of accounts
for the business transactions.
Chart of Accounts
101 Cash 401 Sales
102 Accounts Receivable 401.1 Sales Discounts
102.1 Allowance for Bad debts 501 Purchases
103 Notes Receivable 501.1 Freight in
104 Interest receivable 501.2 Purchase Returns and
Allowances 105 Office Supplies 501.3 Purchase discounts
106 Merchandise Inventory 502 Rent Expense
107 Prepaid rent 503 Utilities expense
108 Furniture and Fixtures 504 Salaries Expense
108.1 Accum. Depreciation - Furniture and Fixtures 505 Freight out
201 Accounts Payable 506 Depreciation expense
202 Salaries Payable 507 Office Supplies Expense
203 Utilities Payable 508 Interest expense
204 Interest Payable 509 Interest income
205 Notes Payable 510 Bad Debts
301 Barrios, Capital
302 Barrios, Drawing

The transactions of Boy Barios for the month of December, 2018 are summarized
below:
December
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1 Started his business named BARIOS TRADING with investments of cash
P640, 000, furniture and fixtures, P50, 000.
2 Bought merchandise for cash amounting to P40, 000.
2 Bought merchandise from FAR Company on credit, P67, 200 FOB destination
terms n/30.
3 Paid rent for three months, P16, 800.
4 Bought supplies for office use, by paying P11, 200 cash.
4 Purchased merchandise for cash, P224, 000 and paid freight P5,000.
5 Purchase merchandise on account from Ronnie Black, P112, 000, FOB
destination terms 2/10, n/20.
6 Purchase merchandise from MM Mfg. and issued promissory note for P44, 800.
7 Sold to Dagupan Trading merchandise for P336, 000 FOB destination and
received a promissory note for this amount.
7 Sold merchandise on account to Juan Carlos, P145, 600, FOB destination
Terms:
1/10, n/20.
8 Returned merchandise purchased in December 4, and received a cash refund
amounting to P22, 000.
9 Sold to Joy Poe merchandise for cash, P56, 000.
11 Sold to Western Trading on account merchandise for P134, 400. FOB destination
Freight paid by Barrios P2, 000. Terms: 2/10, 1/20, n/30.
12 Returned P11, 200 merchandise purchased from Ronnie Black in December 5.
13 Paid Ronnie Black the total amount due to him.
15 Collected full payment from Juan Carlos on the sale in December 6.
15 Paid half month salaries of employees, P8, 000.
17 Purchased merchandise on account from Central Trading, P280, 000 FOB
destination, terms 2/10, n/30.
19 Sold to Art Cruz merchandise for P201, 600 on account, FOB destination terms
2/5, n/30 and paid P2, 000 for delivery charge.
22 Paid telephone bill for the month P770.
23 Collected in full the account of Western Trading.
23 Paid half of the account of Central Trading.
28 Boy Barrios withdrew P10, 000 cash for personal use.

Data for adjustments:

a. The estimated life of the furniture and fixture is four years with scrap value of
P2, 000.
b. Expense method was used in recording the rental payment.
c. Asset method was used in recording the office supplies, P2, 000 worth is unused as
of December 31, 2019.
d. Accrued interest on notes payable at December 31 is P1, 000.
e. Accrued interest on notes receivable at December 31 is P3, 000.
f. Accrued salaries as of December 31, is P12, 000.
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g. Accrued electric bill as of December 31, is P10, 000.
h. Bad debts is estimated to be 1% of the accounts receivable ending balance.
i. Unsold merchandise as of December 31 is P200, 000.

Requirements:
1. Journalize the transactions.
2. Post the entries to the T-accounts.
3. Prepare the adjusting entries.
4. Prepare the worksheet for the month ended, December 31, 2019.
5. Prepare the closing entries.
6. Prepare the reversing entries.

Exercise 2
Frontliner Mdse. Below are the sample account titles used by the company.
Cash on Hand Cash in Bank
Accounts Receivable Office Supplies
Prepaid Rent Accounts Payable
Notes Payable Accrued Interest Expense
SSS, Philhealth, Pag-ibig Payable Fonti, Capital
Sales Sales Returns and Allowances
Sales Discount Purchases
Purchase Returns and Allowance Purchase Discount
Rent Expense Utilities Expense
Freight out Salaries Expense
SSS, Philhealth, Pag-ibig Expense Interest Expense
Office Supplies Expense

They engaged in the following transactions in June, 2017.

Jun. 1 Mr. Fonti made an initial investment of P250,000 thru a current account in
BDO-Bauan Branch and P50,000 cash on hand
Jun.2 Paid rent for six months (June to November 2017) worth P21,000 thru
check#10001
Bought office supplies for P5,300 cash
Purchased merchandise from Ado House for P50,000 FOB destination on
account with terms 2/10, n/30.
Jun. 7 Returned P800 of defective merchandise to Ado House
Jun. 11 Returned office supplies worth P200
Jun. 12 Paid Ado House in full with check#10002
Sold P15,000 worth of merchandise on cash
Jun. 14 Deposited cash collection from Jun. 12 transaction
Recorded credit sales of P35,000 to Sosing Co., terms 1/10, n/30 net of
delivery cost worth P2,500 FOB destination which was paid in cash
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Jun. 15 Receipt defective merchandise from Sosing Co. worth P1,000
Jun. 16 Paid employee salaries P8,000 net of SSS, Philhealth, Pag-ibig
Contribution worth P950
Jun. 24 Sold merchandise to Rosa Apparel worth P15,000 cash, net of 3%
discount, FOB shipping point, prepaid. Delivery fee is P2,050
Purchased merchandise worth P50,000 issuing a 2% 30days note from
Myra Inc.
Jun. 26 Returned P200 worth of defective merchandise to Myra Inc.
Paid utilities worth P3,500 cash
Jun. 30 Paid employees salaries P8,500
Realized SSS, Philhealth, Pag-ibig Expense worth P1,120
Office supplies inventory is P2,200

Exercise 3
Use perpetual and periodic accounting for the following transactions of Mother Knows
Best Company. Note that the company uses 60% mark-up rate.
Jan. 1 Owner invested in the business and deposited P75,000 into the Business
Checking Account
Jan.2 Paid rent of P2,500 with check #100
Bought office supplies for P2,850 with check #101
Used check #102 to buy desktop computer and printer for P9,450
Bought P2,980 worth of office table and chairs with check #103
Jan. 3 Purchased merchandise for P15,000 with delivery cost of P2,050.00 FOB
shipping point on credit from A. Co., terms 2/10, n30 (net of delivery cost)
Jan. 7 Returned P400 of defected merchandise to A. Co.
Jan. 11 Paid A. Co. in full with check # 104.
Jan. 12 Recorded cash sales of P3,000.
Jan. 14 Recorded credit sales of P15,000 to B. Co., terms 1/10, n/30. Delivery
cost P1,500 FOB destination was paid in cash
Jan. 15 Purchased merchandise from Z. Co. with a value of P4,000, terms 2/10,
n30. FOB shipping point
Jan. 16 Paid transportation charges of P300 for merchandise purchased from Z.
Co.
Jan. 18 B. Co. returned P200 of merchandise.
Jan. 24 Received full payment from B. Co.
Jan. 27 Paid Z. Co. for purchases last Jan. 15.
Jan. 28 Paid utilities of owners’ house P1,200 with check # 105.
Jan. 31 Received monthly billing of electricity and water consumed by the
business from Jan. 1-15 worth P1,860.
Merchandise inventory count is P11,800

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Exercise 4
The ending balances for December 31, 20x1 of ABM Trading Inc. follows:

ABM Trading Inc.

Ending Balances
December 31, 20x1

Cash on Hand P 40,000

Cash in Bank 200,000
Accounts Receivable 60,000
Notes Receivable 150,000
Merchandise Inventory 730,000
Prepaid Rent 90,000
Office Supplies 160,000
Office Equipment 1,000,000
Accumulated Depreciation – Office Equipment 250,000
Accounts Payable 330,000
Notes Payable 150,000
VAT Payable 50,000
Abmer, Capital 1,650,000

Terms: All credit sales are @ 2/10, n/30 FOB shipping point while all credit purchases
are @ 3/10, n/30 FOB destination.
Note: ABM Trading Inc. is a VAT registered company who pays on or before the end of
the following month.
Notes Receivable balance was from STEM Merchandising, generated on Dec.
26, 20x1.
Notes Payable balance was due to HUMSS Inc. for purchases made on Dec. 28,
20x1.

The company uses periodic inventory system. During the following month (January
20x2), the following transactions were completed:

Jan. 02 Sold merchandise on credit to Batronel Decors, P240,000.00

03 Purchase merchandise on account from Arenas Co., P90,000.00

04 Received P80,000.00 worth of merchandise from Jan. 03 purchases and

paid freight collect worth P5,000.00. Received a confirmation that the
balance will no longer be delivered due to item unavailability. Returned
P3,200.00 worth of defective merchandise
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 05 Collected in full from STEM Merchandising.

06 Deposited the amount collected from STEM Merchandising.

07 Paid HUMSS Inc. in full thru ck#120112

08 Sold merchandise on account to Royal Home worth P300,000.00, and

paid freight prepaid worth P12,000.00.

10 Received returned merchandise from Royal Home due to wrong item sent
and payment for freight for Jan. 08 delivery.

11 Paid VAT payable in full thru ck#120113

12 Sold merchandise P160,000.00 on cash.

Deposited P100,000.00 to checking account.

13 Paid Arenas Co., in full thru ck# 120114.

15 Paid salary of staff for the month P15,200.30 net of SSS, Philhealth, and
Pag-ibig Premiums worth P 1,060.70 and Withholding Tax worth
P1,200.00

18 Collected from Royal Home in full.

20 Consumed P10,000 prepaid rent and P5,210 office supplies.

30 Paid the following: utilities – P2,600.50, representation expenses –

P5,000.00, salaries expense - P 16,800.00.

31 Make the necessary adjusting entries including the following:

- Consumed P10,000.00 prepaid rent and P5,210.00 office supplies
- Depreciation of office equipment is P10,000.00
- Recognized SSS, Philhealth, and Pag-ibig Premiums Expense worth
P 1,800.00
- Recognized VAT Payable

Journalize the following related transactions using perpetual inventory system.

a) Purchased merchandise on account from Blitzen Co., list price P20,000, terms FOB shipping
point, 2/10, n/30, with prepaid transportation costs of P650 added to the invoice. b) Purchased
merchandise on account from Cupid Co., P8,000, terms FOB destination, 1/10, n/30.

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 c) Sold merchandise on account to Donner Co., P9,800, terms 2/10, n/30. The cost of the
merchandise sold was P5,800.
d) Returned P2,000 of merchandise purchased from Cupid Co.
e) Paid Blitzen Co.
f) Received merchandise returned by Donner Co., P1,800. The cost of the merchandise returned was
P1,080.
g) Paid Cupid Co.
h) Received cash on account from Donner Co.
i) Perpetual inventory records indicate that P85,000 of merchandise should be on hand. The physical
inventory indicates that P81,350 of merchandise is on hand.