VI.

LEARNING ACTIVITIES

A. Prepare the income statement using the function of expense method. In a separate
schedule, show the computation of Cost of Goods Sold.

Selected amounts from the accounting records of Winnie Villanueva Souvenirs are
called in alphabetical order:

Accounts Receivable P48,300 Purchases P91,300

Accumulated Depreciation 18,700 Purchase Discount 3,000
Cost of Goods Sold ? Purchase Returns 2,000
Transportation In 2,200 Sales Discount 9,000
General Expenses 23,800 Sales Returns 16,000
Other Operating Expenses 1,500 Sales 301,000
Inventory, 6/30/2016 21,870 Distribution Cost
37,840
Inventory, 1/1/2016 19,450 Owner’s Equity 126,070
Unearned Revenues 6,500

VII. ASSIGNMENT

A. PREPARING WORKSHEET, ADJUSTING AND CLOSING ENTRIES, AND

FINANCIAL STATEMENTS

The ledger account of Linda Chua Company for the year ended Dec. 31, 2015 are as
follows:

Accu. Depreciation-Off. 100,000 Notes Payable due in 200,000

Bldg 2 years
Accu. Depreciation-Off. 150,000 Office Building 1,600,000
Equipment
Accounts Receivable 136,000 Office Equipment 570,000
Accounts Payable 74,000 Office Supplies 42,000
Cash 72,000 Prepaid Advertising 75,000
Transportation In 72,000 Purchase Discounts 172,000
Insurance Expense 25,000 Purchase rets. & 133,000
Allow.
Interest Expense 208,000 Purchases 2,643,000
Chua, Capital 1,510,000 Salaries Expense 862,000
Chua, Withdrawal 200,000 Sales Discounts 161,000
Land 400,000 Sales Returns and 187,000
Allowa.
Merchandise Inventory 598,000 Sales 4,600,000
Mortgage Payable 1,100,000 Travel Expense 188,000

Additional Information:
a. Office supplies consumed during the year amounted to P17,000.
b. Advertising expense in the amount of P25,000 has expired during the year.
c. Salaries of P21,000 have accrued as at Dec. 31, 2013.
d. Depreciation on the office building and on the office equipment amounted to
P15,000 and P20,000, respectively.
e. he Dec. 31, 2013 ending inventory is P723,000.

Required:
1. Prepare worksheet.
2. Prepare the financial statements.
3. Prepare the adjusting and closing entries.

General Journal

(Prepare the journal entries & Financial Statements using this journal.)
Date Description P.R Debit Credit

Date Description P.R Debit Credit