FABM2- PYTHAGORAS AND EUCLID

ACCOUNTING CYCLE IN A MERCHANDISING BUSINESS

WEEK 4-6 on a 14 columnar book
1. Journalizing the Transaction
2. Posting Journal Entries to the Ledgers (T-Accounts)
3. Preparing an Unadjusted Trial Balance on Worksheet
4. Writing the Financial Statements-SFP and SCI

WEEK 4 WORK ON YOUR COLUMNAR BOOK

A. Journalizing the Transaction (Two Column for this)
What you need to do
 On date column write the transaction number
 Particulars (Accounting Titles and the Short Description)
 PR (Post Reference)
 Debit
 Credit

Example

Transaction Particulars PR Debit Credit

1 Merchandise Inventory 101 ₱ 10, 000
Marcher, Capital ₱ 10,000
To record initial investment (Re-opening of shop)

After creating the journal entries post it to the Ledgers

B. Posting Journal Entries to the Ledgers (T-Accounts)
 Post Reference Number
 Accounting Titles
 T-account (debit and credit)
Example

100 Cash
Debit Credit
₱40,000 ₱28,000
20,000
₱32,000

Marcher Per Shop reopened its merchandising business engaged in the trading of pet care products such as feed,
cages, shampoo, powder, soap and pets’ accessories. When Smith Marcher, the sole proprietor, closed the shop, he
kept some of his ware because he has the intention to reopen it. Below is the summarized listing of all the
transactions of Marcher Pet Shop from September 1, 2020 (date of reopening) to December 31, 2020 (date of
adjustments).

1. He invested merchandise worth ₱50,000

2. He sold his merchandise for cash ₱153, 000 and on account to Harry Poultry Farm ₱23,000 and to Ron Piggery
₱24,000. The credit terms were 10/15, n/30
3. He collected within the discount period from the two credit customers ₱20, 000 each.
4. He purchased merchandise for cash ₱13,000 and on credit from Chicken Feeds Corp ₱38,000 and
Slitherine Company ₱39,000. The credit terms were 10/15, n/30
5. He paid the two credit suppliers ₱25,000 each within the discount period.
6. He paid freight- on amounting to ₱3,000.
 7. He refunded the customer for the returned of products worth ₱3,000.
8. He received ₱2,000 for payment of products he returned to suppliers.
9. He applied for business loans to BDO and BPI, which granted him ₱15,000 and ₱16,000 respectively.
10. He purchased the following assets office supplies ₱6,000, store supplies ₱7,000, office equipment
₱18,000, and store equipment ₱19,000
11. He paid rent ₱26,000 and insurance ₱12, 000; he used the asset method in recording these two
items
12. He paid the following expenses: salaries for the office employees ₱20,000, salaries of store personnel ₱30,
0000, miscellaneous office expense ₱2,000 and miscellaneous store expenses ₱1,000
13. He withdrew ₱5,000 for personal use

Week 5-6 Adjusting Entries and WORKSHEET

1. The supplies on hand are two-thirds of office supplies and one-half of store supplies.
2. The additional investment of ₱4,000 worth of office equipment and ₱7,000 worth of store equipment and cash
withdrawal amounting to ₱5,000 were not recorded.
3. The depreciation of equipment is based on the straight-line method; office equipment has a life of five years
and a total salvage value of ₱2,000 while store equipment has a life of six years and a total salvage value of
₱3,000.
* the formula to compute for straight -line depreciation
Depreciation = (cost of fixed assets – scrap value of fixed assets)/ useful life
Example: If the fixed asset acquired is ₱55,000 and its scrap value of ₱5,000 and a use life of 5 years, its
annual depreciation is ₱10,000. Assuming that the fixed asset was acquired in May 2017 the computation will
be as follow:

May 2017 – December 2017 8mos = 2/3 of ₱10,000 ₱ 6,667

January 2018 – December 2018 12mos ₱10,000
January 2019 – December 2019 12mos ₱10,000
January 2020 – December 2020 12mos ₱10,000
January 2021 – December 2021 12mos ₱10,000
January 2022 – April 2022 12mos ₱ 3,333
Total ₱50,000

Now if you were just about to record the current year the transaction happens