The Fashion Rack

GENERAL JOURNAL Page # 25.00

DATE PARTICULARS P/R DR CR
2021
Oct 1 Rent Expense 616 44,000.00
Cash 101 44,000.00
Paid for rent expenses, Check 601

2 Advertising Expense, Prepaid 133 51,000.00

Cash 101 51,000.00
Paid for advertising expense, Check 602

3 Cash 101 20,678.00

Sales Discount 403 422.00
Accounts Receivable 111 21,100.00
Received payment on account from Erin Quinn

4 Accounts Payable 203 78,300.00

Cash 101 76,734.00
Purchase Discounts 504 1,566.00
Paid balance owed to A Fashion Statement, Check 603

5 Accounts Receivable 111 21,100.00

Sales 401 21,100.00
Sold merchandise on credit to Alex Wilder on terms 2/10,1/15,n/30

Freight out 611 500.00

Accounts Receivable 111 500.00
Freight charges for Alex Wilder, shipping term FOB DP, Collect

6 Supplies 131 10,500.00

Cash 101 10,500.00
Paid for supplies expense to ABC Supply, Check 604

8 Cash 101 17,000.00

Account Receivable 111 17,000.00
Received payment on account from Miguel Diaz , full

9 Cash 101 1,500.00

Supplies 131 1,500.00
Cash refund for damaged supplies from ABC Supply

10 Sales Returns and Allowances 402 6,000.00

Accounts Receivable 111 6,000.00
Credit memo to Alex Wilder for defective goods

13 Accounts Receivable 111 20,500.00

Sales 401 20,500.00
Sold merchandise on credit to Jane Hopper on terms 2/10,n/30

14 Purchases 501 48,200.00

 Accounts Payable 203 49,200.00
Purchased goods on credit from Unique Styles on terms 2/10, n/30

Freight In 502 1,000.00

Accounts Payable 203 1,000.00
Payment of freight charges to Unique Styles ; shipping term FOB SP, prepaid

15 Cash 111 318,000.00

Sales 401 318,000.00
Cash sales from October 1-15

16 Purchases 501 70,000.00

Cash 101 16,000.00
Account Payable 203 56,000.00
Purchased goods on account from A Fashion Statement with 20% downpayment
on terms 2/10, n/30

Accounts Payable 203 2,000.00

Cash 101 2,000.00
Paid for the freight, Check 606

17 Heron, Drawing 302 32,000.00

Cash 101 20,000.00
Supplies 131 2,000.00
Purchases 501 10,000.00
Owner withdrew for personal expenses, Check 607

18 Accounts Payable 203 7,000.00

Purchases Returns and Allowance 503 7,000.00
Credit memo for goods delivered with wrong specifications - Unique Styles

19 Cash 101 5,000.00

Accounts Receivable 111 5,000.00
Received payment from Jane Hopper, partial

20 Cash 101 14,944.00

Sales Discounts 403 156.00
Accounts Receivable 111 15,100.00
Full payment of Alex Wilder on term 2/10, 1/15, n/30 (availed of 1% discount)

21 Accounts Payable 203 15,000.00

Cash 101 15,000.00
Partial payment to Unquie Style, Check 608. Paid during the discount period

22 Cash 101 200,000.00

Notes Payable 231 200,000.00
Borrowed money from Prime Bank on terms 6/90

23 Cash 101 15,090.00

Sales Discount 403 410.00
 Accounts Receivable 111 15,500.00
Full payment of Jane Hopper on term 2/10, n/30 (availed of 2% discount)

25 Janitorial Services Expense 615 10,000.00

Cash 101 10,000.00
Paid for Janitorial Services from A+ Janitors, Check 609

27 Accounts Payable 203 54,000.00

Cash 101 54,000.00
Full payment to settle count with A Fashion Statement, Check 610

28 Accounts Payable 203 50,000.00

Cash 101 50,000.00
Partial settlement of account with Classy Threads, Check 611

29 Accounts Payable 203 27,200.00

Cash 101 26,376.00
Purchase Discounts 504 824.00
Full payment to settle count with Unique Styles, Check 612

30 Salaries Expense 617 48,000.00

Cash 101 48,000.00
Paid for Salaries Expense, Check 613

31 Cash 101 160,400.00

Sales 401 160,400.00
Cash sales from October 16-31

ADJUSTMENTS
2021 (Adjustment A)
Oct 31 Income Summary 399 889,560.00
Merchandise Inventory 121 889,560.00
To traansfer beginning inventory to Income summary

(Adjustment B)
31 Merchandise Inventory 121 648,160.00
Income Summary 399 648,160.00
To record ending inventory

(Adjustment C)
31 Utilities Expense 619 14,300.00
Utilities Payable 221 14,300.00
To record unpaid utilities bill for October

(Adjustment D)
31 Interest expense 614 1,200.00
Interest Payable 222 1,200.00
To record accrued interest from note issued last October 22, 2021, for the month
of October
 (Adjustment E)
31 Supplies Expense 918 20,600.00
Supplies 131 20,600.00
To record supplies used for the month of October

(Adjustment F)
31 Insurance Expense 613 14,000.00
Prepaid Insurance Expense 134 14,000.00
To record expired insurance from six-month insurance policy for the month of
October

(Adjustment G)
31 Advertising Expense 612 17,000.00
Prepaid Advertising Expense 133 17,000.00
To record used advertising from three-month advertising contract for the month
of October

(Adjustment H)
31 Depreciation Expense - Equipment 631 3,000.00
Accumulated Depreciation - Equipment 142 3,000.00
To record depreciation for equipment for the month of October

(Adjustment I)
31 Depreciation Expense - Furniture 632 5,000.00
Accumulated Depreciation - Furniture 144 5,000.00
To record depreciation for furniture for the month of October

(Adjustment J)
31 Uncollectible Accounts Expense 641 120.00
Allowance for Doubtful Accounts 112 120.00
To recorded estimated loss from uncollectible accounts based on half of 1% of
accounts receivable of 4,200

CLOSING ENTRIES
2021
Oct 31 Sales 401 520,500.00
Purchase Returns and Allowances 503 7,000.00
Purchase Discounts 504 2,390.00
Income Summary 399 529,890.00
To close income and contra-cost-of-sales accounts
CLOSED

Income Summary 399 293,008.00

Sales Returns and Allowances 402 6,000.00
Sales Discount 403 988.00
Purchases 501 108,200.00
Freight In 502 1,000.00
Freight Out 611 500.00
Advertising Expense 612 17,000.00
 Insurance Expense 613 14,000.00
Interest Expense 614 300.00
Janitorial Services Expense 615 10,000.00
Rent Expense 616 44,000.00
Salaries Expense 617 48,000.00
Supplies Expense 618 20,600.00
Utilities Expense 619 14,300.00
Depreciation Expense - Equipment 631 3,000.00
Depreciation Expense - Furniture 632 5,000.00
Uncollectible Accounts Expense 641 120.00
To close contra-sales accounts, inventoriable costs, and expenses
CLOSED

Income Summary (4,198.00)

Heron, Capital (4,198.00)
To close capital account to income summary

Heron, Capital 32,000.00

Heron, Drawing 32,000.00
To close Heron, drawings account
CLOSED
 Cash 101 Accounts Receivable 111 Accounts Payable 203 Sales 401 Freight Out 611 Salaries Expense 617
Date Particulars P/R Dr Date Particulars P/R Cr Date Particulars P/R Dr Date Particulars P/R Cr Date Particulars P/R Dr Date Particulars P/R Cr Date Particulars P/R Dr Date Particulars P/R Cr Date Particulars P/R Dr Date Particulars P/R Cr Date Particulars P/R Dr Date Particulars P/R Cr
1-Oct Balance 598,000.00 1-Oct To record check 601 GJ-25 44,000.00 1-Oct Balance 62,100.00 4-Oct To record payment of balanced owed to Fashion Statement, Check 603 GJ-25 78,300.00 1-Oct Balance 183,000.00
3-Oct To record recieved payment on account from Erin Quinn GJ-25 20,678.00 2-Oct To record check 602 GJ-25 51,000.00 3-Oct To record payment from Erin Quinn GJ-25 21,100.00 16-Oct A Fashion Statement - frieght charge GJ-25 2,000.00 14-Oct To record payment to Unique Styles GJ-25 48,200.00 05-Oct To record payment of sold merchandise GJ-25 21,600.00 5-Oct To record payment of shipment fee 611 500.00 30-Oct To record payment of salaries, Check 613 GJ-25 48,000.00
8-Oct To record recieved payment on account from Miguel Diaz GJ-25 17,000.00 4-Oct To record payment of balanced owed to Fashion Statement, Check 603 GJ-25 76,734.00 5-Oct To record payment from Alex Wlder GJ-25 21,600.00 18-Oct To record credit memo for goods delivered with wrong specification to Unique Styles GJ-25 7,000.00 14-Oct Freight In GJ-25 1,000.00 13-Oct To record payment of sold merchandise GJ-25 20,500.00
9-Oct To record refunded damaged supplies from ABC Supply GJ-25 1,500.00 6-Oct To record check 604 GJ-25 10,500.00 13-Oct To record payment from Jane Hopper GJ-25 20,500.00 5-Oct Alex Wilder - frieght charge GJ-25 500.00 21-Oct To record partial payment to Unique Style paid within the discounting period GJ-25 15,000.00 16-Oct To record full payment to Fashion Statement GJ-25 56,000.00 15-Oct To record cash sales from Oct 1-15 GJ-25 318,000.00 Balance before closing 500.00 Balance before closing 48,000.00
15-Oct To record cash sales from Oct 1-15 GJ-25 318,000.00 16-Oct To record downpayment of purcahsed goods from A Fashion Statement GJ-25 14,000.00 8-Oct To record payment from Miguel Diaz GJ-25 17,000.00 27-Oct To record full payment to Fashion Statement, Check 610 GJ-25 54,000.00 31-Oct To record cash sales from Oct 16-31 GJ-25 160,400.00 31-Oct Closing GJ-25 500.00 31-Oct Closing GJ-25 48,000.00
19-Oct To record partial payment from Jane Hopper GJ-25 5,000.00 16-Oct To record freight charge to A Fashion Statement GJ-25 2,000.00 10-Oct To record credit memo to Alex Wilder GJ-25 6,000.00 28-Oct To record partial settlement of accounts with Classy Threads, Check 611 GJ-25 50,000.00
20-Oct To record payment from Alex Wilder in full GJ-25 14,944.00 17-Oct To record the withdrawal of owner for personal expenses GJ-25 20,000.00 19-Oct To record partial payment from Jane Hopper GJ-25 5,000.00 29-Oct To record full payment to Unique Styles, Check 612 GJ-25 27,200.00 Balance before closing 520,500.00 Balance closed Balance closed
22-Oct To record borrowed money from Prime Bank on terms 6/90 GJ-25 200,000.00 21-Oct To record partial payment to Unique Style paid within the discounting period GJ-25 15,000.00 233,500.00 288,200.00 31-Oct Closing GJ-25 520,500.00
23-Oct To record full payment from Jane Hopper on account GJ-25 15,090.00 25-Oct To record payment of services to A+ Janitors, Check 609 GJ-25 10,000.00 20-Oct To record payment from Alex Wilder in full GJ-25 15,100.00 Adjusted/ post-closing balance 54,700.00 Balance closed
31-Oct To record cash sales from Oct 16-31 GJ-25 160,400.00 27-Oct To record full payment to Fashion Statement, Check 610 GJ-25 54,000.00 23-Oct To record full payment from Jane Hopper on account GJ-25 15,500.00
28-Oct To record partial settlement of accounts with Classy Threads, Check 611 GJ-25 50,000.00
29-Oct To record full payment to Unique Styles, Check 612 GJ-25 26,376.00
30-Oct To record payment of salaries, Check 613 GJ-25 48,000.00 104,200.00 80,200.00
1,350,612.00 421,610.00 Adjusted/ post-closing balance 24,000.00
Adjusted/post-closing balance 929,002.00

Allowance for Doubtful Accounts 112 Utilities Payable 221 Sales Returns & Allowances 402 Advertising Expense 612 Supplies Expense 618
Date Particulars P/R Dr Date Particulars P/R Cr Date Particulars P/R Dr Date Particulars P/R Cr Date Particulars P/R Dr Date Particulars P/R Cr Date Particulars P/R Dr Date Particulars P/R Cr Date Particulars P/R Dr Date Particulars P/R Cr
1-Oct Balance 4,200.00 31-Oct To record payment of unpaid utilities expense GJ-25 14,300.00 01-Oct To record credit memo to Alex Wilder GJ-25 6,000.00 31-Oct Adjusting enrry for expired advertising expenses in October GJ-25 17,000.00 Adjusting entry for supplies used in October
Adjusted/ post-closing balance 14,300.00 Balance before closing 6,000.00 31-Oct To record the adjusting entry to reflect supplies used GJ-25 20,600.00
3-Oct To record payment of allowance for doubtful accounts GJ-25 120.00 1-Nov Reversing Entry GJ-25 14,300.00 31-Oct Closing GJ-25 6,000.00 Balance before closing 17,000.00 Balance before closing 20,600.00
Adjusted/post-closing balance 4,320.00 Balance closed 31-Oct Closing GJ-25 17,000.00 31-Oct Closing GJ-25 20,600.00

Balance closed Balance closed

Merchandise Inventory 121 Interest Payable 222 Sales Discount 403 Insurance Expense 613 Utilities Expense 619
Date Particulars P/R Dr Date Particulars P/R Cr Date Particulars P/R Dr Date Particulars P/R Cr Date Particulars P/R Dr Date Particulars P/R Cr Date Particulars P/R Dr Date Particulars P/R Cr Date Particulars P/R Dr Date Particulars P/R Cr
1-Oct Balance GJ-25 889,960.00 1-Oct Balance GJ-25 889,960.00 31-Oct To record payment of interest from Oct 22, 2021 note GJ-25 300.00 03-Oct To record discount of sale GJ-25 422.00 31-Oct Adjusting entry for expired insurance expense in October GJ-25 14,000.00 Adjusting entry for unpaid utilities expense for October
Adjusted/ post-closing balance 300.00 20-Oct To record discount of sale GJ-25 156.00 31-Oct To record payment of unpaid utilities expense GJ-25 14,000.00
31-Oct To record the adjusting of ending inventory GJ-25 648,160.00 1-Nov Reversing Entry GJ-25 300.00 23-Oct To record discount of sale GJ-25 410.00 Balance before closing 14,000.00 Balance before closing 14,000.00
Adjusted/post-closing balance 648,160.00 Balance before closing 988.00 31-Oct Closing GJ-25 14,000.00 31-Oct Closing GJ-25 14,000.00
31-Oct Closing GJ-25 988.00
Balance closed Balance closed Balance closed

Supplies 131 Notes Payable 231 Purchases 501 Interest Expense 614 Depreciation Expense - Equipment 631
Date Particulars P/R Dr Date Particulars P/R Cr Date Particulars P/R Dr Date Particulars P/R Cr Date Particulars P/R Dr Date Particulars P/R Cr Date Particulars P/R Dr Date Particulars P/R Cr Date Particulars P/R Dr Date Particulars P/R Cr
1-Oct Balance GJ-25 41,000.00 9-Oct To record refunded supplies from ABC supply GJ-25 1,500.00 22-Oct To record borrowed money from Prime Bank on terms 6/90 GJ-25 200,000.00 14-Oct To record purchased goods from Unique Styles GJ-25 48,200.00 17-Oct Owner's withdrawal-purchases GJ-25 10,000.00 31-Oct Adjusting entry for expired interest expense in October GJ-25 300.00 Adjusting entry for October equipment
17-Oct To record withdrawal of owner for personal expenses GJ-25 2,000.00 Adjusted/ post-closing balance 200,000.00 16-Oct To record purchased goods from Fashion Statement GJ-25 70,000.00 31-Oct To record depreciation of equipment GJ-25 3,000.00
6 -Oct ABC Supply purchase GJ-25 10,500.00 118,200.00 Balance before closing 300.00 Balance before closing 3,000.00
3,500.00 Balance before closing 108,200.00 31-Oct Closing GJ-25 300.00 31-Oct Closing GJ-25 3,000.00
51,000.00 31-Oct Closing GJ-25 108,200.00
48,000.00 Balance closed Balance closed Balance closed
31-Oct Adjusting entry for supplies used in October 20,600.00
Adjusted/ Post-closing balance 27,400.00

Prepaid Advertising Expense 133 Heron, Capital 301 Freight In 502 Janitorial Services Expense 615 Depreciation Expense - Furniture 632
Date Particulars P/R Dr Date Particulars P/R Cr Date Particulars P/R Dr Date Particulars P/R Cr Date Particulars P/R Dr Date Particulars P/R Cr Date Particulars P/R Dr Date Particulars P/R Cr Date Particulars P/R Dr Date Particulars P/R Cr
1-Oct Prepaid radio advertising - Cable Station GJ-25 51,000.00 18-Oct Owner's withdrawal GJ-25 32,000.00 1-Oct Balance 1,939,860.00 14-Oct Unique Styles GJ-25 1,000.00 25-Oct To record payment of services to A+ Janitors, Check 609 GJ-25 10,000.00 Adjusting entry for October furniture
31-Oct Adjusting entry GJ-25 17,000.00 31-Oct Net loss for the period of October GJ-25 4,918.00 31-Oct To record depreciation of furniture GJ-25 5,000.00
Adjusted/ Post-closing balance 34,000.00 Balance before closing 1,000.00 Balance before closing 10,000.00 Balance before closing 5,000.00
36,918.00 1,939,860.00 31-Oct Closing GJ-25 1,000.00 31-Oct Closing GJ-25 10,000.00 31-Oct Closing GJ-25 5,000.00
31-Oct Adjusted/ post-closing balance GJ-25 1,902,942.00 Balance closed
Balance closed Balance closed

Prepaid Insurance Expense 134 Purchases Returns & Allowances 503 Rent Expense 616 Uncollectible Accounts Expense 641
Date Particulars P/R Dr Date Particulars P/R Cr Date Particulars P/R Dr Date Particulars P/R Cr Date Particulars P/R Dr Date Particulars P/R Cr Date Particulars P/R Dr Date Particulars P/R Cr
1-Oct Balance GJ-25 84,000.00 18-Oct To record credit memo for goods delivered with wrong specification to Unique Styles GJ-25 7,000.00 1-Oct Properties Management GJ-25 44,000.00 Adjusting entry for October's uncollectible accounts
31-Oct Adjusting entry GJ-25 14,000.00 Heron, Drawing 302 31-Oct To record payment of allowance for doubtful accounts GJ-25 120.00
Adjusted/ Post-closing balance 70,000.00 Date Particulars P/R Dr Date Particulars P/R Cr Balance before closing 7,000.00 Balance before closing 44,000.00 Balance before closing 120.00
18-Oct To record check 607 GJ-25 32,000.00 31-Oct Closing GJ-25 7,000.00 31-Oct Closing GJ-25 44,000.00 31-Oct Closing GJ-25 120.00
Balance closed
Adjusted/ post-closing balance 32,000.00 Balance closed Balance closed
31-Oct Closing GJ-25 32,000.00
Balance Closed
Equipment 141 Purchases Discounts 504.00
Date Particulars P/R Dr Date Particulars P/R Cr Date Particulars P/R Dr Date Particulars P/R Cr
1-Oct Balance GJ-25 200,000.00 4-Oct To record the discount GJ-25 1,566.00
Adjusted/ Post-closing balance 200,000.00 Income Summary 399 29-Oct To record the discount GJ-25 824.00
Date Particulars P/R Dr Date Particulars P/R Cr Balance before closing 2,390.00
31-Oct Beginning inventory GJ-25 874,960.00 31-Oct To record the adjusting of ending inventory GJ-25 648,160.00
Accumulated Depreciation - Equipment 142 31-Oct Debit balance accounts 293,008.00 31-Oct Credit balance accounts GJ-25 529,890.00 31-Oct Closing GJ-25 2,390.00
Date Particulars P/R Dr Date Particulars P/R Cr Balance closed
1-Oct Balance GJ-25 18,000.00 1,182,968.00 1,178,050.00
31 -Oct To record depreciation of equipment GJ-25 3,000.00 Balance (net loss for the year) 4,918.00
Adjusted/ Post-closing balance 21,000.00 31-Oct Closing GJ-25 4,918.00
Balanced close
Furniture 143
Date Particulars P/R Dr Date Particulars P/R Cr
1-Oct Balance GJ-25 300,000.00
Adjusted/ Post-closing balance 300,000.00

Accumulated Depreciation - Furniture 144

Date Particulars P/R Dr Date Particulars P/R Cr
1-Oct Balance GJ-25 30,000.00
31 -Oct To record depreciation of furniture GJ-25 5,000.00
Adjusted/ Post-closing balance 35,000.00
 The Fashion Rack
Worksheet
for the month ended October 31, 2021
ADJUSTED STATEMENT OF STATEMENT OF
TRIAL BALANCE ADJUSTMENTS TRIAL BALANCE PROFIT & LOSS FINANCIAL POSITION
ACCOUNT NAME DR CR DR CR DR CR DR CR DR CR
Cash 929,002.00 929,002.00 929,002.00
Accounts Receivable 24,000.00 24,000.00 24,000.00
Allowance for Doubtful Accounts 4,200.00 120.00 4,320.00 4,320.00
Merchandise Inventory 889,960.00 648,160.00 889,960.00 648,160.00 648,160.00
Supplies 48,000.00 20,600.00 27,400.00 27,400.00
Prepaid Advertising Expense 51,000.00 17,000.00 34,000.00 34,000.00
Prepaid Insurance Expense 84,000.00 14,000.00 70,000.00 70,000.00
Equipment 200,000.00 200,000.00 200,000.00
Accumulated Depreciation - Equipment 18,000.00 3,000.00 21,000.00 21,000.00
Furniture 300,000.00 300,000.00 300,000.00
Accumulated Depreciation - Furniture 30,000.00 5,000.00 35,000.00 35,000.00
Accounts Payable 54,700.00 54,700.00 54,700.00
Utilities Payable 14,300.00 14,300.00 14,300.00
Interest Payable 300.00 300.00 300.00
Notes Payable 200,000.00 200,000.00 200,000.00
Heron, Capital 1,939,860.00 1,939,860.00 1,939,860.00
Heron, Drawing 32,000.00 32,000.00 32,000.00
Income Summary 889,960.00 648,160.00 889,960.00 648,160.00 889,960.00 648,160.00
Sales 520,500.00 520,500.00 520,500.00
Sales Returns and Allowances 6,000.00 6,000.00 6,000.00
Sales Discounts 988.00 988.00 988.00
Purchases 108,200.00 108,200.00 108,200.00
Freight In 1,000.00 1,000.00 1,000.00
Purchases Returns and Allowances 7,000.00 7,000.00 7,000.00
Purchases Discounts 2,390.00 2,390.00 2,390.00
Freight Out 500.00 500.00 500.00
Advertising Expense 17,000.00 17,000.00 17,000.00
Insurance Expense 14,000.00 14,000.00 14,000.00
Interest Expense 300.00 300.00 300.00
Janitorial Services Expense 10,000.00 10,000.00 10,000.00
Rent Expense 44,000.00 44,000.00 44,000.00
Salaries Expense 48,000.00 48,000.00 48,000.00
Supplies Expense 20,600.00 20,600.00 20,600.00
Utilities Expense 14,300.00 14,300.00 14,300.00
Depreciation Expense - Equipment 3,000.00 3,000.00 3,000.00
Depreciation Expense - Furniture 5,000.00 5,000.00 5,000.00
Uncollectible Accounts Expense 120.00 120.00 120.00
TOTAL 2,776,650.00 2,776,650.00 1,612,440.00 1,612,440.00 3,447,530.00 3,447,530.00 1,182,968.00 1,178,050.00 2,264,562.00 2,269,480.00
Net loss 4,918.00 4,918.00
1,192,968.00 1,182,968.00 2,269,480.00 2,269,480.00
 The Fashion Rack
Statement of Profit and Loss
For the Month Ended in 31 October 2021
Php Php
Net Sales 513,512.00
Expenses
Beginning Inventory 889,960.00
Less Ending Inventory (648,160.00)
Net Purchases 99,810.00
Freight Out 500.00
Advertising Expense 17,000.00
Insurance Expense 14,000.00
Interest Expense 300.00
Janitorial Services Expense 10,000.00
Rent Expense 44,000.00
Salaries Expense 48,000.00
Supplies Expense 20,600.00
Utilities Expense 14,300.00
Depreciation Expense - Equipment 3,000.00
Depreciation Expense - Furniture 5,000.00
Uncollectible Accounts Expense 120.00
Total expense 518,430.00

Net Loss (4,198.00)

 The Fashion Rack
Statement of Owner's Equity
For the month ended October 31, 2021
PHP
Heron, Capital - September 30, 2021 1,939,860.00
Net Loss (4,918.00)
Heron, Drawing (32,000.00)
(Decrease in capital) (36,918.00)
Heron , Capital - October 31, 2021 1,909,242.00
 The Fashion Rack
Statement of Financial Position
As of October 31, 2021

ASSETS
Current Assets:
Cash 929,002.00
Accounts Receivable, net 19,680.00
Merchandise Inventory 648,160.00
Supplies 27,400.00
Prepaid Advertising Expenses 34,000.00
Prepaid Insurance Expenses 70,000.00
Total Current Assets 1,728,242.00

Fixed Assets
Equipment 200,000.00
Accumulated Depreciation - Equipment (21,000.00)
Furniture 300,000.00
Accumulated Depreciation - Furniture (35,000.00)
Total Fixed Assets 444,000.00

Total Assets 2,172,242.00

LIABILITIES AND OWNER'S EQUITY

Current Liabilities
Accounts Payable 54,700.00
Utilities Payable 14,300.00
Interest Payable 300.00
Notes Payable 200,000.00
Total Current Liabilities 269,300.00

Total Liabilities 269,300.00

Owner's Equity
Heron, Capital - October 31, 2021 1,902,942.00

Total Liabilities and Equity 2,172,242.00

 Notes to the Financial Statements
For the Month October 2021
Company information
The Fashion Rack is a retail merchanding business that sells trendy apparel at discounted prices. Owned and managed by Cady Heron, the business started on April 1, 2021.

Acccounting principles and policies

The financial statements abide by the Philippine Financial Reporting Standards (PFRS).
Accounting conventions
Consistency - The same accounting policies are used when preparing the business' monthly financial statements.

Conservatism - The financial statements of The Fashion Rack are prepared with caution by not overstating assets and limiting the understatement of liabilities
and expenses.

Materiality - All material items are reported properly in the financial statements. With The Fashion Rack being a small and newly started business, any financial
information is regarded as significant or impactful to the business' operations.

Full disclosure - All relevant and important information pertaining to the business are stated in all its financial records and statements.

Accounting Period
The company follows a monthly accounting period.

Employee Salaries
The company's employees are paid at the end of each month.

Depreciation of Fixed Assets

The business depreciates its fixed assets using the straight-line method. The depreciation of equipment and assets are shown below:

Equipment 200,000.00
Accumulated Depreciation - Equipment (21,000.00)
Net 200,000.00

Furniture 300,000.00
Accumulated Depreciation - Furniture (35,000.00)
Net 265,000.00

Deferred/Prepaid Expenses
Deferred expenses reported on the Statement of Profit and Loss - computation below

Supplies 20,600.00
Prepaid Advertising 17,000.00
Prepaid Insurance 14,000.00
Expired/consumed prepaid expenses 51,600.00

Supplies 27,400.00
Prepaid Advertising 34,000.00
Prepaid Insurance 70,000.00
Current balance of prepaid expenses 131,400.00

Sales
Net sales reported on the Statement of Profit and Loss, computation below

Sales 520,500.00
Less Sales Returns and Allowances (6000.00)
Less Sales Discount (988.00)
Net Sales 513,512.00

Purchases
Net purchases reported on the Statement of Profit and Loss, computation below

Purchases 118,200.00
Freight In 1,000.00
Purchases Returns and Allowances (7000.00)
Purchase Discounts -2,390.00
Withdrawn for personal use (988.00)
Net Purchases 99,810.00

Cost of Goods Sold (COGS)

The business uses a periodic inventory system, and computation for COGS

Beginning Inventory 889,960.00

Less Ending Inventory (648,160.00)
Net Purchases 99,810.00
Cost of Goods Sols 341,610.00

Accounts Receivable
Net accounts receivable reported on the Statement of Financial Position

Balance forwarded (Oct. 1 2021) 62,100.00

Collectible accounts - Alex Wilder 21,600.00
Collectible accounts - Jane Hopper 20,500.00
Paid accounts (credited AR) (80,200.00)
Total Accounts Receivable 24,000.00
Allowance for Doubtful Accounts (4,320.00)
 Net Accounts Receivable 19,680.00

Uncollectible Accounts Expense

Uncollectible accounts expense reported on the Statement of Profit or Loss

Balance forwarded (Oct. 1, 2021) 4,200.00

Increase in AFDA for October 120.00
Allowance for Doubtful Accounts (month-end) 4,320.00

Current Liabilities (payables)

Uncollectible accounts expense reported on the Statement of Financial Position

Accounts Payable 54,700.00

Utilities Payable 14,300.00
Interest Payable 300.00
Notes Payable 200,000.00
Total current liabilities (payables) 269,300.00

Subsequent events
The Fashion Rack does not have any subsequent events it needs to disclose.

Intangible and real assets

The Fashion Rack currently has no intangible or real assets

Schedule of financial soundness indicators

Financial ratios serve as a tool to evaluate the financial performance of a company relative to similar businesses within the industry. The following values serve as a secondary method to analyze financial efficiency.

Financial Ratio OCTOBER 2021 ANALYSIS

Liquidity Ratio
Current Ratio 6 to 1

Quick Ratio (acid test) 4 to 1

Efficiency ratio

Inventory turnover ratio 0.43x

Capital structure

Debt ratio 12.40%

Asset management efficiency ratio

Total Asset turnover ratio 0.24x

Profitability Ratio

Gross profit percentage 35.42%

Net profit margin 0.96%

 The Fashion Rack
Post-Closing Trial Balance
As of October 31, 2021

DEBIT CREDIT
Cash 929,002.00
Accounts Receivable 24,000.00
Allowance for Doubtful Accounts 4,320.00
Merchandise Inventory 648,160.00
Supplies 27,400.00
Prepaid Advertising Expense 34,000.00
Prepaid Insurance Expense 70,000.00
Equipment 200,000.00
Accumulated Depreciation - Equipment 21,000.00
Furniture 300,000.00
Accumulated Depreciation - Furniture 35,000.00
Accounts Payable 54,700.00
Utilities Payable 14,300.00
Interest Payable 300.00
Notes Payable 200,000.00
Heron, Capital 1,902,942.00
2,232,562.00 2,232,562.00