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11
FUNDAMENTALS OF
ACCOUNTANCY,
BUSINESS AND
MANAGEMENT 1
Second Quarter
LEARNING ACTIVITY SHEETS

i
COPYRIGHT PAGE
Learning Activity Sheet in Fundamentals of Accountancy,

Business and Management
Grade 11
Copyright @ 2020
DEPARTMENT OF EDUCATION
Regional Office No. 02 (Cagayan Valley)
Regional Government Center, Carig Sur, Tuguegarao City, 3500
“No copy of this materials shall subsist in any work of the Government of the Philippines.
However, prior approval of the government agency or office wherein the work is created shall be
necessary for exploitation of such work for profit.”
This material has been developed for the implementation of the K to 12 Curriculum through the
Curriculum and Learning Management Division (CLMD). It can be reproduced for educational
purposes and the source must be acknowledged. Derivatives of the work including creating an
edited version, an enhancement of supplementary work are permitted provided all original works
are acknowledged and the copyright is attributed. No work may be derived from the material for
commercial purposes and profit.
ii
Consultants:
Regional Director ESTELA L. CARIŇO, EdD, CESO IV
Assistant Regional Director RHODA T. RAZON, EdD, CESO V
Schools Division Superintendent MADELYN L. MACALLING, PhD, CESO VI
Assist. Schools Division Supt. EDNA P. ABUAN, PhD
DANTE J. MARCELO, PhD, CESO VI
Chief Educ. Supervisor, CLMD OCTAVIO V. CABASAG, PhD Chief Education
Supervisor, CID RODRIGO V. PASCUA, EdD
Development Team
Writers : Marcris T. Domingo, Desserie R. Figuracion and Lourdes D. Pedro
Content Editors : Inocencio T. Balag,EPS Math, SDO Isabela
Cyril M. Pacunana, Claudine Sevilleja, Mary Mendoza
Focal Persons : Inocencio T. Balag, EPS Math, SDO Isabela

Cristina Acosta, EPS LRMDS, SDO Isabela
Isagani R. Duruin, EPS Math, DepEd RO2-CLMD
Rizalino G. Caronan, EPS LRMDS- CLMD
Printed by DepEd Regional Office No. 02

Regional Center, Carig Sur, Tuguegarao City
TABLE OF CONTENTS
Competency Page No.
Prepares the Adjusting Entries 1
Complete the Accounting Cycle 10
Describes the nature of transactions in a merchandising business 37
Records transactions of a merchandising business in the general and special journals 40
Posts transactions in the general and subsidiary ledgers 66

Prepares a trial balance 90
The learner prepares adjusting entries 104
The learner completes the accounting cycle of a merchandising business
iii
The learner prepares the Statement of Cost of Goods Sold and Gross Profit 117
FUNDAMENTALS OF
ACCOUNTANCY, BUSINESS AND
MANAGEMENT 1
Name of Learner: ________________________________ Grade Level:
_______________
Section: ________________________________________ Date:
_____________________
LEARNING ACTIVITY SHEET

Prepares the Adjusting Entries
Background Information for Learners

Now that we have the correct and balanced trial balance, we will begin the
next step with the confidence that account balances that we will be “adjusting”
are correctly stated. Before we proceed, it is important to understand that,
strictly, “adjusting” should not be used interchangeably with “correcting”.
Adjusting entries are adjustments to bring the assets, liabilities, revenue and
expenses up to.
Accounting utilizes “adjusting entries “at the end of an accounting period to
split separate mixed accounts. Mixed accounts are accounts that have
components of asset and expenses, or liability and income at the end of the
accounting period. Remember to consider the two major classification of
adjusting entries (Accruals and Deferral) as well as the method use for each
classification when analyzing the given problem.
Learning Competency: Prepares the Adjusting Entries (ABM_FABM11-1Va-d-33)
Exercise 1
Directions: Analyse and prepare the necessary adjusting entries at year end
2019 of the following independent transactions. Show your solutions.
{ 3 points each}
iv
1. On December 01, 2019, Yan Company purchased supplies worth of P
12,000 from Dito Supplies Trading. At the end of the Month, only P 3,000
worth of supplies inventory on hand. The bookkeeper used the asset method in
recording the transaction.
2. On November 15,2019, VJK Company subscribed to the Globe services.

The monthly fee of P 4,000 is paid every 15 th of the month. The payment on
December 15, 2019 has been recorded by a debit to utilities expense and credit
to Cash of P4,000.
3. Roger’s rendered catering services last December 15,2019. The contract

price amounted to P 63,000. Since no payment had been received yet, Rogers
did not make any journal entry last Dec 15,2019.
4. On October 01,2019, Kaye Piano Services received a P 300,000, 8 % note

for selling an equipment not being used anymore in the business. The note
will be payable in one year.
5. On December 1, 2019, LALA Company paid P 36,000 to GCQ Insurance

Co. as insurance premium for one year. The bookkeeper recorded the payment
with a debit to prepaid Insurance and credit to Cash for P 36,000.
Exercise 2
Directions: Solve the given problems

{ 3 points each}
1. A firm purchased equipment on May 1, 2019 for P 60,000. It is estimated

that the equipment
will have a
P 6,000 residual value at the end of its ten-year useful life. Using the Straight
line Method of Depreciation, what will be the balance of the Accumulated
Depreciation account on December 31,2021.
2. Ethan Company uses the allowance method in estimating doubtful

accounts. During the first year of operations, credit sales total P 1,300,000 but
60% of this amount have been collected. It is the policy of the company to set
5
up 3% of the outstanding receivables. For the current year, at what amount
should Doubtful Account Expense be presented in the income statement?
3. Aegean Airlines purchased a five year insurance policy for its airlines on
June 1, 2019 for the amount of P150,000 and debited it to an asset account. The
company uses a calendar as its accounting period. Assuming that June 1 is the
effective date of the policy, How much is the correct balance for the Prepaid
Insurance account on December 31,2019.
Exercise 3
Let us go deeper. This activity requires you to recall your knowledge in
preparing trial balance with carefully adding the adjusting entries for the
adjusted trial balance.
Directions: Prepare adjusting entries and adjusted trial balance of Praca
General Services
{ Adjusting entries : 3 points each}
Praca General Services
Unadjusted Trial Balance
As of January 31,2020
Account Title Debit Credit

Cash ₱84,500
Accounts Receivable 12,300
Supplies 9,500
Prepaid Insurance 6,000
Office Equipment 24,000
Accounts Payable 12,200
Praca, Capital ₱106,000
Praca, Drawings 10,000
Service Revenue 45,200
Salaries Expense 14,000
Rent Expense 1,500
Utilities Expense 1,600
6
Total ₱163,400 ₱163,400
Additional information for adjustment:
a. Depreciation of Office Equipment, P 2000
b. Bad Debt expense is estimated at 2 % of the Accounts receivable balance.
c. The unused supplies balance is P 5,300
d. Unearned service revenue, 3000
e. The unexpired Insurance premium during the month, P5,500,
Guide Questions:
1. What are the correct entries and how much will be the correct amount of
each adjusting entries for the adjustment?
2. How much is the amount of the totals of debit and credit of the adjusted
trial balance?
Rubrics for Scoring - Trial Balance

Criteria NI Fair Good Excellent
(5) (10) (15) (20)
Concept Does not Does not Understands Shows clear

understand understand concepts in understanding
concepts in concepts in preparing trial of the concepts
preparing trial preparing trial balance very in preparing a
balance very well balance very well with few trial balance
with major errors well with half errors.
errors.
7
Structure Heading is Correct heading Correct heading Correct heading
incorrect, omitted and double rule and double rule and
double rule in total the total the total double rule the
balance. Most of balance. Listing balance. Listing total balance.
the listed accounts of accounts of accounts is Listing of
is entered with 1-2 is not properly entered accounts is
incorrectly and properly with -3-4 properly
most of its entered with -3- incorrect entered with
amounts are not in 4 incorrect amounts in its correct
proper debit and amounts in its debit and credit amounts in its
credit column debit and credit column debit and credit
column column.
Computations Total balance of Total balance of Total balance of Total balance of

debit and credit debit and debit and credit debit and
columns are credit columns columns are credit columns
incorrect due to are incorrect incorrect due to are correct and
major errors and due to 3-4 1-2 errors but equal
not equal errors and not equal
equal
References:
Textbook: Fundamentals of Accountancy, Business, and Management 1.

Isabela CPA Review Center Bookkeeping hands out
Teacher’s Guide: Fundamentals of Accountancy, Business,
and Management 1.
Joselito G. Florendo, Fundamentals of Accountancy, Business and
Management 1
Valencia, et.al (2010). Basic Accounting 3rd ed. Valencia Educational Supply
Weygandt, J. et .al (20120. Accounting Principles 10 th ed. John Wiley & Sons
(Asia) Pte. Ltd.
Reflection
What did you learn from this activity?
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FUNDAMENTALS OF
MANAGEMENT 1
_______________
Section: ________________________________________ Date:
_____________________

Complete the Accounting Cycle

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After performing the previous steps in the accounting cycle, we will
move now to the next accounting processes, the preparation of financial
statements, closing entries and postclosing trial balance. The financial
statements must be relevant, reliable and comparable. Most of all, it must
follow the applicable Philippine Financial Reporting Standards.
At the end of the accounting period, all temporary (nominal) are closed,
then, Post-Closing Trial Balance is prepared after recording and posting all the
closing entries. The balances of permanent or real accounts become the starting
balances for the next accounting period.
Learning Competency with code: Complete the Accounting Cycle.

ABM_FABM11- IVa-d -34
Exercise 1
Directions: Prepare the statement of financial performance using the
information of adjusted trial balance of Praca General Services for the Month
of January 31, 2020.
Praca General Services
Adjusted Trial Balance
January 31, 2020
Cash P 84,500
Supplies 5,300
Prepaid Insurance 5,500
Office Equipment 24,000
Accumulated Depreciation P 2,000
Unearned Service Revenue 3,000
Praca, Capital 106,000
Praca, Drawings 10,000
10
Service Revenue 42,200
Rent Expense 1,500
Depreciation Expense- Office Equipment 2,000
Bad Debt Expense 246
Supplies Expense 4,200
Insurance Expense 500
Total P 165,400 P 165,400
Guide Questions:
1. What are the accounts included in preparing the Statement of Financial
Performance?
2. How much net income computed from the given transaction?
Exercise 2
Directions: Prepare the Statement of Financial Position of Sherwin’s Delivery

Services using the information of their first month of operation for the month
of November 2019.The business had the following accounts:
Cash P 90,000
Prepaid expense 30,000
Land 160,000
Building 200,000
Notes Payable 30,000
Sherwin’s, Capital 300,000
Allowance for Doubtful Accounts 5,000
Accumulated Depreciation 20,000
Reported net income 55,000
Guide Questions:
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1. What will be the proper heading to be used for the Statement of Financial
Position?
2. Are the given transaction balances satisfy the equation Asset= Liabilities +
Owners Equity? If not, check the missing account and amount before
proceeding in preparing a statement of financial position.
3. Compute for the total Assets and Liabilities and Owner’s Equity.
Exercise 3: Let us go deeper. In this Activity, your knowledge on the whole
accounting process is needed. Please feel free to review your previous
activities. And I will give four hours to finish this activity.
Directions: Prepare the complete accounting cycle of Mr.Kan for the month of
January 2020. Use all the information for the preparation below.
Mr. Chandler Kan established Tax and Accounting services and had the following
transactions for the month of January 2020
Jan
6 Kan Invested P 200,000 into the business
Received a charge Invoice from a supplier for the purchase of a desktop computer
amounting to P 33,000 on account. The computer is estimated to be useful for five
7 years and have a salvage value of 3,000 thereafter
9 Purchased supplies amounting to P 19,500 in cash.
13 Paid 12,000 insurance for 1 year
Issued a service invoice for an amount of P 50,000 to a customer for services
15 rendered on account.
16 Received collections from customers on account, P 40,000
20 Paid P 20,000 as partial payment for purchase of equipment on account
22 Billed P 30,000 to customer for the services rendered
23 Borrowed P 15,000 from the bank
31 Paid P 16,000 for the salaries of employees
31 Kan withdrew P 11,000 from the business
31 Paid the bill of telephone amounting to P 2,500
31 Supplies remaining on hand worth P 12,000
Additional information for adjustment:

a. Depreciation of Office Equipment, P 500.
b. The unexpired Insurance premium during the month, P 11,000.
Use the following Charts of Accounts:

12
Kans Taxes and Accounting Services
CHART OF ACCOUNTS
Code ASSETS Code EQUITY

101 Cash 301 Kan , Capital
111 Accounts Receivable 311 Kan , Drawing
121 Supplies
131 Prepaid Insurance INCOME
151 Office Equipment 401 Service Revenue
152 Accumulated Depreciation-
Office Equipment EXPENSES
LIABILITIES 501 Salaries Expense
201 Accounts Payable 511 Supplies Expense
202 Notes Payable 512 Utilities Expense
211 Loans Payable 513 Insurance Expense
514 Depreciation Expense
601 Income and Expense Summary
Prepare the following:

a. Journal entries
b. General Ledger
c. Unadjusted trial Balance
d. Adjusting entries
e. Adjusted Trial balance
f. Statement of Financial Performance
g. .Statement of changes in Equity
h. Statement of financial Position
i. Statement of Cash Flows.
j. Closing entries
k. Post- Closing Trial Balance
Guide Questions:
1. What will be the proper heading to be used for the Statement of
Financial Position, Statement of Financial Performance and Statement of
Changes in Equity and Cash flow statement?
13
2. What will be the correct account titles and how much will be the amount
use in the given transaction, in adjusting entries and in closing entries?
Rubrics for Scoring Income Statement

(3) (5) (8) (10)

preparing trial preparing trial balance very in preparing
balance and with balance very well with few Income
Major errors well with half errors. statement
errors.
Structure Heading is Correct heading Correct heading Correct heading

incorrect; and DOUBLE and DOUBLE and
DOUBLE RULE RULE the total RULE the total DOUBLE
in total balance is balance. Listing balance. Listing RULE the total
omitted. Most of of account titles of account titles balance. Listing
the listed accounts with 1-2 is not is properly of account titles
and amounts is properly entered with -3- is properly
entered incorrectly entered with -3- 4 incorrect entered with
4 incorrect amounts correct
amounts amounts
Computations Obtained incorrect Obtained Obtained Obtained

net income/loss incorrect net incorrect net correct net
due to major errors income/loss income/loss due income/loss
due to 3-4 errors to 1-2 errors
Rubrics for Scoring Statement of Financial Position

(5) (10) (15) (20)
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preparing trial preparing trial balance very in preparing
balance very well balance very well with few income
with Major errors well with half errors. statement
errors.
Structure Incorrect heading Correct heading Correct heading Correct heading

and DOUBLE and DOUBLE and DOUBLE and
RULE total RULE the total RULE the total DOUBLE
balance is omitted. balance. Listing balance. Listing RULE the total
Most of the listed of accounts of accounts is balance. Listing
accounts and with 1-2 is not properly entered of accounts is
amounts is entered properly with -3-4 properly
incorrectly entered with -3- incorrect entered with
4 incorrect amounts correct
amounts amounts
Computations Obtained incorrect Obtained Obtained Obtained

answer due to incorrect incorrect answer correct answer.
major errors. answer due to 3- due to 1-2 Assets vs.
Assets vs. 4 errors. errors. Assets liabilities &
liabilities & Assets vs. vs. liabilities & owner’s equity
owner’s equity is liabilities & owner’s equity is is equal
not equal owner’s equity equal
is not equal
References
Textbook: Fundamentals of Accountancy, Business, and Management 1.
Isabela CPA Review Center Bookkeeping hands out
Teacher’s Guide: Fundamentals of Accountancy, Business, and Management
1.
Joselito G. Florendo, : Fundamentals of Accountancy,Business and
Management 1
Valencia, et.al (2010). Basic Accounting 3rd ed. Valencia Educational
Supply Weygandt, J. et .al (20120. Accounting Principles 10 th ed. John
Wiley & Sons (Asia) Pte. Ltd.
Reflection:
15
What did you learn from this activity?
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ANSWER SHEETS FOR ACCOUNTING CYCLE

General Journal
GJ-1
Date Account Title and Explanation PR Debit Credit
06-Jan
13
15
16
16
20
22
23
31
GJ-2
31
31
17
31
Account Name: CASH
Account No. 101 Balance
Date Particulars Post Debit Credit Debit Credit
Account Name: ACCOUNTS RECEIVABLE
18
Account Name: SUPPLIES
Account Name: Prepaid Insurance
Account Name: OFFICE EQUIPMENT

Account No.151 Balance
Account Name: ACCUMULATED DEPRECIATION-OFFICE EQUIPMENT

Account Name: ACCOUNTS PAYABLE

19
Account Name: Loans Payable
Account Name: KAN, CAPITAL
Account Name: KAN, DRAWINGS
Account Name: INCOME AND EXPENSE SUMMARY

Account Name: SERVICE REVENUE

Account Name: SALARIES EXPENSE
20
Account Name: SUPPLIES EXPENSE
Account Name: UTILITIES EXPENSE
Account Name: INSURANCE EXPENSE
Account Name: DEPRECIATION EXPENSE
21
Unadjusted Trial Balance
ADJUSTING ENTRIES
GJ-3

31-Jan
22
31
Statement of Financial Performance
Statement of Changes in Equity
23
Statement of Financial Position
ASSETS
LIABILITIES AND OWNER'S EQUITY
24
Cash Flow Statement
Cash Flow from Operating Activities:
Cash Flow from Investing Activities
Cash Flow from Financing Activities
Total Cash from Financing Activities

Increase in Cash
Cash Balance,
Cash Balance,
Closing Entries
GJ-4

31-Jan
25
31
31
31
Kan Taxes and Accounting Firm
Post-Closing Trial Balance
January 31,2020
26
FUNDAMENTALS OF
MANAGEMENT 1
_______________
Section: ________________________________________ Date:
_____________________
LEARNING ACTIVITY SHEET Nature of Transactions in a

Merchandising Business
Two accounting inventory systems of a merchandising business are: (1)

periodic inventory method and (2) perpetual inventory method The Periodic
Inventory System is generally used when the individual inventory items have
small peso value. Under this method, the business maintains temporary
accounts like purchases, purchase returns, and purchase discounts. At the end
of the accounting period, these temporary accounts are used to determine the
amount of inventory available for sale.
On the other hand, the Perpetual Inventory System is generally used when the
individual items have relatively large values. The inventory account is
continually updated for each inventory transaction.
Learning Competency with code
Describes the nature of transactions in a merchandising business
ABM_FABM11- IVe-j -35
Activity 1
Direction: Answer the following questions (10 points)
27
1. What distinguishes a merchandising business from a service business?
(3points)
Describe the operation of a merchandising business (5points)

2. Give two (2) examples of a merchandising business.
Activity 2
Direction: Complete (fill-out) the missing item in the formula/s below:
1 Beginning Inventory (BI) +Cost of Goods Purchased
(COGP) = ?
_____________________________
2 Cost of goods available for sale (CGAS) - Ending
Inventory (EI) = ?
_____________________________
3 Sales - Cost of Goods Sold (COGS) = ?
____________________
4 Gross Profit - Operating Expenses = ?

____________________
5 Cost of Goods Available for Sale (CGAS) - Cost of Goods

Purchased (COGP) = ? ____________________
Activity 3 Answer with True or False (5 points)

1 The balance of the merchandise inventory account at the
beginning of the period represents the cost of merchandise on hand
at the time
2. The two inventory systems of accounting for merchandising

business are periodic and perpetual
3. If the seller is to absorb the cost of delivering the goods, the
terms are stated (free on board) shipping point.
4. If the merchandise purchased on account is returned, the buyer
may inform the seller of the details by issuing an
invoice
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5. The purchases returns and allowances account is treated as a
deduction from the amount initially recorded as
Purchases
Reflection
In this activity, I learned that
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______ References
https://wbbbb-ams.blogspot.com/2012/07/nature-of-merchandising-business.html
https://en.wikipedia.org/wiki/Merchandising
FUNDAMENTALS OF
MANAGEMENT 1
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Section: ________________________________________ Date:
_____________________
LEARNING ACTIVITY SHEET RECORDING

TRANSACTIONS OF A MERCHANDISING
A journal entry is the next step in the accounting after analyzing business
transactions. In this step, all the general accounting transactions are recorded
29
in general journal in a chronological order. The journal is maintained
essentially on the concept of double entry system of accounting, where each
transaction affects at least two accounts.
For businesses with repetitive transactions, just like in a merchandising
business, the company may use special journals. Special journals record
transactions of a specific type. The four special journals are cash receipts
journal, cash disbursements journal, purchases journal and sales journal.

Records transactions of a merchandising business in the general and special
journals
(ABM_FABM_11-IVe-j-36)
Activity 1
Perpetual Inventory Recording System of a Merchandising Business
The following Chart of Accounts are used by Lourd Brothers Trading

Company
Store using the Perpetual Method
101 Cash 400 Sales

110 Accounts Receivable 410 Sales Discounts
120 Supplies 420 Sales Returns and Allowances
130 Merchandise Inventory 500 Cost of Sales
140 Office Equipment 610 Salaries Expense
210 Accounts Payable 620 Freight Out
220 Notes Payable 630 Advertising Expense
310 Lopez, Capital 640 Rent Expense
320 Lopez, Drawings 650 Utilities Expense
330 Income Summary
Journalize the following transactions:
Lourd Brothers Trading Company’s transactions for March 2020 were as

follows:
30
1 The business registered as a single proprietorship and Jaynielle Lopez
invested P40,000 2 Bought computer equipment for P10,000 cash
Bought merchandise on account from Andrew Supplies Company, P15,900

with terms: 2/10, n/30
3 Bought office supplies for P700
4 Sold merchandise on account to LB Leverage Company P15,200 FOB

Destination, terms: 2/10, n/30.Cost of merchandise P12,160
5 Paid P200 freight for March 4 sale
6 Received credit memo from Andrew Supplies Company for merchandise

return, P300
11 Paid Andrew Supply Company

13 Collected from LB Leverage Company
14 Bought merchandise from E Perol Enterprises, P13,400
15 Paid salaries of P1,500
16 Borrowed money from CIM Bank, signed a promissory note for P12,000
17 Received refund from a supplier on cash purchase on March 14, P500
18 Bought merchandise from Mia Lovella Distributors, P14,200 FOB
Shipping point , terms: 2/10, n/30
20 Paid freight on March 18 purchase, P700
23 Sold merchandise to Foggia’s Merchandise for P16,400. Cost of

merchandise:P12,000 26 Bought merchandise from My Souki, P12,300
27 Paid Mia Lovella Distributors on March 18 purchase, P9,000 No allowed
discount on partial payment
28 Jaynielle Lopez withdrew cash from the business, P2,008
29 Made refund to Foggia’s Merchandise for a defective merchandise, P900
30 Sold Merchandise to Collete’s Creations, P13,700, with terms 2/10, n/30.
Cost of merchandise:P9,000
Paid the following: Advertising P1,000, Utilities, P400, Rent P3,500,

Salaries P1,500
31
General Journal- PERPETUAL METHOD
GJ-1
Date Account Title and Explanation Ref Debit Credit
01-Mar
32
5
11
13
14
33
GJ-2
15
16
17
18
20
23
34
26
27
28
29
30
35
GJ-3
30
Activity 2
The following Chart of Accounts are used by Lourd Brothers Trading

Company
using the
Periodic Method
101 Cash 401 Sales
103 Office Supplies 420 Sales Returns and Allowances
130 Inventory 501 Purchases
104 Computer Equipment 502 Purchases Returns and Allowances
201 Accounts Payable 503 Purchase Discounts
202 Notes Payable 504 Freight In
301 Lopez, Capital 605 Salaries Expense
302 Lopez, Drawing 601 Freight Out
330 Income Summary 602 Advertising Expense
603 Utilities Expense
604 Rent Expense
36
Journalize the following transactions:

follows:
invested P40,000
2 Bought computer equipment for P10,000 cash
Bought merchandise on account from Andrew Supplies Company,
P15,900 with terms: 2/10, n/30
Destination, terms: 2/10, n/30.Ref. SI#0001
6 Received credit memo from Andrew Supplies Company for
merchandise return, P300
16 Borrowed money from CIM Bank, signed a promissory note for
P12,000
23 Sold merchandise to Foggia’s Merchandise for P16,400.

26 Bought merchandise from My Souki, P12,300
37
30 Sold Merchandise to Collete’s Creations, P13,700, with terms 2/10,
n/30.Ref. SI#0002

Salaries P1,500
General Journal- PERIODIC METHOD
GJ-1
38
39
40
41
Activity 3
Direction:
Record the transactions of Lourd Brothers Trading Company in the Special Journals .

follows:
invested P40,000
2 Bought computer equipment for P10,000 cash
Bought merchandise on account from Andrew Supplies Company,
P15,900 with terms: 2/10, n/30
42
Destination, terms:
2/10, n/30.Ref. SI#0001
6 Received credit memo from Andrew Supplies Company for
merchandise return, P300
16 Borrowed money from CIM Bank, signed a promissory note for
P12,000
23 Sold merchandise to Foggia’s Merchandise for P16,400.

26 Bought merchandise from My Souki, P12,300
30 Sold Merchandise to Collete’s Creations, P13,700, with terms 2/10,

n/30.Ref/. SI#0002
Salaries P1,500
Sales Journal
43
Date Account Invoice Ref Dr.Accounts
Debited No. Receivable &
Cr. Sales
2020
March 0001
4
0002
30
Cash Receipts
Journal
Date Account Re Dr. Cr. Accounts Cr. Cr. Other
Credited f Cash Receivable Sales Accounts
March
1
13
16
17
23
Purchases Journal
Account Dr. Merchandise Inventory

Date Credited Terms Ref Cr. Accounts Payable
2020
44
March 2
18
Cash Payments Journal
Check Account Dr. Accounts Dr. Other Cr.

Date No. Debited Ref Payable Accounts Cash
2020
March
2
3
5
11
14
15
20
26
27
28
29
30
General Journal
45
GJ-1
2020
March 6
Reflection
In this activity I learned that
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Reference https://www.myaccountingcourse.com/accounting-dictionary/special-journal
46
47
FUNDAMENTALS OF
MANAGEMENT 1
_______________
Section: ________________________________________ Date:
_____________________

Posts Transactions in the General Ledgers and Subsidiary Ledgers

Merchandising entities may use either of the following inventory systems:
1. Perpetual System--Detailed records of the cost of each item are
maintained, and the cost of each item sold is determined from records when
the sale occurs. At the end of the period, no entry is made except to adjust
inventory for losses.
2. Periodic System--Cost of goods sold is determined only at the end of an

accounting period. The cost of goods sold must be computed, meaning, the
cost of goods sold on hand at the beginning of the accounting period must be
determined.
In recording transactions of a merchandising business, a general ledger serves

as a central repository for accounting data transferred from all subsidiary
ledgers like the accounts receivable, accounts payable, cash, fixed assets, and
purchases. Each account maintained is known as ledger accounts and the
collection of all these accounts is known as the general ledger.
Posts transactions in the general and subsidiary ledgers
ABM_FABM11- IVe-j -37
Directions:
48
Activity 1 Journalize the transactions using the Periodic Inventory
System
Activity 2 Post to the General Ledger
Activity 3 Prepare for the Cost of Goods Sold.
Chart of Accounts
101 Cash 400 Sales
120 Supplies 420 Sales Returns and Allowances
130 Inventory 510 Purchases
140 Office Equipment 520 Purchases Discounts
Purchases Returns and

Allowances
210 Accounts Payable 530
220 Notes Payable 540 Freight In
310 Villa, Capital 610 Salaries Expense
320 Villa, Drawings 620 Freight Out
330 Income Summary 630 Advertising Expense
640 Rent Expense
650 Utilities Expense
Serenity Villa opened SV Merchandising Store. The following transactions

occurred during the month of July 2019:
49
July
1 Villa invested P128,000 in the business.
Acquired computer set for P21,000. Villa paid 5,000 and issued a
promissory note for the remaining balance.
2 Acquired supplies for cash, P1,200.
3 Purchase P81,900 of merchandise from LOWKEY company on
account.
Terms: FOB Destination, 2/10, n/30.
5 Sold merchandise to THORE for P48,600 on account.
Terms: FOB Destination, 2/10, n/30.
The cost of merchandise sold was P28,880.
Paid P550 freight on the same day.
7 Received collections from customers billed on sales of P48,600 on July 5.
9 Returned merchandise purchased from LOWKEY Company, P380.
11 Paid the amount due from July 3 transaction.
13 Purchase merchandise P12,300 and additional supplies P450 for cash.
15 Paid 15th month salary, P8,000.
16 Received refund for poor quality of merchandise from a supplier on cash
purchase made on July 13, P870.
18 Sold merchandise to various customers, P24,300.
The cost of merchandise is P16,500.
19 Purchase 15,800 of merchandise from Eleonor Shop.
FOB Shipping point, terms, 2/10, n/30.
23 Receive sales returns, P3,800 from various customers. Its cost is P2,900.
24 Borrowed money from Town Bank, signed promissory note for
P13,500.
24 Paid freight on July 21 purchase, P580.
26 Sold merchandise on account for P36,800 terms, 2/10, n/30 FOB
Destination. The merchandise sold had a cost of P21,300.
28 Serenity Villa withdrew cash from the business, P9,000.
30 Paid Eleonor Shop in full.
31 Paid Salary to employees, P8,000.
31 Paid News Hub for 1 month advertisement of the store, P1,580.
Paid Rent and Utilities expenses for the month, P2,800 and
P700 respectively. 31 Inventory count at the end of the month:
P48,480.
50
General Journal- PERIODIC METHOD
GJ-1

1-Jul
51
9
11
GJ-2
13
15
16
18
19
52
23
24
24
26
GJ-3
26
28
30
53
31
31
31
General Ledger- PERIODIC METHOD

Account Name: CASH
01-Jul GJ-1
2
2
5
7
11
13
15
54
16
18
23
24
24
28
30
31
31
31
Account Name: ACCOUNTS RECEIVABLE
Account Name: SUPPLIES
55
Account Name: OFFICE EQUIPMENT
Account Name: ACCOUNTS PAYABLE
Account Name: NOTES PAYABLE
56
Account Name: VILLA, CAPITAL
Account Name: VILLA, DRAWINGS
Account Name: INCOME SUMMARY
57
Account Name: SALES
Account Name: SALES DISCOUNT
58
Account Name: SALES RETURNS AND
ALLOWANCES
Account Name: PURCHASES
59
Account Name: PURCHASES DISCOUNT
Account Name: PURCHASES RETURNS AND ALLOWANCES
Account Name: FREIGHT IN
60
Account Name: SALARIES EXPENSE
Account Name: FREIGHT OUT
Account Name: ADVERTISING EXPENSE
61
Account Name: RENT EXPENSE
Account Name: UTILITIES EXPENSE
Reflection
In this activity I learned that
62
______________________________________________________________
________________
______________________________________________________________
________________
______________________________________________________________
________________
______________________________________________________________
________________
__________________________________________________________
Reference
Basic Financial Accounting and Reporting by Win Ballada, CPA
FUNDAMENTALS OF
MANAGEMENT 1
_______________
Section: ________________________________________ Date:
_____________________
LEARNING ACTIVITY SHEET Accounting Cycle of a

The first step in the summarizing part in the accounting process, after recording
and classifying, is the preparation of trial balance. A trial balance is prepared
to check the equality of debits and credits. A trial balance is a step in the
accounting process that shows the balances of accounts which also aids in the
preparation of financial statements.
63
In the preparation of trial balance we get the balances from the ledger balances
then from the trial balance we move the balances of the accounts to their
respective financial statements. A careful transfer of account balances from the
ledger to the trial balance must be observed. Errors such as incorrectly copying
the amounts from ledger to trial balance, placing the amount in the incorrect
column of the trial balance and even omitting an account in the trial balance
may still result in a balanced trial balance. Remember that a balanced trial
balance does not mean that it is free from errors.

1. Prepares a trial balance (ABM_FABM11-IVe-j-38)
Activity 1: CHECK THE BALANCE

Direction: Given is the trial balance of Kaydee Lim Merchandising Company.
The company uses a perpetual inventory system. Assuming that there are no
abnormal balances, identify whether each account title is in its correct debit or
credit column. Put a check mark (√) if the balance is correct; otherwise, cross
out the amount and write it in its proper column. Prepare the corrected trial
balance using the space provided below.
KAYDEE LIM MERCHANDISING COMPANY
Trial Balance
December 31, 2019
Account Titles Dr Cr Answer
Cash ₱ 645,300
Accounts Receivable ₱ 10,000
64
Merchandise Inventory 513,300
Store Supplies 10,000
Furniture and Fixtures 80,000
Equipment 450,000
Kaydee Lim, Capital 1,500,000
Kaydee Lim, Drawings 50,000
Sales 610,000
Sales Returns and Allowances 5,000
Sales Discount 2,400
Cost of Goods Sold 452,500
Advertising Expense 1,500
Freight Out 5,000
Trial Balance
Account Titles Dr Cr
65
Activity 2: COMPLETE ME
Direction: Given is an incomplete trial balance of Averill Merchandising using
the periodic inventory system. Fill in the missing accounts by using the
following additional information taken from the ledger account balances and
compute for the total balance.
Accounts Receivable ₱ 19,700 Purchase Discount ₱ 1,116
Freight In 850 Freight Out 650
Notes Payable 25,000 Averill, Capital 150,000
Advertising Expense 2,000 Cash 60,532
Averill, Drawings 5,000 Equipment 30,000
Sales 71,900 Sales Discount 714
Sales Returns and Allowances 800 Store Supplies 750
66
Purchase Returns and Allowances 1,080
AVERILL MERCHANDISING
Trial Balance
December 31, 2019
Cash
750
Equipment
Averill, Capital
Averill, Drawings
71,900
Sales Returns and Allowances
Purchases 109,000
Purchase Returns and Allowances
850
Advertising Expense
Utilities Expense 700
Rent Expense 2,500
Total
67
Activity 3: PREPARING TRIAL BALANCE (PERIODIC INVENTORY SYSTEM)
Direction: Using the information from the ledger account balances of Mae
Merchandising for the month of July 2019, prepare the trial balance for Periodic
Inventory System using the space provided below.
Cash ₱ 45,180 Purchases 70,900
Purchase Returns and Allowances
Accounts Receivable 24,700 880
Store Supplies 800 Purchase Discount 320

Equipment 15,000 Freight In 850
Accounts Payable 11,000 Salaries Expense 5,000
Notes Payable 15,000 Utilities Expense 700
Mae, Capital 80,000 Freight Out 650
Mae, Drawings 5,000 Rent Expense 2,500
Sales 67,200 Advertising Expense 2,000
Sales Returns and Allowances 800
Sales Discount 320
Trial Balance
68
Activity 4: PREPARING TRIAL BALANCE (PERPETUAL INVENTORY SYSTEM)
Direction: Using the information from the ledger account balances of Mae
Merchandising for the month of July 2019, prepare the trial balance for the
Perpetual Inventory System in a two-column columnar.
Cash ₱ 45,180 Sales 67,200
Accounts Receivable 24,700 Sales Returns and Allowances 800
Merchandise Inventory 17,830 Sales Discount 320
Store Supplies 800 Cost of Goods Sold ₱ 52,720
Equipment 15,000 Salaries Expense 5,000
Accounts Payable 11,000 Utilities Expense 700
69
Notes Payable 15,000 Freight Out 650
Mae, Capital 80,000 Rent Expense 2,500
Mae, Drawings 5,000 Advertising Expense 2,000
Trial Balance
70
Rubrics for Scoring Activity 3 and Activity 4
Criteria Excellent Good Fair NI
(10) (8) (5) (2)
Concept Shows clear Understands Do not have Do not have a

understanding of concepts in complete good
the concepts in preparing trial understanding understanding of
preparing a trial balance very of the concepts the concept in
balance. well with few in preparing preparing trial
errors. trial balance. balance.
Structure Observes proper Observes Observes Did not observed

listing of account proper listing proper listing of proper listing of
titles and amounts of account account account titles
are in its proper titles with 1-2 titles with 3-4 and amounts and
debit and credit amounts that amounts that not in its proper
column. With are not in its are not in its debit and credit
proper heading. proper debit proper debit column.
and credit and credit
Without proper
column. column.
heading.
With proper With proper
heading. heading.
Computations Obtained equal Obtained equal Obtained Obtained

and correct debit debit and unequal debit unequal debit
and credit credit balances and credit and credit
balances. but are balances with balances with 5
incorrect due to 3-4 errors. or more errors.
1-2 errors.
Reflection
Answer what is asked.
In your own words, what are the things you need to remember in preparing a
trial balance?
71
References
Teaching Guide for Senior High School. (2016) FUNDAMENTALS OF
ACCOUNTANCY, BUSINESS AND MANAGEMENT 1. Published by
Commision on Higher Education
Tugas, Florenz, et.al. (2016) FUNDAMENTALS OF ACCOUNTANCY,
BUSINESS AND MANAGEMENT 1. Vibal Group, Inc.
FUNDAMENTALS OF
MANAGEMENT 1
72
_______________
Section: ________________________________________ Date:
_____________________
LEARNING ACTIVITY SHEET Accounting Cycle of a

At the end of the accounting period, some accounts would require updating.
Adjusting entries are journal entries that reflect this kind of updating.
Adjustments for these accounts are for income and expenses to be reported in
the correct period and to ensure that the accrual-basis of accounting and the
time period principle are followed. This ensures that income is recognized in
the period in which they are earned and that expenses are recognized in the
period in which they are incurred.
In doing the following activities, you will be able to answer the questions such
as “What appropriate account titles are to be used in recording adjusting entries
for each adjustment transactions?”, “How will you compute for the amount
needed for each adjusting entry?” and “What method of recording are you
going to use for each adjustment transaction?”.
The learner prepares adjusting entries. (ABM_FABM11-IVe-j-39)
Activity 1: INCREASE, DECREASE, NO EFFECT

Direction: Identify the effect of each adjusting entry to the major accounts after
the adjustments are made. Place (I) to indicate that the account increased, (D)
to indicate that the account decreased and (NO) if there is no effect.
Adjustment Asset Liability Owner’s Equity
Income Expense
1. Accrued Income
2. Accrued Expense
3. Accumulated Depreciation
4. Prepaid Expense – Asset Method
73
5. Prepaid Expense – Expense Method
Activity 2: CROSSWORD PUZZLE

Direction: Fill in the crossword puzzle with the appropriate account title used
for the adjusting entry from the following adjustment data below. Word spacing
not included.
Across (Debited Account) Down (Credited Account)
74
1. To recognize expired portion of supplies.
2. To recognize expired portion of rent.
3. To record depreciation for the month.
4. To record accrued salaries expense.
5. To record bad debts.
Activity 3: FILL IN THE BOX

Direction: Analyze the following independent transactions and fill in the box
the appropriate adjusting entry for the end of the month. Show your
computation.
Transaction Debit Account Credit Account Amount
Title Title
1. Supplies debited to the store supplies

account during the year, ₱ 20,750.
As of December 31, 2020, ₱ 5, 250
is unused.
2. On November 15, 2020, DRF
Company subscribed to the
Techcron internet services. The
monthly fee of ₱ 2,000 is paid
every 15th of the month. The
payment on December 15, 2020
has been recorded by a debit to
Utilities Expense and credit to
Cash for ₱ 2,000.
3. On December 1, 2019, Insulife
Insurance Company received
₱36,600 from ABS Company as
insurance premium for one year.
The bookkeeper recorded the
payment with a debit to Cash and
credit to Unearned Insurance
Income for ₱ 36,600.
75
4. On December 1, 2019, ABS
Company issued a ₱ 240,000
promissory note to its supplier,
EMC Trading. The note bears an
annual interest rate of 12%. No
interest or principal has been made
until the due date. ABS Company
prepares its monthly financial
statements.
5. On December 1, 2020, KAC
Company paid ₱ 24,000 to ProLife
Insurance Company as insurance
premium for a year. The bookkeeper
recorded the payment with a debit to
Prepaid Insurance and credit to Cash
for ₱ 24,000.
Activity 4: PREPARE ADJUSTING AND ADJUSTED TRIAL BALANCE

Direction: Given is an unadjusted trial balance of Mema Company for the
first month of its operation. Use the following adjustments prepare the
adjusting entries with explanation and plot the adjustments and the adjusted
trial balance on the space provided below.
1. Salaries incurred in December but which remain unpaid as of December 31

amounting to ₱ 7,000.
2. Store supplies used for the month of December totaled ₱ 2, 300.
3. Store equipment is estimated to have salvage value of ₱ 5,000 and useful
life of five years.
4. Rent paid for 6 months amounting to ₱ 45,000.
5. Electric bill received for the month of December amounting to ₱ 6,000.
6. 10% of the Accounts Receivable is deemed uncollectible.
Mema Company e
Unadjusted Trial
Balanc December
31, 2020
Cash ₱ 735,500
76
Merchandise Inventory 372,900
Prepaid Rent 45,000
Store Supplies 10,000
Store Equipment 50,000
Accumulated Depreciation – Store Equipment 0
Accounts Payable ₱ 298,775
Mema, Capital 1,105,000
Mema, Drawings 50,000
Sales 835,745
Sales Returns and Allowances 4,000
Sales Discount 1,620
Cost of Goods Sold 695,000
Freight Out 4,500
Total ₱ 2,239,520 ₱ 2,239,520
General Journal
Date Account Titles Dr Cr
77
Account Titles Adjustments Adjusted Trial Balance
78
Dr Cr Dr Cr
79
Rubrics for Scoring
Criteria Excellent Good Fair NI
1. CONCEPT Shows clear Understands Do not have Do not have a

(10 points) understanding principles in complete good
of the principles preparing understanding understanding of
in preparing adjusting entries of the the principles in
adjusting entries and adjusted principles in preparing
and adjusted trial balance preparing adjusting entries
trial balance. very well with adjusting and adjusted
few errors. entries and trial balance.
adjusted trial
balance
10 8 4
6
2. PREPARING Used Used Used some Failed to use

ADJUSTING appropriate appropriate account titles appropriate
ENTRIES account titles account titles for that are account titles for
(18 points) for each entry each entry with inappropriate each entry and
with correct some incorrect with some computed
computed computed entries and balances are
balance plotted balances but have incorrect incorrect.
properly in its plotted properly computed
(7 or more
debit and credit in its debit and balances
mistakes)
column. credit column.
(4-6 mistakes)
(1-3 mistakes)
15
18
11
8
80
3. ADJUSTED Observes proper Observes proper Observes Did not observed
TRIAL listing of listing of proper listing of proper listing of
BALANCE account titles account titles account account titles
(27 points) and amounts are with 1-3 titles with 4-6 and amounts and
in its proper amounts that are amounts that not in its proper
debit and credit not in its proper are not in its debit and credit
column. debit and credit proper debit column.
Obtained equal column. and credit Obtained
and correct Obtained equal column. unequal debit
debit and credit debit and credit Obtained and credit
balances. balances but are unequal debit balances with 7
incorrect due to and credit or more errors.
1-3 errors balances with 4-
6 errors.
18
24
27
21
Reflection
In your own words, what are the things you need to remember in preparing
adjusting entries?
References
81
FUNDAMENTALS OF
MANAGEMENT 1
_______________
Section: ________________________________________ Date:
_____________________

Accounting Cycle of a Merchandising Business
Accounting is the language of business. Regardless of where in the world a
business is located, financial information is interpreted in the same way. It helps
people, both the internal and external users, to understand what is happening
inside the business. Through this accounting information, a person can assess
how a business is doing thus, can make important decisions such as whether or
not a business owner will look for additional investment or for a creditor to
grant a business loan application. Thus, making accurate important reports are
crucial to a business.
As you complete the accounting cycle, you will be preparing the different
financial reports that are used by the business to communicate its current
situation. Statement of Comprehensive Income or the Income Statement
presents profit or loss generated during the reported period, while the Statement
of Financial Position or Balance Sheet presents the assets, liabilities and equity
of the business as of the reporting period. The Statement of Changes in Owner’s
Equity presents the change in equity and the Statement of Cash Flow presents
the cash inflows and outflows during the reporting period. The Schedule of
Cost of Goods Sold is also prepared to reflect the Cost of Goods Sold for the
reporting period.
82
After preparing the financial reports, you are now ready to close your books.
Closing Entries are made at the end of the accounting period to transfer
balances from a nominal/temporary account to a real/permanent account. After
this, the ledger will be updated to reflect the Closing Entries. Finally, the Post-
closing Trial Balance is prepared to reflect the companies permanent account
balances at the end of the reporting period. Learning Competency with code
2. The learner completes the accounting cycle of a merchandising business
(ABM_FABM11-IVe-j-40)
3. The learner prepares the Statement of Cost of Goods Sold and Gross
Profit
(ABM_FABM11- IVe-j-41)
Activity 1: ARRANGE ME
Direction: Arrange the jumbled words and use those words to fill out the box
to reveal the eight steps of the Accounting Cycle.
1. GNIZRUOJLINA =
2. LRTAI NCBAAEL =
3. IIAALNNCF TTTMEEANSS =
4. LIONCGS ETH KSOOB =
5. IONSSCATTNAR =
6. JAUIGDNTS LJAOUNR EEISRTN =
7. OEESTWKRH =
8. SOTNPIG =
→
→ →
83
→ Activity →
2:
IDENTIFY THE FINANCIAL STATEMENT
Direction: Identify which financial statement each account title is used. Write
“SFP” if it is under the Statement of Financial Position, “SCO” for Statement in
Changes in Owner’s Equity or “SCI” for Statement of Comprehensive Income.
1. Sales Returns and Allowances
2. Merchandise Inventory,End
3. Utilities Expense
4. Owner, Capital – beginning
5. Accounts Receivable
6. Accounts Payable
7. Cost of Goods Sold
8. Sales Discount
9. Owner, Drawings
10. Freight Out
Activity 3: ACCOUNT TITLE SEARCH
Direction: Find and encircle the five (5) account titles in the grid that will
complete the schedule of cost of goods sold below.
A S D G E S F G N M P L F C B X
D C W X G N C O J E X S Z L B X
S D Q S O J B K F R D V O F G H
D F U Y K F T D L C F E C G H I
J M E I D W R G K H H M O E Q S
P T O R K L O S M A G N S S E D
C F R E I G H T I N M J T D G E
S C N M W X C O J D K F O N A W
M Y K J L R E D L I J D F S D D
J E P F M L G E I S P Z G D F U
W E U M D S J D P E T M O E I R
P U R C H A S E D I S C O U N T
Z E C A S D X C K N B N D O P L
84
T P H S C N N F D V G H S Q X S
I O A E E S H J K E H Z S A D V
Y U S S W X I H D N K F O B F E
T F E L Q S B G T T D W L T H M
R H S J U Y T R D O K L D R D N
E S F P E P L E J R D W L E O J
W X C D M X S D G Y C B X C K F
Q S B G E D V N M E L B N F D W
U Y T R W F E S D N F G H J K L
E I R E S S E D F D G H I H D V
Schedule of Cost of Goods Sold
Merchandise Inventory - beginning

Add: (1)
Less: Purchase Return & Allowances
(2)
Net Purchases
Add: (3)
Total Goods Available for Sale

Less: (4)
(5)
Activity 4: CHECK THE BOX

Direction: Identify what part of the statement of cash flow the following
transactions must be recorded. Put a checkmark (√) on the appropriate box.
Transactions Operating Investing Financing
Activities Activities Activities
1. Refund to Customers
85
2. Purchase of Equipment.
3. Payment to suppliers.
4. Owner’s withdrawal of cash from the business

for personal use.
5. Collection from Customers
6. Sale of Equipment.
7. Long term loan from a bank.
8. Receipts from customers.
9. Sale of Merchandise
10. Purchase of Land
Activity 5: CLASSIFY ME
Direction: Classify the following account titles whether they are
nominal/temporary accounts or real/permanent accounts. Write the account
title in the column where it is classified.
Income Summary Merchandise Inventory Rent Expense
Accounts Payable Sales Purchases Prepaid Rent
Owner, Capital Owner, Drawings Store Supplies
Nominal/Temporary Accounts Real/Permanent Accounts
Activity 6: PREPARE FINANCIAL REPORTS (PERIODIC INVENTORY SYSTEM)

Direction: Using the trial balance of Lim Merchandising for December 31,
2020 under periodic inventory system, prepare the following:
1. Schedule of Cost of Goods Sold
86
2. Income Statement
3. Statement of Changes in Owner’s Equity
4. Statement of Financial Position
LIM MERCHANDISING
December 31, 2020
Cash ₱ 45,180
Store Supplies 800
Store Equipment 15,000
Accounts Payable ₱ 11,000
Notes Payable 15,000
Lim, Capital 80,000
Lim, Drawings 5,000
Sales 67,200
Sales Returns and Allowances 800
Sales Discount 320
Purchases 70,900
Purchase Returns and Allowances 880
Purchase Discount 320
Freight In 850
Utilities Expense 700
Freight Out 650
Rent Expense 2,500
Total ₱ 174,400 ₱ 174,400
Additional Information: The physical count conducted on December 31, 2020

revealed that merchandise inventory amounted to ₱ 17,830.
87
Schedule of Cost of Goods Sold
Income Statement
88
Statement of Changes in Owner’s Equity
89
Rubrics for Scoring
Criteria Requirements
1. CONCEPT
Shows clear understanding of the
principles in preparing the
required financial report. (5) (5) (5) (5)
90
2. STRUCTURE
Classified all account titles to its
proper financial statement.
Observed proper listing of account
titles and amounts are transferred
correctly. (one point
each account title) (6) (9) (3) (8)
3. COMPUTATION
Use correct computation and
obtained correct total balances.
• Net Purchases (2)
• Total Goods Available for Sale (2)
• Cost of Goods Sold (3) (7)
• Net Sales (2)
• Gross Profit (2)
• Net Income (3) (7)
• Lim, Capital – end (3) (3)
• Total Assets (3)
• Total Liabilities and Owner’s
Equity (3) (6)
Activity 7: PREPARE CLOSING ENTRIES

Directions: Using the information from Activity 5, prepare all the necessary
Closing Entries and the Post-closing Trial Balance of Lim Merchandising for
December 31, 2020.
General Journal
Date Account Titles and Explanation Dr Cr
91
Post-Closing Trial Balance
92
Activity 8: COMPLETE THE ACCOUNTING CYCLE
Direction: Using the following account title of Maeye Catoc Merchandising
Company under perpetual inventory system, prepare the following:
1. Journalize transactions using the General Journal only
2. Posting Entries
3. Journalize Adjusting Entries
4. Adjusted Trial Balance
5. Income Statement (with supporting notes)
6. Statement of Changes in Owner’s Equity
7. Statement of Financial Position (with supporting notes)
8. Statement of Cash Flow
9. Journalize Closing Entries
10. Post-closing Trial Balance
Chart of Accounts
Assets Income
Current Assets 401 Sales
101 Cash 405 Sales Returns and Allowances
112 Account Receivable 406 Sales Discount
113 Allowance for Doubtful Accounts 601 Cost of Goods Sold
115 Merchandise Inventory Operating Expenses
116 Prepaid Rent Distribution Costs
117 Store Supplies 707 Store Supplies Expense
160 Furniture and Fixture 703 Freight-Out
170 Store Equipment 708 Depreciation Expense-Store Equipment
93
171 Accumulated Depreciation-Store Administrative Expenses
Equipment
Liabilities 701 Salaries Expense
201 Accounts Payable 702 Utilities Expense
202 Notes Payable 704 Rent Expense
203 Salaries Payable 705 Advertising Expense 204
Utilities Payable 709 Doubtful Accounts
Owner’s Equity 801 Income Summary

301 Maeye Catoc, Capital
306 Maeye Catoc, Drawings
For Financial Position use the following:

Cash Cash and Cash Equivalents
Accounts Receivable Trade and Other Receivables
Allowance for Doubtful Accounts
Prepaid Rent Prepaid Expenses

Store Supplies
Store Equipment Property, Plant and Equipment
Account Payable Trade and Other Payables

Salaries Payable
Utilities Payable
Business Transactions of Maeye Catoc Merchandising for the month of July

2020.
July 1, 2020 The business, Maeye Catoc Merchandising was registered as a single
proprietorship with the Department of Trade and Industry, Maeye invested ₱
130,000.
July 2, 2020 Bought store supplies on cash basis for ₱ 1,000.
July 2, 2020 Bought merchandise on account from Mina Las Merchandising, ₱ 26,400.
Terms: 2/10, n/30
94
July 3, 2020 Bought computer equipment on cash basis for ₱ 18,000. Salvage value of
3,000 and useful life of five years.
July 5, 2020 Sold merchandise on account ₱ 20,000, FOB destination, terms: 2/10, n/30.
The cost of goods sold was P16,560.
July 6, 2020 Paid ₱ 750 freight on July 5 sales.
July 6, 2020 Received credits from Mina Las Merchandising for merchandise returned, ₱
500.
July 10, 2020 Collected from July 5 transactions.
July 12, 2020 Paid Mina Las Merchandising.
July 14, 2020 Bought merchandise on cash basis ₱ 15,700.
July 15, 2020 Paid the following:

Advertising ₱ 3,500 Rent ₱ 3,000
Utilities ₱ 900 Salaries ₱ 3,000
July 17, 2020 Borrowed money from China Bank, signed a promissory note for ₱ 20,000.
July 17, 2020 Received refund from the supplier on cash purchased last July 14, ₱ 700.
July 18, 2020 Bought merchandise from Andy Lim Merchandising, ₱ 21,000, FOB
Shipping point, terms: 2/10, n/30
July 19, 2020 Paid freight on July 18 purchases, ₱ 850.
July 21, 2020 Bought merchandise for cash, ₱ 32,600.
July 23, 2020 Sold merchandise for ₱ 27,300. The cost of goods sold was ₱ 21,300.
July 24, 2020 Made refunds from cash customers, ₱ 1,300.
July 28, 2020 Paid Andy Lim Merchandising on the July 18 purchase, ₱ 10,000. No discount
for partial payment.
July 29, 2020 Maeye got cash from the business, ₱ 8,000.
July 30, 2020 Sold merchandise on account ₱ 56,400. Terms: 2/10, n/30. The cost of goods
sold was ₱ 40,760.
Additional information:
• Used Store Supplies as of July 31 amounting to ₱ 300.
95
• Rent paid is for 3 months.
• Salaries incurred in July 16-31 but which remain unpaid as of July 31
amounting to ₱ 3,000.
• Received electric bill for the month of July ₱ 1,000.
• 5% of Accounts Receivable is deemed uncollectible.
1. Journalize transactions using the General

Journal only
GENERAL JOURNAL PAGE 1
DATE ACCOUNT TITLE AND EXPLANATION PR DEBIT CREDIT
July 1
96
5
10
12
97
14
15
17
17
18
19
98
21
23
23
24
24
99
28
29
30
30
2. Posting Entries
GENERAL LEDGER
Account Title: CASH Account No: 101
DATE ITEMS PR DEBIT CREDIT BALANCE

2020 DEBIT CREDIT
100
101
2020 DEBIT CREDIT
102
Account Title: PREPAID RENT Account No: 116

2020 DEBIT CREDIT
Account Title: STORE SUPPLIES Account No: 117

2020 DEBIT CREDIT
Account Title: STORE EQUIPMENT Account No: 170

2020 DEBIT CREDIT
103
Account Title: ACCUMULATED DEPRECIATION-STORE EQUIPMENT
Account No: 171

2020 DEBIT CREDIT
Account Title: ACCOUNTS PAYABLE Account No: 201

2020 DEBIT CREDIT
Account Title: NOTES PAYABLE Account No: 202

2020 DEBIT CREDIT
Account Title: SALARIES PAYABLE Account No: 203

2020 DEBIT CREDIT
104
Account Title: UTILITIES PAYABLE Account No: 204

2020 DEBIT CREDIT
Account Title: MAEYE CATOC, CAPITAL Account No: 301

2020 DEBIT CREDIT
Account Title: MAEYE CATOC, DRAWINGS Account No: 306
2020 DEBIT CREDIT
Account Title: SALES Account No: 401

2020 DEBIT CREDIT
105
Account Title: SALES RETURN AND ALLOWANCES Account No: 405

2020 DEBIT CREDIT
Account Title: SALES DISCOUNT Account No: 406

2020 DEBIT CREDIT
Account Title: COST OF GOODS SOLD Account No: 601

2020 DEBIT CREDIT
Account Title: SALARIES EXPENSE Account No: 701
106
2020 DEBIT CREDIT
Account Title: UTILITIES EXPENSE Account No: 702

2020 DEBIT CREDIT
Account Title: FREIGHT OUT Account No: 703

2020 DEBIT CREDIT
Account Title: RENT EXPENSE Account No: 704
107
2020 DEBIT CREDIT
Account Title: ADVERTISING EXPENSE Account No: 705

2020 DEBIT CREDIT
Account Title: STORE SUPPLIES EXPENSE Account No: 707

2020 DEBIT CREDIT
Account Title: DEPRECIATION EXPENSE-STORE EQUIPMENT Account No: 708

2020 DEBIT CREDIT
108
Account Title: DOUBTFUL ACCOUNTS Account No: 709

2020 DEBIT CREDIT
Account Title: INCOME SUMMARY Account No: 801

2020 DEBIT CREDIT
3. Journalize Adjusting Entries

2020
July 31
109
31
31
31
31
31
4. Adjusted Trial Balance

110
5. Income Statement (with supporting
notes)
111
Income Statement
Notes
Note 1: Net Sales
Note 2: Distribution Costs
Note 3: Administrative Expenses
112
6. Statement of Changes in Equity
Statement of Changes in Equity
7. Statement of Financial Position

(with supporting notes)
ASSETS
Notes
113
LIABILITIES AND EQUITY
Note 4: Trade and Other Receivables
Note 5: Prepaid Expenses
114
Note 6: Property, Plant and Equipment
Note 7: Trade and Other Payables
8. Statement of Cash Flow
Statement of Cash Flow
115
9. Journalize Closing Entries

2020
Jul 31
31
116
31
31
31
117
10. Post-closing Trial Balance
Post-closing Trial Balance
Account
Number
118
Reflection
In your own words, what are the things you need to remember in completing
the accounting cycle?
References
119

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11

LEARNING ACTIVITY SHEETS

Learning Activity Sheet in Fundamentals of Accountancy,

Focal Persons : Inocencio T. Balag, EPS Math, SDO Isabela

Printed by DepEd Regional Office No. 02

Competency Page No.

Prepares the Adjusting Entries 1

Complete the Accounting Cycle 10

Describes the nature of transactions in a merchandising business 37

Records transactions of a merchandising business in the general and special journals 40

Posts transactions in the general and subsidiary ledgers 66

The learner completes the accounting cycle of a merchandising business

LEARNING ACTIVITY SHEET

Background Information for Learners

Learning Competency: Prepares the Adjusting Entries (ABM_FABM11-1Va-d-33)

2. On November 15,2019, VJK Company subscribed to the Globe services.

3. Roger’s rendered catering services last December 15,2019. The contract

4. On October 01,2019, Kaye Piano Services received a P 300,000, 8 % note

5. On December 1, 2019, LALA Company paid P 36,000 to GCQ Insurance

Directions: Solve the given problems

1. A firm purchased equipment on May 1, 2019 for P 60,000. It is estimated

2. Ethan Company uses the allowance method in estimating doubtful

Praca General Services

Unadjusted Trial Balance

Account Title Debit Credit

Rubrics for Scoring - Trial Balance

Concept Does not Does not Understands Shows clear

Computations Total balance of Total balance of Total balance of Total balance of

Textbook: Fundamentals of Accountancy, Business, and Management 1.

LEARNING ACTIVITY SHEET

Background Information for Learners

Learning Competency with code: Complete the Accounting Cycle.

Praca General Services

Adjusted Trial Balance

January 31, 2020

Account Title Debit Credit

Accounts Receivable 12,054

Prepaid Insurance 5,500

Office Equipment 24,000

Accumulated Depreciation P 2,000

Accounts Payable 12,200

Unearned Service Revenue 3,000

Praca, Capital 106,000

Praca, Drawings 10,000

Salaries Expense 14,000

Rent Expense 1,500

Utilities Expense 1,600

Depreciation Expense- Office Equipment 2,000

Bad Debt Expense 246

Supplies Expense 4,200

Insurance Expense 500

Total P 165,400 P 165,400

Directions: Prepare the Statement of Financial Position of Sherwin’s Delivery

Additional information for adjustment:

Use the following Charts of Accounts:

Code ASSETS Code EQUITY

601 Income and Expense Summary

Prepare the following:

Rubrics for Scoring Income Statement

Concept Does not Does not Understands Shows clear

Structure Heading is Correct heading Correct heading Correct heading

Computations Obtained incorrect Obtained Obtained Obtained

Rubrics for Scoring Statement of Financial Position

Structure Incorrect heading Correct heading Correct heading Correct heading