QUARTER 4 – MODULE 3

Hernandez, Charlene D.
11 – Accountant
Fundamentals of Accountancy, Business and Management 1

PRE – TEST
Going from what you have learned from the previous module, how do you think will the rest of the steps of the
accounting cycle for merchandising business differ? Write your thoughts below.

 I think the rest of the steps of the accounting cycle for merchandising business differ from the steps
learned in the previous lesson as we would be able to learn more and understand deeper about the
accounting cycle. I think I would encounter with gathering, journalizing and posting adjustments and the
process of closing an entry.
ACTIVITY 3.1
1. B 6. A 11. C
2. D 7. D 12. B
3. C 8. C 13. A
4. A 9. C 14. C
5. D 10. B 15. A
ACTIVITY 3.2
1. True 6. False 11. True
2. False 7. True 12. False
3. True 8. False 13. True
4. True 9. True 14. False
5. True 10. True 15. False
ACTIVITY 3.3
BINIBINIG MARIKIT TRADING
Charts of Accounts

Account
Account Classification Account Title
Number
101 Current Asset Cash
108 Current Asset Accounts Receivable
114 Current Asset Merchandise Inventory, beginning
117 Current Asset Merchandise Inventory, end
119 Current Asset Prepaid Insurance
122 Current Asset Prepaid Rent
126 Noncurrent Asset Building
132 Noncurrent Asset Furniture and Fixtures
135 Noncurrent Asset - contra Accumulated Depreciation – Building
141 Noncurrent Asset - contra Accumulated Depreciation – Furniture and Fixtures
201 Current Liability Accounts Payable
207 Current Liability Mortgage Payable
213 Current Liability Interest Payable
215 Current Liability Salaries Payable
301 Owner's Equity Soriano, Capital
 309 Owner's Equity Soriano, Drawing
401 Revenue Sales
404 Revenue Interest Income
411 Revenue - contra Sales Returns and Allowances
417 Revenue - contra Sales Discount
501 Cost and Expenses Purchases
503 Cost and Expenses Transportation – In
505 Cost and Expenses Transportation – out
518 Cost and Expenses Office Salaries Expense
524 Cost and Expenses Store Salaries Expense
526 Cost and Expenses Gas, Water, Electricity and Telephone Expenses
531 Cost and Expenses Interest Expense
534 Cost and Expenses Insurance Expense
537 Cost and Expenses Depreciation Expense – Building
542 Cost and Expenses Depreciation Expense – Furniture and Fixtures
549 Cost and Expenses - contra Purchase Returns and Allowances
555 Cost and Expenses - contra Purchase Discount

Binibining Marikit Trading

Trial Balance
April 30, 2020

Account Title Debit Credit

Cash 123,000  
Accounts Receivable 284,500  
Merchandise Inventory, beginning 150,000  
Prepaid Insurance 19,400  
Building 535,000  
Furniture and Fixtures 280,000  
Accumulated Depreciation – Building   85,500
Accumulated Depreciation – Furniture and Fixtures   56,000
Accounts Payable   110,000
Mortgage Payable 752,000
Soriano, Capital   645,120
Soriano, Drawing 50,000  
Sales   950,000
Interest Income   12,440
Sales Returns and Allowances 27,000  
Sales Discount 13,600  
Purchases 714,000  
Transportation – In 14,000  
Transportation – out 9,000  
Office Salaries Expense 245,000  
Store Salaries Expense 119,000  
Gas, Water, Electricity and Telephone Expenses 45,700  
Interest Expense 7,560  
Depreciation Expense – Building 0  
Depreciation Expense – Furniture and Fixtures 0  
Purchase Returns and Allowances   16,800
Purchase Discount   8,900
Totals 2,636,760 2,636,760
  Merchandise Inventory, April 30, Php210, 000
 Depreciation for the year: building – Php20, 000; Furniture and fixtures – Php15, 000
 Insurance Expense for the year, Php8, 600.00. 70% administrative; 30% selling.
 Accrued Interest on mortgage payable is 8%
 Accrued store salaries expense, Php10, 000

General Journal G1
Date Particulars Ref Debit Credit
2020  
Dec-31 Inventory, end   210,000.00  
  Income Summary     210,000.00
  To set – up ending inventory      
         
31 Depreciation Expense – Building   20,000.00  
  Accumulated Depreciation - Building     20,000.00
  To record depreciation for the year      
         
31 Depreciation Expense - Furniture and Fixtures   15,000.00  
  Accumulated Depreciation – Furniture and Fixtures     15,000.00
  To record depreciation for the year      
         
31 Insurance Expense   8,600.00  
  Prepaid Rent     8,600.00
  To adjust prepaid insurance      
         
31 Interest Expense   453.6  
  Interest Payable     453.6
To record accrued interest for 9 months (7,560 × 8%
  × 9/12)      
       
31 Store Salaries Expense   10,000.00  
  Salaries Payable     10,000
  To recognize accrued expense      

General Ledger:

Merchandise Inventory
Date Items Ref. Debit Date Items Ref. Credit
2020              
Dec-31 Balance   150,000        
31 Adjusting Entry G1 210,000        
Balance 360,000

Prepaid Rent
Date Items Ref. Debit Date Items Ref. Credit
        2020      
        Dec-31 Adjusting Entry G1 8,600

Accumulated Depreciation - Building

Date Items Ref. Debit Date Items Ref. Credit
        2020      
 Dec 31 Balance 85,500
        Dec-31 Adjusting Entry G1 20,000
Balance 105,500

Accumulated Depreciation – Furniture and Fixtures

Date Items Ref. Debit Date Items Ref. Credit
        2020      
Dec-31 Balance 56,000
        Dec-31 Adjusting Entry G1 15,000
Balance 71,000

Interest Payable
Date Items Ref. Debit Date Items Ref. Credit
        2020      
        Dec-31 Adjusting Entry G1 453.6

Salaries Payable
Date Items Ref. Debit Date Items Ref. Credit
        2020      
        Dec-31 Adjusting Entry G1 10,000

Insurance Expense
Date Items Ref. Debit Date Items Ref. Credit
2020              
Dec-31 Adjusting Entry G1 8,600        

Interest Expense
Date Items Ref. Debit Date Items Ref. Credit
2020              
Dec-31 Adjusting Entry G1 454        

Store Salaries Expense

Date Items Ref. Debit Date Items Ref. Credit
2020            
Dec-31 Balance 119,000
Dec-31 Adjusting Entry G1 10,000        
31 Balance   129,000        

Depreciation Expense – Building

Date Items Ref. Debit Date Items Ref. Credit
2020            
Dec-31 Adjusting Entry G1 20,000        

Depreciation Expense - Furniture and Fixtures

Date Items Ref. Debit Date Items Ref. Credit
2020            
Dec-31 Adjusting Entry G1 15,000        
 Income Summary
Date Items Ref. Debit Date Items Ref. Credit
        2020      
        Dec-31 End of Inventory G1 210,000

Binibining Marikit
Adjusted Trial Balance
December 31, 2020

Account Number Account Title Debit Credit

101 Cash 123,000  
108 Accounts Receivable 284,500  
114 Merchandise Inventory, beginning 150,000  
119 Prepaid Insurance 19,400  
126 Building 535,000  
132 Furniture and Fixtures 280,000  
135 Accumulated Depreciation – Building   105,500
141 Accumulated Depreciation – Furniture and Fixtures   71,000
201 Accounts Payable   110,000
207 Mortgage Payable   752,000
301 Soriano, Capital   645,120
309 Soriano, Drawing 50,000  
401 Sales   950,000
404 Interest Income   12,440
411 Sales Returns and Allowances 27,000  
417 Sales Discount 13,600  
501 Purchases 714,000  
503 Transportation – In 14,000  
505 Transportation – out 9,000  
518 Office Salaries Expense 245,000  
524 Store Salaries Expense 129,000  
527 Gas, Water, Electricity and Telephone Expenses 45,700  
531 Interest Expense 8,014  
537 Depreciation Expense – Building 20,000  
542 Depreciation Expense – Furniture and Fixtures 15,000  
549 Purchase Returns and Allowances   16,800
555 Purchase Discount   8,900
117 Merchandise Inventory, end 210,000  
122 Prepaid Rent   8,600
213 Interest Payable   454
215 Salaries Payable   10,000
536 Insurance Expense 8,600  
  Income Summary   210,000
  Totals 2,900,814 2,900,814

Binibining Marikit
Income Statement
For the year ended December 31, 2020

  Note    
Net Sales Revenue 1   Php 909,400
Cost of Goods Sold 2   (693,700)
Operating Expenses:     215,700
Distribution Costs 3 52,014  
Administrative Expenses 4 428,300 (480,314)
Net Income (Loss)     (Php 264,614)

Note 1: Net Sales Revenue

Sales   Php 950,000
Interest Income 12,440
Less: Sales Returns and Allowances Php 27,000  
Sales Discount 13,600 40,600
Net Sales Revenue   Php 909,400

Note 2: Cost of Goods Sold

Merchandise Inventory, Beginning   Php 150,000
Add: Net Cost of Purchases    
Purchases 714,000  
Less: Purchase Returns and Allowances 16,800
Purchase Discount 8,900  
Net Purchases 739,700  
Add: Transportation -In 14,000 753,700
Cost of Goods Available for Sale   903,700
Less: Merchandising Inventory, end   210,000
Cost of Goods Sold   Php 693,700

Note 3: Distribution Costs

Interest Expense   Php 8,014
Transportation - Out 9,000
Depreciation Expense – Building   20,000
Depreciation Expense – Furniture and Fixtures   15,000
Total Distribution Costs   Php 52,014

Note 4: Administrative Expenses

Insurance Expense   Php 8,600
Gas, Water, Electricity and Telephone Expenses   45,700
Office Salaries Expense   245,000
Store Salaries Expense   129,000
Total Administrative Expenses   Php 428,300