WAGWAG ENTERPRISES

The transactions in this practice set illustrated the general accounting principles and procedures
that you have studied. The owner, Mr. Juan Wagwag, operates a wholesale second-hand clothing
business. As the account for Wagwag Enterprises, you will be required to maintain the journals
and ledgers listed below and record the business transaction for September.

Subsidiary Ledgers
Open an account for cash customer listed below in the accounts receivable subsidiary ledger:
LIST OF CUSTOMERS
Abanao Shop, 42 Abanao, Baguio City R&S, 44 Otek St., Baguio City

B&C, 16 Harrison Rd., Baguio City Kool, 99 Rivera St., Baguio City

B&S, 1489 Magssysay St., Baguio City ODOC, 42 Badihoy Rd., Baguio City

Dagupan, Inc., 84 Lake Drive, Bauio City R&S, 02 Harrison Rd., Baguio City

EverGood, 542 Session Rd., Baguio City TONY, 1 Marcoville, Baguio City

HC, 3018 Bonifacio St., Baguio City WEAR. 57 Ferguson Rd., Baguio City

J&B, 135 Leonard Wood, Baguio City Mc Cario, 871 Brookside, Baguio City

Open an account for each creditor listed below in the accounts payable subsidiary ledger:
LIST OF CREDITORS
Andy & Son, 42 Otek, Baguio City LEE, 15 Campo Sioco, Baguio City

Capital Goods, 5 Happy Homes, Baguio City New City, 60 Tacay Rd., Baguio City

Cute, 50 Woodville, La Trinidad, Benguet Roberto, 830 Leonard Wood, Baguio City

FAX. 16 Bagdihoy Rd., Baguio City Esteban, 43 Bakakeng, Baguio City

HANZ, 100 Everlasting Q.M., Baguio City YANG’s Rizal Parl., Baguio City

Note: Arrange all customer and creditor accounts in alphabetical order.

The schedules of the accounts receivable and accounts payable subsidiary ledgers as of August 31
are listed as follows:
WAGWAG ENTERPRISES
Schedule of Accounts Receivable
August 31, 200x
B&C, 16 Harrison Rd., Baguio City ₱11,600

EverGood, 542 Session Rd., Baguio City 10,000

Mc Carlo, 871 Brookside, Baguio City 9,000

TONY, 1 Marcoville, Baguio City 8,000

WEAR. 57 Ferguson Rd., Baguio City 5,000

Total ₱43,600
 WAGWAG ENTERPRISES
Schedule of Accounts Payable
August 31, 200x
FAX. 16 Bagdihoy Rd., Baguio City ₱16,700

LEE, 15 Campo Sioco, Baguio City 15,600

Roberto, 830 Leonard Wood, Baguio City 13,000

YANG’s Rizal Parl., Baguio City 11,000

Total ₱56,300

NARRATIVE OF TRANSACTIONS

DATE TRANSACTIONS

Sept. 1 Issued check as payment for the September rent of building and equipment,
₱25,000

Purchased office supplies, ₱850, store supplies, ₱1,500.

Checks were issued for these purchases.

Purchased merchandise on account from:

FAX - P.O. *No. 781, amount, ₱4,500. Invoice dated September 1, 200x, terms.
2/10, n/30.

Esteban - P.O. No. 782, amount, ₱6,300. Invoice dated September 1, 200x; terms,
1/10, n/30

YANG’s - P.O. No. 783, amount, ₱6,000. Invoice dated September 1, 200x; terms,
2/10, n/30

*P.O. = Purchase Order

DATE TRANSACTIONS

Sept. 2 Sold merchandise on account to:

J&B - S.I. *No. 0201, amount ₱6,900

Mc Cario - S.I. No. 0202, amount ₱10,000

R&S - S.I. No. 0203, amount ₱5,000

Note: Sales are made on the terms of 2/10, n/30, to all customers and, therefore,
should be recorded in the sales journal and customer’s accounts. All the payments
received within ten days of the date of the invoice will be entitled to a 2% discount.

Paid ₱60 for handbills from Petty Cash. (Charge Advertising)

*S.I - Sales Invoice

 DATE TRANSACTIONS

Sept. 3 Purchase advertising space in the Midland Courier. ₱900. (Issued check)

Issued checks to the following creditors for merchandise purchased on September

1, 200x:

FAX - Invoice dated September 1.

YANG’S - Invoice dated September 1.

Note: Whenever an invoice that is subject to a discount is paid within the discount
period, the discount should be calculated and taken and a check issued for the net
amount due.

DATE TRANSACTIONS

Sept. 3 Received payments from the following customers:

EverGood - S.I. No. 1130, amount, ₱10,000. Invoice dated August 27.

TONY - S.I. No. 1131, amount, ₱8,000. Invoice dated August 27.

WEAR - S.I. No. 1140, amount, ₱5,000. Invoice dated August 31.

Note: Whenever payment is received within the discount period, the discount
should be calculated, and the amount of payment received compared against your
calculation.

DATE TRANSACTIONS

Sept. 4 Paid the following salaries by check, ₱70,000. (In this practice set, payroll taxes
will not be considered.)

Cash sales from September 1 to 4 - ₱79,000.

Issued checks to the following creditors for merchandise purchases during the
month of August (no discount allowed):

FAX - ₱16,700 for the balance as of August 31, 200x

Roberto - ₱13,000 for the balance as of August 31, 200x.

Instructions for September 1 to 4 transactions:

Source Documents - Fill up the required source documents of Wagwag Clothes to support the
transactions.

Recording – Record the respective documents describing the transactions (use appropriate
special books).

Posting – Post the accounts receivable and accounts payable in their respective subsidiary
ledger.
 DATE TRANSACTIONS

Sept. 6 Purchase merchandise on account from:

Capital Goods – P.O. No. 784, amount, ₱16,000. Invoice dated September 6;
terms, 2/10, n/30.

LEE – P.O. No. 785, amount, ₱9,000. Invoice dated September 3; terms, n/30.

New City – P.O. No. 786, amount, ₱6,000. Invoice dated September 6; terms,
2/10, n/30.

Purchased office supplies, ₱720. (Issued check)

Sold merchandise on account to:

Dagupan, Inc. – S.I. No. 0204, amount, ₱9,600.

EverGood – S.I. No. 0205, amount, ₱2,500.

ODOC – S.I. No. 0206, amount, ₱5,000.

DATE TRANSACTIONS

Sept. 7 Issued a check to the Capital Goods for the merchandise purchased on September
6.

Received payment for merchandise sold to ODOC on September 6.

Issued a credit memorandum to Mc Cario for ₱150 on merchandise sold in August

of this year. Merchandise was found to be defective.

Purchased merchandise for cash, ₱45,000.

Paid ₱100 for wrapping supplies from Petty Cash. (Charge to Store Supplies)

DATE TRANSACTIONS

Sept. 8 Sold merchandise on account to:

B&S - S.I. No. 0207, amount, ₱30,000

Kool - S.I. No. 0208, amount, ₱65,000

TONY - S.I. No. 0209, amount, ₱14,000

WEAR - S.I. No. 0210, amount, ₱24,000

Issued a check to the Diwata Trucking for ₱700 freight charges on purchases
F.O.B. Shipping point
 Issued a check to the PILTEL for August telephone bill, ₱2,800. (Charge
Miscellaneous General Expense)

Replenished Petty Cash

DATE TRANSACTIONS

Sept. 9 Received a credit memorandum from YANG’s ldr ₱500 on merchandise purchased
in August of this year and found to be defective.

Purchased office supplies for cash, ₱300. (Taken from the Petty Cash Fund)

Issued checks to the following creditors:

LEE - Invoice dated September 6.

Esteban - Invoice dated September 1.

Paid the following expenses from Petty Cash:

Carfare, ₱60; Tips, ₱80; Repair of typewriter, ₱800. (Charge Miscellaneous

General Expense)

DATE TRANSACTIONS

Sept. 10 Juan Wagwag withdraw cash for personal use, ₱10,00. Issued a check to the
Diwata Trucking for freight charges, ₱500. (For purchases, F.O.B., shipping point)

Purchased merchandise for cash, ₱18,000. (Issued check)

Received payments from the following customers:

J&B - Sales No. 0201.

Mc Cario - Sales No. 0202.

R&S - Sales No. 0203

Replenished Petty Cash

DATE TRANSACTIONS

Sept. 11 Paid the following salaries, ₱70,000. (Issued check)

Purchase merchandise on account from:

 New City - P.O. No. 787, amount, ₱45,000. Invoice dated September 10: terms,
2/10, n/30.

Esteban - P.O. No. 788, amount, ₱17,000. Invoice dated September 10: terms,
1/10, n/30.

Cash sales from September 6 to 11 amounted to ₱68,000.

Instructions for September 13 to 18 transactions:

Source Documents - Fill up the required source documents of Wagwag Clothes to support the
transactions.

Recording – Record the respective documents describing the transactions (use appropriate
special books).

Posting – Post the accounts receivable and accounts payable in their respective subsidiary
ledger.

DATE TRANSACTIONS

Sept. 13 Sold merchandise on account to:

Abanao Shop – S.I. No. 0211, amount, ₱86,000

B&C – S.I. No. 0212, amount, ₱74,000

ODOC – S.I. No. 0213, amount, ₱25,000

DATE TRANSACTIONS

Sept. 14 Receivable payments from the following customers:

Abanao Shop – S.I. No. 0211

B&C – S.I. No. 0212

Dagupan Inc. – S.I. No. 0204

EverGood – S.I. No. 0205

Issued check for the following purchases:

Purchased merchandise for cash, ₱90,000

Purchased advertising space in the Midland Courier, ₱900

Allowed ODOC full credit on S.I. No. 0213. (Returned merchandise)

DATE TRANSACTIONS

Sept. 15 Paid by check August bills for heat, light, and power, ₱3,000
(Charge Miscellaneous General Expense)

Issued a check to Philippine Non-Life Insurance for additional insurance on the

equipment, ₱3,100. (Charge Prepaid Insurance)
 DATE TRANSACTIONS

Sept. 16 Purchase merchandise on account from:

Andy & Son – P.O. No. 789, amount, ₱35,000. Invoice dated September 15;
terms, 2/10, n/30.

HANZ – P.O. No. 790, amount, ₱28,000. Invoice dated September 15; terms, 2/10,
n/30.

YANG’s – P.O. No. 791, amount ₱34,000. Invoice dated September 13. Terms,
2/10, n/30.

Juan Wagwag withdrew ₱4,500 worth of merchandise for personal use.

DATE TRANSACTIONS

Sept. 18 Sold merchandise on account to:

EverGood – S.I. No. 0214, amount, ₱44,500.

K&S – S.I. No. 0215, amount, ₱39,500.

Mc Cario – S.I. No. 0216, amount, ₱18,000.

DATE TRANSACTIONS

Sept. 18 Issued ₱1,500 check to the Receiving and Shipping Department foreman for
miscellaneous general expenses incurred during the first two weeks.

Issued a ₱7,500 check to the Sales Specialties for selling expenses.

Paid from Petty Cash for taxi fares, ₱150. (Charge Miscellaneous Selling Expense)

Paid the employees salaries, ₱70,000.

Cash sales of ₱109,800 for September 13 – 18.

Instructions for September 13 to 18 transactions:

Source Documents - Fill up the required source documents of Wagwag Clothes to support the
transactions.

Recording – Record the respective documents describing the transactions (use appropriate
special books).

Posting – Post the accounts receivable and accounts payable in their respective subsidiary
ledger.

DATE TRANSACTIONS

Sept. 20 Issued a check to VES Printing for the printing of circulars, ₱4,000. (Charge
Advertising)
 Purchase merchandise for cash ₱67,000. (Issued check)

Received a credit memorandum from HANZ for ₱1,200 on September 16 purchase

which was found to be defective.

Juan Wagwag withdrew cash ₱10,000 and ₱5,000 worth of merchandise for
personal use.

Purchased ₱1,000 worth of advertising supplies for cash. (Issued check)

Replenished Petty Cash

DATE TRANSACTIONS

Sept. 21 Purchase merchandise on account from:

Capital Goods – P.O. No. 792, amount, ₱34,000. Invoice dated September 15;
terms, 2/10, n/30

HANZ – P.O. No. 793, amount, ₱42,000. Invoice dated September 16; terms, 2/10,
n/30.

Roberto – P.O. No. 794, amount, ₱50,000. Invoice dated September 21; terms,
1/15, n/30

Issued checks to the following creditors:

Andy and Son, invoice dated September 16.

HANZ, invoice dated September 16 less credit memorandum.

DATE TRANSACTIONS

Sept. 22 Sold merchandise on account to:

Abanao Shop – S.I. No. 0217, amount, ₱50,000

HC – S.I. No. 0218, amount ₱69,000.

DATE TRANSACTIONS

Sept. 28 Received payments from the customers:

EverGood – S.I. No. 0214

K&S – S.I. No. 0215

Mc Cario – S.I. No. 0216

Dagupan, Inc. – S.I. No. 0219

 Kool – S.I. No. 0220

Issued a check to YANG’s for invoice dated September 16.

DATE TRANSACTIONS

Sept. 29 Sold merchandise on account to:

Dagupan, Inc. – S.I. No. 0222, amount, ₱86,000.

R&S – S.I. No. 0223, amount, ₱120,000.

Juan Wagwag withdrew merchandise for personal use, ₱8,000.

Purchased merchandise in cash, ₱6,000

Issued a credit memorandum to ODOC for ₱150 because of defective merchandise.

DATE TRANSACTIONS

Sept. 30 Purchased merchandise on account from:

Cute – P.O. 797, amount, ₱9,700. Invoice dated September 29; terms, 2/10. n/30

FAX – P.O. 789, amount, ₱14,000. Invoice dated September 30; terms, 2/10, n/30

LEE – P.O. 799, amount, ₱46,000. Invoice dated September 28; terms, n/30.

Roberto – P.O. 800, amount, ₱20,000. Invoice dated September 29; terms, 1/15,
n/30.

Esteban – P.O. 801, amount, ₱3,000. Invoice dated September 30; terms, 1/10,
n/30,

Cash sales amounted to ₱43,500 for September 27 – 30.

O.R No. 125, received ₱937 for merchandise purchase on cash returned due to
defects.
Instructions for September 27 to 30 transactions:

Source Documents - Fill up the required source documents of Wagwag Clothes to support the
transactions.

Recording – Record the respective documents describing the transactions (use appropriate
special books).

Posting – Post the accounts receivable and accounts payable in their respective subsidiary ledger
CHART OF ACCOUNTS

ACCT. ACCOUNTS ACCT. ACCOUNTS

NO. NO.

110 Cash 510 Purchases

120 Petty cash 520 Freight in

130 Accounts receivable 530 Purchases returns and allowances

140 Allowance for bad debts 540 Purchases discount

150 Merchandise inventory

160 Store supplies 610 Salaries

170 Office supplies 620 Advertising

180 Advertising supplies 630 Advertising supplies used

190 Prepaid insurance 640 Store supplies used

200 Furniture 650 Rent expenses

210 Accum. Depreciation – Furniture 660 Depreciation expense

670 Bad debts expense

310 Accounts payable 680 Miscellaneous selling expense

320 Juan Wagwag, Capital 690 Office supplies used

330 Juan Wagwag, Drawing 700 Insurance expenses

410 Income Summary 710 Miscellaneous general expense

420 Sales

430 Sales returns and allowances

440 Sales discount

 WAGWAG ENTERPRISES
Statement of Financial Position
August 31, 200x
Current Assets: Current Liability:
Cash ₱110,650 Accounts payable ₱56,300
Petty cash 1,500
Accounts receivable 43,600 Owner’s equity:
Mdse. Inventory 406,000 Juan Wagwag, Capital ₱543,700
Store supplies 1,400
Office supplies 950
Advertising supplies 1,250
Prepaid insurance 4,650
Total current assets ₱570,000

Plant asset:
Office furniture ₱60,000
Less: Accum. Depreciation 30,000
Net book value ₱30,000

Total Assets ₱600,000 Total liability and capital ₱600,000

Record the asset, liability, and capital balances in the general ledger. It is suggested that no opening
entry be made in the journal, but that the balances be entered in the accounts directly. Wagwag
enterprises is a “going-concern” business, and the recording of the account balances causes the
ledger to appear as it would at the close of business on August 31, 200x.