Page 7-63

Problem 23
Journal entries

Date Account title and explanation PR Debit Credit

Feb 1 Cash 110 113,000
Accounts receivable 120 113,000

2 Accounts payable 210 64,000

Cash 110 62,080
Purchase discount 530 1,920

4 Purchases 510 170,000

Accounts payable 210 170,000
Terms: FOB shipping point; 3/10, n/30.

5 Accounts receivable 120 270,000

Sales 410 270,000
To Gonzales. Terms: FOB shipping point: 2/10, n/30.

7 Advertising expense 670 6,000

Cash 110 6,000

Cash 110 250,000

Sales 410 250,000

8 Acounts payable 210 170,000

Cash 110 164,900
Purchase discoount 530 5,100
Paid Feb 4 transaction

9 Transportation-in 540 4,000

Cash 110 4,000
Shipping from Feb 4. Terms: FOB shipping point; 3/10, n/30.

10 Sales returns and allowances 420 70,000

Accounts receivable 120 70,000
Return from customer Gonzales from Feb 5.

12 Cash 110 196,000

Sales discount 430 4,000
Accounts receivable 200,000
Received from Gozales from Feb 5.

14 Interest expense 680 26,000

Cash 110 26,000

15 Salaries expense 610 51,000

 Cash 110 51,000

16 Accounts receivable 120 392,000

Sales 41 392,000
To Ronzales Corp. Terms: FOB destination, 2/10, n/30

18 Transportation out 660 4,000

Cash 110 4,000
Shipping from Feb 16

19 Supplies 140 21,000

Cash 21,000

20 Purchases 510 125,000

Account payable 210 125,000
From Lozada. Terms: FOB destination; 3/10, n/30.

22 Miscellaneous expense 690 7,000

Cash 110 7,000

23 Cash 110 384,160

Sales discount 430 7,840
Accounts receivable 120 392,000

24 Purchases 510 373,000

Accounts payable 210 373,000
From Agustin. Terms: FOB shipping point, 3/10, n/30

Transportation in 540 9,000

Cash 110 9,000
Shpping from 24

25 Accounts receivable 120 420,000

Sales 410 420,000
To Ronzales. Terms: FOB Shipping point, 2/10, n/30

26 Sales returns and allowances 420 71,000

Accounts receivable 120 71,000
Return from customer Ronzales from Feb 25

28 Buenaflor, withdrawal 320 400,000

Cash 110 400,000

Accounts payable 210 25,000

Purchase returns and allowances 520 25,000
Return to Agustin from June 24

Adjusting entries
Feb 28 Salaries expense 51,000
Salaries payable 51,000
 Insurance expense 2,000
Prepaid insurance 2,000

Depreciation expense-Buidling 9,000

Accumulated depreciation expense-Buidling 9,000

Depreciation expense-Equipment 12,000

Accumulated depreciation expense-Equipment 12,000

Supplies expense 58,000

Supplies 58,000

Closing entries
Feb 28 Merchandise inventory, 2/28/2021 397,000
Sales 1,332,000
Purchase returns and allowances 25,000
Purchase discount 7,020
Income summary 1,761,020
To close temporary account with credit balances
and to close beginning inventory

Income summary 1,472,840

Merchandise inventory, 2/1/2021 413,000
Sales returns and allowances 141,000
Sales discount 11,840
Purchases 668,000
Transportation in 13,000
Salaries expense (Selling) 102,000
Supplies expense (Admin) 58,000
Insurance expense (Admin) 2,000
Depreciation expense-Building (Selling) 9,000
Depreciation expense-Equipment (Admin) 12,000
Transportation out 4,000
Advertising expense (Selling) 6,000
Interest expense 26,000
Miscellaneous expense (Admin) 7,000
To close temporary account with debit balances
and to close beginning inventory

Income summary 288,180

Buenaflor, capital 288,180
To close income summary

Buenaflor, capital 400,000

Buenaflor, withdrawal 400,000
Page 7-63
Problem 23
T-accounts

110 Cash 210 Accounts payable 510 P

Feb 1 33,000 62,080 Feb 2 Feb 2 64,000 108,000 Feb 1 Feb 4
1 113,000 6,000 7 8 170,000 170,000 4 20
7 250,000 164,900 8 25,000 125,000 20 24
12 196,000 4,000 9 373,000 24 Bal
23 384,160 26,000 14 Total 259,000 776,000 Total Bal
51,000 15 517,000 Bal
4,000 18
21,000 19
7,000 22
9,000 24
400,000 28
Total 976,160 754,980 Total
Bal 221,180

120 Accounts receivable 220 Salaries payable 520 Purchase ret

Feb 1 192,000 113,000 Feb 1 51,000 Feb 28
5 270,000 70,000 10 51,000 Adj Bal
16 392,000 200,000 12
25 420,000 392,000 23
71,000 26
1,274,000 846,000
Bal 428,000

130 Merchandise inventory 230 Mortgage payable 530 Purc

Feb 1 413,000 2,600,000 Feb 1
Bal 413,000 2,600,000 Bal
28 397,000 413,000 Feb 28
810,000 413,000
Bal 397,000

140 Supplies 310 Buenaflor, capital 540 Tran

Feb 1 51,000 1,569,000 Feb 1 Feb 9
 19 21,000 1,569,000 Bal 24
Bal 72,000 58,000 Feb 28 Feb 28 400,000 288,180 Feb 28 Bal
Adj bal 14,000 1,457,180 Bal Bal

150 Prepaid insurane 320 Buenaflor, withdrawal 610 Salaries

Feb 1 48,000 Feb 28 400,000 Feb 15
Bal 48,000 2,000 Feb 28 Bal 400,000 400,000 Bal
Adj bal 46,000 Bal - 28
Adj Bal
Bal

160 Land 330 Income summary 620 Supplies

Feb 1 460,000 Feb 28 1,472,840 1,761,020 Feb 28 Feb 28
Bal 460,000 288,180 288,180 Bal Adj bal
- Bal Bal

170 Building 410 Sales 630 Insurance

Feb 1 1,750,000 270,000 Feb 5 Feb 28
Bal 1,750,000 250,000 7 Bal
392,000 16
420,000 25
1,332,000 1,332,000 Bal
-
 175 Acc Dep-Building 420 Sales returns and allowances 640 Depreciation exp
350,000 Feb 1 Feb 10 70,000 Feb 28
350,000 Bal 26 71,000 Adj bal
9,000 Bal 141,000 141,000 Bal
359,000 Adj bal Bal -

180 Equipment 430 Sales discount 650 Depreciation expe

Feb 1 2,310,000 Feb 12 4,000 Feb 28
Bal 2,310,000 23 7,840 Adj bal
Bal 11,840 11,840 Bal
Bal -

185 Acc Dep-Equipment

630,000 Feb 1
630,000 Bal
12,000
642,000 Adj Bal
 510 Purchases 660 Transportation out
170,000 Feb 18 4,000
125,000 Bal 4,000 4,000
373,000 Bal -
668,000 668,000
-

520 Purchase returns and allowances 670 Advertising expense (Selling)

25,000 Feb 28 Feb 7 6,000
25,000 25,000 Bal Bal 6,000 6,000
- Bal Bal -

530 Purchase discount 680 Interest expense

1,920 Feb 2 Feb 14 26,000
5,100 8 Bal 26,000 26,000
7,020 7,020 Bal Bal -
- Bal

540 Transportation in 690 Miscellaneous expense (Admin)

4,000 Feb 22 7,000
 9,000 Bal 7,000 7,000
13,000 13,000 Bal -
-

610 Salaries expense (Selling) 64 52

51,000 65
51,000
51,000
102,000 102,000
-

620 Supplies expense (Admin)

58,000
58,000 58,000
-

630 Insurance expense (Admin)

2,000 2,000
-
 640 Depreciation expense-Building (Selling)
9,000
9,000 9,000
-

650 Depreciation expense-Equipment (Admin)

12,000
12,000 12,000
-
 Teresita Buenaflor Shoes
Worksheet
Feb 28, 2021

Account Trial balance Adjustments

no Account title Debit Credit Debit Credit
110 Cash 221,180
120 Accounts receivable 428,000
130 Merchandise inventory 413,000
140 Supplies 72,000 58,000
150 Prepaid insurane 48,000 2,000
160 Land 460,000
170 Building 1,750,000
175 Acc Dep-Building 350,000 9,000
180 Equipment 2,310,000
185 Acc Dep-Equipment 630,000 12,000
210 Accounts payable 517,000
220 Salaries payable 51,000
230 Mortgage payable 2,600,000
310 Buenaflor, capital 1,569,000
320 Buenaflor, withdrawal 400,000
330 Income summary
410 Sales 1,332,000
420 Sales returns and allowances 141,000
430 Sales discount 11,840
510 Purchases 668,000
520 Purchase returns and allowances 25,000
530 Purchase discount 7,020
540 Transportation in 13,000
610 Salaries expense (Selling) 51,000 51,000
620 Supplies expense (Admin) 58,000
630 Insurance expense (Admin) 2,000
640 Depreciation expense-Building (Selling) 9,000
650 Depreciation expense-Equipment (Admin) 12,000
660 Transportation out 4,000
670 Advertising expense (Selling) 6,000
680 Interest expense 26,000
690 Miscellaneous expense (Admin) 7,000
Total 7,030,020 7,030,020 132,000 132,000
Profit
enaflor Shoes
ksheet
8, 2021

Adjusted trial balance Inome statement Balance sheet Post-closing trial balance
Debit Credit Debit Credit Debit Credit Debit Credit
221,180 221,180 221,180
428,000 428,000 428,000
413,000 413,000 397,000 397,000 397,000
14,000 14,000 14,000
46,000 46,000 46,000
460,000 460,000 460,000
1,750,000 1,750,000 1,750,000
359,000 359,000 359,000
2,310,000 2,310,000 2,310,000
642,000 642,000 642,000
517,000 517,000 517,000
51,000 51,000 51,000
2,600,000 2,600,000 2,600,000
1,569,000 1,569,000 1,457,180
400,000 400,000

1,332,000 1,332,000
141,000 141,000
11,840 11,840
668,000 668,000
25,000 25,000
7,020 7,020
13,000 13,000
102,000 102,000
58,000 58,000
2,000 2,000
9,000 9,000
12,000 12,000
4,000 4,000
6,000 6,000
26,000 26,000
7,000 7,000
7,102,020 7,102,020 1,472,840 1,761,020 6,026,180 5,738,000 5,626,180 5,626,180
288,180 288,180
1,761,020 1,761,020 6,026,180 6,026,180
-
Teresita Buenaflor Shoes
Income Statement
As of the month ending Feb 28, 2021

Net Sales
Gross sales 1,332,000
Less: Sales returns and allowances 141,000
Sales discount 11,840 152,840
Net sales 1,179,160
Cost of sales
Merchandise inventory, 2/1/2021 413,000
Purchases 668,000
Less: Purchase returns and allowances 25,000
Purchase discount 7,020 32,020
Net Purchases 635,980
Transportation in 13,000
Net cost of purchases 648,980
Goods available for sale 1,061,980
Less: Merchandise inventory, 2/28/2021 397,000
Cost of sales 664,980
Gross profit 514,180
Operating expenses
Selling expenses
Salaries expense (Selling) 102,000
Depreciation expense-Building (Selling) 9,000
Transportation out 4,000
Advertising expense (Selling) 6,000
Total selling expense 121,000
Administrative expenses
Supplies expense (Admin) 58,000
Insurance expense (Admin) 2,000
Depreciation expense-Equipment (Admin) 12,000
Miscellaneous expense (Admin) 7,000
Total admin expense 79,000
Total operating expenses 200,000
Operating profit 314,180
Finance cost 26,000
Profit 288,180
Teresita Buenaflor Shoes Teresita Buenaflor Shoes
Statement of Changes in Owner's Equity Balance sheet
As of the month ending Feb 28, 2021 As of the month ending Feb 28, 2021

Buenaflor, capital, 2/1/2021 1,569,000 ASSET

Add Additional Investment 0 Current assets
Profit 288,180 288,180 Cash
Total 1,857,180 Accounts receivable
Less Withdrawal 400,000 Merchandise inventory
Buenaflor, capital, 2/28/2021 1,457,180 Supplies
Prepaid insurane
Total current assets

Non-current assets
Land
Building 1,750,000
Less Acc Dep-Building 359,000
Equipment 2,310,000
Less Acc Dep-Equipment 642,000
Total non-current assets
Total assets
 LIABILITIES AND EQUITY
LIABILITIES
221,180 Current liability
428,000 Accounts payable 517,000
397,000 Salaries payable 51,000
14,000 Total current liabilities 568,000
46,000
1,106,180 Non-current liability
Mortgage payable 2,600,000
Total non-current liabilities 2,600,000
460,000 Total liabilities 3,168,000

1,391,000 EQUITY
Buenaflor, capital, 2/28/2021 1,457,180
1,668,000 Total liabilities and owner's equity 4,625,180
3,519,000
4,625,180
Page 7-63
Problem 23
T-accounts

Cash Accounts payable Purchases

Feb 1 33,000 #REF! Feb 2 Feb 2 #REF! 108,000 Feb 1 Feb 4
1 #REF! #REF! 4

Accounts receivable Salaries payable Purchase returns and allow

Feb 1 192,000 #REF! Feb 1
5 #REF!

Merchandise inventory Mortgage payable Purchase discount

Feb 1 413,000 2,600,000 Feb 1

Supplies Buenaflor, capital Transportation in

Feb 1 51,000 1,569,000 Feb 1
 Prepaid insurane Buenaflor, withdrawal Salaries expense (Selli
Feb 1 48,000

Land Income summary Supplies expense (Adm

Feb 1 460,000

Building Sales Insurance expense (Adm

Feb 1 1,750,000 #REF! Feb 5

Acc Dep-Building Sales returns and allowances Depreciation expense-Buildin

350,000 Feb 1
 Equipment Sales discount Depreciation expense-Equipm
Feb 1 2,310,000

Acc Dep-Equipment
630,000 Feb 1
 Account
Purchases Transportation out no
#REF! 110
120
130
140
150
160
170
175
180
185
210
220
Purchase returns and allowances Advertising expense (Selling) 230
310
320
330
410
420
430
510
520
530
540
610
620
Purchase discount Interest expense 630
#REF! Feb 2 640
650
660
670
680
690

Transportation in Miscellaneous expense (Admin)

 Salaries expense (Selling)

Supplies expense (Admin)

Insurance expense (Admin)

Depreciation expense-Building (Selling)

Depreciation expense-Equipment (Admin)
 Teresita Buenaflor Shoes
Worksheet
Feb 28, 2021

Trial balance Adjustments Adjusted trial balanec

Account title Debit Credit Debit Credit Debit
Cash 33,000
Accounts receivable 192,000
Merchandise inventory 413,000
Supplies 51,000
Prepaid insurane 48,000
Land 460,000
Building 1,750,000
Acc Dep-Building 350,000
Equipment 2,310,000
Acc Dep-Equipment 630,000
Accounts payable 108,000
Salaries payable
Mortgage payable 2,600,000
Buenaflor, capital 1,569,000
Buenaflor, withdrawal
Income summary
Sales
Sales returns and allowances
Sales discount
Purchases
Purchase returns and allowances
Purchase discount
Transportation in
Salaries expense (Selling)
Supplies expense (Admin)
Insurance expense (Admin)
Depreciation expense-Building (Selling)
Depreciation expense-Equipment (Admin)
Transportation out
Advertising expense (Selling)
Interest expense
Miscellaneous expense (Admin)
Tottal 5,257,000 5,257,000 - - -
Adjusted trial balanec Inome statement Balance sheet
Credit Debit Credit Debit Credit

- - - - -
 Teresita Buenaflor Shoes
Worksheet
Feb 28, 2021

Account Trial balance Adjustments

no Account title Debit Credit Debit Credit
110 #REF! 33,000
120 #REF! 192,000
130 #REF! 413,000
140 #REF! 51,000
150 #REF! 48,000
160 #REF! 460,000
170 #REF! 1,750,000
175 #REF! 350,000
180 #REF! 2,310,000
185 #REF! 630,000
210 #REF! 108,000
220 #REF!
230 #REF! 2,600,000
310 #REF! 1,569,000
320 #REF!
330 #REF!
410 #REF!
420 #REF!
430 #REF!
510 #REF!
520 #REF!
530 #REF!
540 #REF!
610 #REF!
620 #REF!
630 #REF!
640 #REF!
650 #REF!
660 #REF!
670 #REF!
680 #REF!
690 #REF!
Tottal 5,257,000 5,257,000 - -
hoes

Adjusted trial balanec Inome statement Balance sheet

Debit Credit Debit Credit Debit Credit

- - - - - -