Practice Exercise 4-1.

COMPLETING THE ACCOUNTING CYCLE

The account balances in the ledger of Jupiter's Store on December 31 of the current year
are as follows:
Cash P 34,150 Sales 577,800
Accounts Receivable 62,750 Sales returns and allowances 3,300
Merchandise inventory 81,700 Purchases 379,650
Prepaid insurance 7,125 Purchase discount 4,930
Store supplies 895 Sales salaries expense 61,150
Office supplies 575 Advertising expense 16,400
Store equipment 52,500 Misc. selling expense 1,960
Accum. Dep'n - Store equipt 17,200 Office salaries expense 31,500
Office equipment 18,300 Rent expense – selling 16,000
Accum. Dep'n – Office equipt 7,800 Rent expense – general 8,000
Accounts payable 41,650 Misc. general expense 1,440
Note Payable (due in 5 years) 25,000 Gain on sale of equipment 800
J. Perez, Capital 124,215 Interest expense 2,000
J. Perez, Drawing 20,000

The data for adjustments on December 31 are as follows:

a. Merchandise inventory on December 31 - P89, 200

b. Insurance expired during the year: Allocable as selling expense - P2, 550; Allocable as general expense - P715
c. Inventory of supplies on December 31: Office supplies - P295; Store supplies - P235
d. Depreciation for the current year: Store equipment - P4, 050; Office equipment - P 1,240
e. Bad debts is estimated at P2, 750
f. Salaries payable on December 31 - Sales salaries P1, 525; Office salaries P1, 200