This problem is preparatory to accounting for merchandising enity.

Following is the post closing trial balance of ABC Trading at the close of the calendar year, 2017.

ABC Trading
Post-Closing Trial Balance
31 December 2017

Cash 500,000
Notes Receivable 200,000
Accrued Interest Receivable 10,000
Accounts Receivable 400,000
Allowance for Bad Debts 10,000
Merchandise Inventory 2,550,000
Store Supplies 25,000
Office Supplies 10,000
Prepaid Insurance 20,000
Prepaid Advertising 10,000
Land 400,000
Building 2,000,000
Accumulated Depreciation-Building 300,000
Store Equipments 800,000
Accumulated Depreciation-Store Equipment 100,000
Office Equipments 400,000
Accumulated Depreciation-Office Equipment 50,000
Office Furniture 200,000
Accumulated Depreciation-Office Furniture 50,000
Accounts Payable 750,000
Salaries Payable 50,000
Mortgage Payable 500,000
ABC, Capital 5,715,000
7,525,000 7,525,000

Below is the summary of transactions for the 1 st half of the year, 2018:
1. Collected from customers on account, P300,000.
2. Paid P200,000 of the account due less discounts of 3%.
3. Purchased merchandise from Nestle Corporation, P500,000. Terms: FOB Shipping Point-Freight
Collect; 10%, 5%; 5/10, 3/15, n/30. Freight, P5,000
4. Purchased merchandise from Unilever Phil, P400,000. Terms: FOB Shipping Point-Freight
Prepaid; 10%, 5%; 5/10, 2/20, n/30. Freight, P4,000
5. Sold merchandise to various customers:
Cash P2,000,000
On Account P 500,000
6. Sold merchandise on account to Tweetums, P100,000. Terms: FOB Shipping Point; 2/15, n/30.
7. Paid the following:
Advertising P 10,000
Insurance P 20,000
Salaries and Wages P150,000
Office Supplies P 15,000
Store Supplies P 25,000
Utilities P 50,000
8. Purchased merchandise from Universal Robina Corporation, P600,000. Terms: FOB Destination-
Freight Collect; 10%, 5%; 3/10, 2/15, n/30. Freight, 65,000
9. Purchased merchandise from Procter and Gamble Phil, P500,000. Terms: FOB Destination-Freight
Prepaid; 10%, 5%; 5/10, 2/10, n/30. Freight, P5,000
10. Sold merchandise on account to new customer, P1,000,000. Terms: FOB Shipping Point-Freight
Collect; 10%, 5%; 2/10, n/30.
11. Sold merchandise on account to Suki Merchandising, P500,000. Terms: FOB Shipping Point-
Freight Prepaid; 5%; 2/10, n/30. Freight, P50,000.
12. Sold merchandise on account to Global Trading, P1,000,000. Terms: FOB Destination-Freight
Collect; 10%, 5%; 2/10, n/30. Freight, P100,000
 13. Sold merchandise on account to Non-Suki Merchandising, P500,000. Terms: FOB Destination-
Freight Prepaid; 5%; 2/10, n/30. Freight, P50,000
14. Collected 50% of the account due in Item No. 5
15. Paid Nestle Corporation 8 days after invoice date.
16. Paid Unilever Phil within the second discount period.
17. Tweetums paid its account beyond the discount period.
18. Collected 75% of the account due in No. 10. 5 days after invoice date and the balance beyond the
discount period.
19. Suki paid its account within the discount period.
20. Collected interest on notes receivable, P20,000

ADDITIONAL INFORMATION:

1. Expense method is used to record insurance and advertising, while asset method is used to record
both office and store supplies

2. Annual Depreciation of fixed assets are as follows:

Building 300,000
Store Equipments 100,000
Office Equipments 50,000
Office Furniture 50,000

3. Accruals at the end of the first half of the year, 2018, follow:

Interest on Notes Receivable 30,000

Interest on Mortgage Payable 10,000

4. 50% of both store and office supplies remains on hand, while 60% of both insurance and
advertising have been used.

5. Mark up based on sales is at an average of 20%.

6. Inventory per count, P70,000

REQUIREMENTS:

A. Assuming ABC is using periodic inventory system

1. Reversing Entries at the beginning of the period

2. Journal entries for the period
3. Ledgers
4. Preliminary Trial Balance
5. Adjusting entries
6. Final Trial Balance
7. Financial Statements
8. Closing entries
9. Post closing Trial Balance

B. Assuming ABC is using perpetual inventory system

10. Reversing Entries at the beginning of the period

11. Journal entries for the period
12. Ledgers
13. Preliminary Trial Balance
14. Adjusting entries
15. Final Trial Balance
16. Financial Statements
17. Closing entries
18. Post closing Trial Balance