Group 8 Practice Set - Merchandising Business

Republic of the Philippines
BATANGAS STATE UNIVERSITY

COLLEGE OF ACCOUNTANCY, BUSINESS, ECONOMICS AND
INTERNATIONAL HOSPITALITY MANAGEMENT
CITE Building, Pablo Borbon Main I, Rizal Avenue, Batangas City
PRACTICE SET ON FINANCIAL ACCOUNTING
ACCOUNTING PROCESS OF
WAIKIKI RETAILERS
IN PARTIAL FULFILLMENT OF THE COURSE SUBJECT
ACC101: FINANCIAL ACCOUNTING AND REPORTING 1

FIRST SEMESTER, AY 2021-2022
SUBMITTED TO:
WENNIE F. MEDINA, CPA, MBA

INSTRUCTOR
BACHELOR OF SCIENCE IN ACCOUNTANCY
GROUP LEADER: SALENDREZ, JANE NICOLE F.

MEMBERS: SALIGAO, IELLA MARIZ M.
UNTALAN, LEAH MARIE C.
UNTALAN, SOPHIA CELINE A.
VALDEZ, JHOANNE F.
VICERAL, CHARLENE S.
Republic of the Philippines
BATANGAS STATE UNIVERSITY
COLLEGE OF ACCOUNTANCY, BUSINESS, ECONOMICS AND
INTERNATIONAL HOSPITALITY MANAGEMENT
CITE Building, Pablo Borbon Main I, Rizal Avenue, Batangas City
Practice Set - Merchandising Business

COMPREHENSIVE PROBLEM:
WAIKIKI Retailers is a VAT-registered merchandising company owned and managed by Ike Won. He opened his
business on December 1, 2018. The business adopts the expense method of prepayments and income method on pre-collection.
The initial chart of accounts of the business appears as follows:
WAIKIKI Retailers
Chart of Accounts
CODE ACCOUNT TITLE CODE ACCOUNT TITLE
Assets Revenues
101 Cash 401 Sales
102 Accounts receivable 402 Sales discount
103 Allowance for uncollectible accounts 403 Sales returns and allowances
104 Merchandise inventory 404 Interest income
105 Office supplies
106 Store supplies Cost of Sales
107 Prepaid insurance 501 Purchases
108 Prepaid rent 502 Freight-in
109 Input tax 503 Purchases discount
110 Store furniture and fixtures 504 Purchase returns and allowances
111 Accumulated depreciation – Store Furniture
& Fixtures Expenses
112 Store Equipment 601 Salaries expense
113 Accumulated depreciation-Store Equipment
602 Rent expense
603 Office supplies expense
Liabilities 604 Insurance expense
201 Accounts payable 605 Store supplies expense
202 Notes payable 606 Utilities expense
203 Salaries payable 607 Depreciation expense-Store Furniture &
Fixtures
204 Utilities payable 608 Depreciation expense-Store equipment
205 Interest payable 609 Taxes and licenses
206 SSS premium payable 610 Uncollectible accounts
207 Pag-ibig premium payable 611 Freight-out
208 Philhealth payable 612 SSS contribution
209 Withholding tax payable 613 Pag-ibig contribution
210 Output tax payable 614 Philhealth Contribution
211 VAT payable
Equity
301 Won, Capital
302 Won, Withdrawals
303 Income Summary
The transactions for the month of December were as follows:
Dec .
1 • Mr. Won invested the following to the business:
▪ Cash P450,000
▪ Merchandise Inventory 500,000
▪ Store furniture and fixtures 120,000
▪ Store equipment 90,000
2 • Issued checks for the following:

▪ Rent for three (3) months P15,000 starting December 2018, Voucher No. 001, Check No.120001 paid
to Diamond Commercial.
▪ Office supplies, P10,000 and store supplies, P8,000; Voucher No. 002 Check No. 120002 issued to
Quality Supplies, Inc.
▪ Insurance coverage for five (5) months effective December 1, 2018, P15,000; Voucher No.003 ,
Check No. 120003 issued to Phil-Am Plans Co.
▪ Taxes and Licenses P8,000; Voucher No. 004, Check No. 120004 issued to City Treasurer.
3
• Sold merchandise on account to Gel Trading , P90,000, exclusive of VAT. Terms 2/10, n/30. FOB
destination, Invoice No.1001, Voucher No. 005 and issued Check No. 120005 as payment of freight
P2,000 to Hook Forwarders.
• Received Check No. 89102 from Prince Retailers for merchandise sold on cash basis amounting to
P28,000. Selling price of merchandise is P25,000 plus VAT of P3,000. Issued OR No. 0001, Voucher
5 No. 006 for the freight , Check No. 120006, P1,000 issued to Hook Forwarders.
• Bought assorted merchandise on account from Zel Company , P60,000, exclusive of VAT, terms
8 2/10;n/30, FOB shipping point. RR No. 1204 , Voucher No. 007 for freight, check issued No. 120007
for P1,800 to Hook Forwarders.
10
• Sold merchandise on account to ONE Merchandising , P120,000 exclusive of VAT, terms
12 10, 2/10; n/30 FOB shipping point , Invoice No. 1002.
• Received debit memo (DM) number 2003 from Gel Trading due to returned merchandise, P2,000.
• Received Check No. 20036 from Gel Trading as full payment of the account. Issued OR No. 0002.
• Purchased merchandise on account from Nica Merchandising P60,000, exclusive of VAT, RR No.
1205, terms 2/10; n/30 FOB shipping point. Voucher No. 008 for payment of freight, P1,500 and
issued check No. 120008 to Hook Forwarders.
13
• Issued debit memo No. 10001 to Zel Company for damaged merchandise P3,000
15
• Issued Check No. 120009 to Josen Wholesalers for the cash purchase of merchandise P40,000
exclusive of VAT per RR No. 1206. Voucher No. 009 for the freight , P1,000. Issued Check No.
120010 to Hook Forwarders.
• Issue Check No. 120011 to Zel Company as full payment of the account, Voucher No.010.
17 • Paid salaries of the staff P25,000, Voucher No. 011 and issued Check No. 120012.
• Issued credit memo (CM) #1001 to ONE Merchandising for returned merchandise, P3,000.
• Sold merchandise on account to Gel Trading P80,000 exclusive of VAT, terms 2/10;n/30, FOB
destination per Invoice No. 1003, issued Voucher No. 012, Check No.120013 as payment of freight
19 for P1,000 to Hook Forwarders.
• Received check number 35012 from ONE Merchandising as full payment of the account and issued
OR#003.
20 • Acquired additional display equipment from RAM‘s Steel Parts, Inc., VAT inclusive, P65,000 on 30
22 days term as per RR. No. 1207.
• Issued DM #2001 to Nica Merchandising for damaged merchandise, P1,000.
23 • Issued check No. 120014 to Nica Merchandising as full payment of the account , Voucher No. 013
25 was prepared for the payment.
• Issued CM No. 1002 to Gel Trading for damaged merchandise, P2000.
27
• Bought merchandise on account from Zel Company, P50,000 exclusive of VAT, terms
28 2/10;n/30,FOB destination, RR No. 1208.
• Received check No. 89601 from Gel Trading as full payment of the account. Issued OR#004.
30 • Sold merchandise on account to Jen Trading , P60,000 exclusive of VAT, terms 2/10;n/30 FOB
shipping point, Invoice No. 1004.
• Paid semi-monthly salary per Voucher No.014 and issued Check No. 120015 in the name of the
cashier :
▪ Cash in Bank P450,000
▪ Salaries 40,000
Less: SSS 1,000
Pag-ibig 500
Philhealth 500
Withholding tax 4,000 6,000
Net Cash paid 34,000
• Employer’s share per voucher No. 015 : SSS 1,000; Pag-ibig P500 and Philhealth P500.
Additional data for adjustments:

1. Merchandise Inventory, December 31, P540,000.
2. Accruals: Utilities P3,500 and Salaries P4,000.
3. Store furniture and Fixtures depreciated at 10 years ; Store equipment at 6 years and both will no longer have scrap
value.
4. Expired supplies-Office supplies P6,000 and store supplies P5,000.
5. Estimated doubtful accounts is 5% of the outstanding accounts receivable.
SPECIAL JOURNALS
SALES JOURNAL
Accounts
INV. Sales
DATE CUSTOMER PR Terms Receivable Output Tax (CR)
No. (CR)
(DR)
2018
Dec 3 Gel Trading SL 1001 2/10; n/30 P 100,800 P 90,000 P 10,800
8 ONE Merchandising SL 1002 10,2/10; n/30 120,960 108,000 12,960
17 Gel Trading SL 1003 2/10; n/30 89,600 80,000 9,600
28 Jen Trading SL 1004 2/10; n/30 67,200 60,000 7,200
TOTAL P 378,560 P 338,000 P 40,560
(102) (401) (210)
PURCHASE JOURNAL
CREDITS DEBITS
Accounts
DATE RR No. SUPPLIER PR Purchases Input VAT Other Accounts
Payable
2018 Account Title PR Amt
Dec 5 1204 Zel Company SL P 67,200 P60,000 P 7,200
12 1205 Nica Merchandising SL 67,200 60,000 7,200
19 1207 RAM's Steel Parts, Inc. SL 65,000 6,964 Store Equipment P 58,036
25 1208 Zel Company SL 56,000 50,000 6,000
TOTAL P 255,400 P 170,000 P 27,364 P 58,036
(201) (501) (109) (112)
CASH RECEIPTS JOURNAL
Accounts Output
OR Description/ Sundry/Other
Date PR Cash Sales Receivable VAT Dr Cr
No. Customer Accounts
(Cr) (Cr)
2018
Investment by
Dec.1 P 450,000 Won, Capital P 450,000
owner
Prince
3 0001 28,000 P 25,000 P 3,000
Retailers
12 0002 Gel Trading 96,589 P 98,560 (211) Sales Discount P1,760
One
17 003 115,248 117,600 (252) Sales Discount 2,100
Merchandising
27 004 Gel Trading 85,613 87,360 (187) Sales Discount 1,560
TOTAL P 775,450 P 25,000 P 303,520 P2,350 P 5,420 P 450,000
(101) (401) (102) (210) (402) (301)
CASH DISBURSEMENT JOURNAL
Check Description Sundry/Other

Date Credits Debits Dr
No. /Supplier Accounts Cr
Purchase Accounts Input
2018 Cash Purchases
Discounts Payable VAT
Diamond
Dec 2 120001 P 15,000 Rent Expense P 15,000
Commercial
Office Supplies
2 120002 Quality Supplies 10,000 10,000
Expense
Store Supplies
2 120002 Quality Supplies 8,000 8,000
Expense
Insurance
2 120003 Phil-Am Plans Co. 15,000 15,000
Expense
Taxes and
2 120004 City Treasures 8,000 8,000
Licenses
3 120005 Hook Forwarders 2,000 Freight-out 2,000
120006 Hook Forwarders 1,000 Freight-out 1,000
5 120007 Hook Forwarders 1,800 Freight-in 1,800
15 120009 Josen Wholesalers 44,800 P40,000 P4,800
15 120011 Zel Company 62,563 P 1,140 P63,840 (137)
Paid Salaries of Salaries
15 120012 25,000 25,000
Staff Expense
17 120013 Hook Forwarders 1,000 Freight-out 1,000
Nica
22 120014 64,758 1180 66,080 (142)
Merchandising
Paid semi- Salaries
30 120015 34,000 34,000
monthly salary Expense
TOTAL P 295,421 P 2,320 P 129,920 P 40,000 P 4,521 P 123,300
(101) (503) (201) (501) (109)
GENERAL JOURNAL
DATE ACCOUNT TITLES AND EXPLANATION PR DEBIT CREDIT

2018
Dec 1 Merchandise Inventory 104 P 500,000
Store furniture and fixtures 110 120,000
Store equipment 112 90,000
Won, Capital 301 P 710,000
To record initial investment of the owner to the business.
10 Sales Returns and Allowances 403 2,000

Output Tax Payable 210 240
Accounts Receivable - Gel Trading 102 2,240
To record returned merchandise sold from Gel Trading
13 Accounts Payable - Zel Company 201 3,360

Purchase Returns and Allowances 504 3,000
Input Tax 109 360
To record returned merchandise purchased from Zel Company

Accounts Receivable - ONE Merchandising 102 3,360
To record returned merchandise sold from ONE Merchandising
20 Accounts Payable - Nica Merchandising 201 1,120

Purchase Returns and Allowances 504 1,000
Input Tax 109 120
To record returned merchandise purchased from Nica Merchandising

Accounts Receivable - Gel Trading 102 2,240
To record returned merchandise sold from Gel Trading
30 Salaries expense 601 6,000

SSS premium payable 206 1,000
Pag-ibig premium payable 207 500
Philhealth payable 208 500
Withholding tax payable 209 4,000
To record payment for semi-monthly salary
30 SSS Contribution 612 1,000

Pag-ibig Contribution 613 500
Philhealth Contribution 614 500
SSS premium payable 206 1,000
Pag-ibig premium payable 207 500
Philhealth payable 208 500
To record employer's share
SUMMARY OF GENERAL JOURNAL
PR Account Titles Debit Credit

102 Accounts Receivable P 7,840
104 Merchandise Inventory P 500,000
109 Input Tax 480
110 Store Furniture and Fixture 120,000
112 Store Equipment 90,000
201 Accounts Payable 4,480
206 SSS Premium Payable 2,000
207 Pag-ibig Premium Payable 1,000
208 Philhealth Payable 1,000
209 Withholding Tax Payable 4,000
210 Output Tax Payable 840
301 Won, Capital 710,000
403 Sales Returns and Allowances 7,000
504 Purchase Returns and Allowances 4,000
601 Salaries Expense 6,000
612 SSS Contribution 1,000
613 Pag-ibig Contribution 500
614 Philhealth Contribution 500
ACCOUNTS RECEIVABLE -SUBSIDIARY LEDGER
GEL TRADING
DATE PARTICULARS PR DEBIT CREDIT BALANCE

2018
Dec 3 SJ P 100,800
10 GJ P 2,240
12 CRJ 98,560
17 SJ 89,600
23 GJ 2,240
27 CRJ 87,360
TOTAL P 190,400 P 190,400 P0
ONE MERCHANDISING

2018
Dec 8 SJ P 120,960
15 GJ P 3,360
17 CRJ 117,600
TOTAL P 120,960 P 120,960 P0
JEN TRADING

2018
Dec 28 SJ P 67,200
TOTAL P 67,200 P 67,200
SUMMARY OF ACCOUNTS RECEIVABLE - SUBSIDIARY LEDGER

DATE Company's Name Balance
Dec. 31 Gel Trading P0
One Merchandising 0
Jen Trading 67,200
TOTAL P 67,200
ACCOUNTS PAYABLE -SUBSIDIARY LEDGER
ZEL COMPANY

2018
Dec 5 PJ P 67,200
13 GJ P 3,360
15 CDJ 63,840
25 PJ 56,000
TOTAL P 67,200 P 123,200 P 56,000
NICA MERCHANDISING
2018
Dec 12 PJ P 67,200
20 GJ P 1,120
22 CDJ 66,080
TOTAL P 67,200 P 67,200 P0
RAM'S STEEL PARTS INC.

2018
Dec 19 PJ P65,000
TOTAL P 65,000 P 65,000
SUMMARY OF ACCOUNTS PAYABLE - SUBSIDIARY LEDGER

DATE Customer’s Name Balance
Dec 31 Zel Company P 56,000
Nica Merchandising 0
RAM's Steel Parts Inc. 65,000
TOTAL P 121,000
GENERAL LEDGER - ASSETS
Account Name: Cash Code No. 101

Date Explanation PR Debit Credit Balance
2018
Dec 31 Total cash received CRJ P 775,450 P 775,450
31 Total cash payments CDJ P 295,421 480,029
TOTAL P 480,029
Account Name: Accounts Receivable Code No. 102

2018
Dec 31 Total receivable from sales SJ P 378,560 P 378,560
31 Total receivable paid CRJ P 303,520 75,040
31 Total receivable from returns GJ 7,840 67,200
TOTAL P 67,200
Account Name: Allowance for Uncollectible Accounts Code No. 103

2018
Dec 31 Adjustment made at the end of the month AJE7 P 3,360 P 3,360
TOTAL P 3,360
Account Name: Merchandise inventory Code No. 104

2018
Dec 1 Total from summary of general journal GJ P 500,000 P 500,000
31 Removed beginning inventory CE1 P 500,000 0
31 Established ending inventory CE2 540,000
TOTAL P 540,000
Account Name: Office Supplies Code No. 105

2018
TOTAL P 4,000
Account Name: Store Supplies Code No. 106

2018
TOTAL P 3,000
Account Name: Prepaid Insurance Code No. 107
2018
TOTAL P 12,000
Account Name: Prepaid Rent Code No. 108

2018
TOTAL P 10,000
Account Name: Input Tax Code No. 109

2018
Dec 31 Total input tax from purchases PJ P 27,364 P 27,364
31 Total input tax from cash payments CDJ 4,521 31,885
31 Total from summary of general journal GJ 480 31,405
31 Closed to VAT Payable CE7 31,405 0
TOTAL P0
Account Name: Store Furniture & Fixtures Code No. 110

2018
TOTAL P 120,000
Account Name: Accumulated Depreciation - Store Furniture & Fixtures Code No. 111
2018
TOTAL P1,000
Account Name: Store Equipment Code No. 112

2018
Dec 19 Purchased from RAM’s Steel Parts, Inc. PJ P 58,036 P 58,036
31 Total from summary of general journal GJ 90,000 148,036
TOTAL P 148,036
Account Name: Accumulated Depreciation-Store Equipment Code No. 113
2018
TOTAL P 1,572
GENERAL LEDGER - LIABILITIES
Account Name: Accounts Payable Code No. 201

2018
Dec 31 Purchased merchandise on account PJ P 255,400 P 255,400
31 Settled accounts CDJ P 129,920 125,480
31 Total from summary of general journal GJ 4,480 121,000
TOTAL P 121,000
Account Name: Salaries Payable Code No. 203

2018
TOTAL P 4,000
Account Name: Utilities Payable Code No. 204

2018
TOTAL P 3,500
Account Name: SSS Premium Payable Code No. 206

2018
TOTAL P 2,000
Account Name: Pag-ibig Premium Payable Code No. 207

2018
Dec 31 Total from summary of general journal GJ P 1000 P 1,000
TOTAL P1,000
Account Name: PhilHealth Payable Code No. 208

2018
TOTAL P1,000
Account Name: Withholding Tax Payable Code No. 209
2018
TOTAL P4,000
Account Name: Output Tax Payable Code No. 210

2018
Dec 31 Total from sale of merchandise SJ P 40,560 P 40,560
31 Total from settled accounts of customers CRJ 2,350 42,910
31 Total from summary of general journal GJ P 840 42,070
31 Closed to VAT Payable CE7 42,070 0
TOTAL P0
Account Name: VAT Payable Code No. 211

2018
Dec 31 Closed input and output tax to VAT Payable CE7 P 10,665 P 10,665
TOTAL P 10,665
GENERAL LEDGER - EQUITY
Account Name: Won, Capital Code No. 301

2018
Dec 1 Owner’s cash investment CRJ P 450,000 P 450,000
31 Total from summary of general journal GJ 710,000 1,160,000
31 Closed income summary account CE6 71,168 1,231,168
TOTAL P 1,231,168
Account Name: Income Summary Code No. 303

2018
Dec 31 To remove the beginning inventory CE1 P 500,000 P 500,000
31 To establish the ending merchandise inventory CE2 P 540,000 40,000
To close all temporary accounts with debit
31 CE3 226,720 186,720
balances.
To close all temporary accounts with credit
31 CE4 369,320 182,600
balances.
31 To close all expense accounts. CE5 111,432 71,168
31 To close the income summary account. CE6 71,168 0
TOTAL P0
GENERAL LEDGER - REVENUES
Account Name: Sales Code No. 401

2018
Dec 31 Total sales on account SJ P 338,000 P 338,000
31 Total cash received from sales CRJ 25,000 363,000
31 Closed to income summary CE4 P 363,000 0
TOTAL P0
Account Name: Sales Discount Code No. 402

2018
Dec 31 Total sales discounts from cash received CRJ P 5,420 P 5,420
TOTAL P0
Account Name: Sales Returns and Allowances Code No. 403

2018
TOTAL P0
GENERAL LEDGER – COST OF SALES
Account Name: Purchases Code No. 501

2018
Dec 31 Total purchases on account PJ P 170,000 P 170,000
31 Total purchases on cash CDJ 40,000 210,000
TOTAL P0
Account Name: Freight-in Code No. 502

2018
Dec 31 Total freight costs paid CDJ P 4,300 P 4,300
TOTAL P0
Account Name: Purchases Discount Code No. 503

2018
Dec 31 Total discount on purchase on cash CDJ P 2,320 P 2,320
TOTAL P0
Account Name: Purchase Returns and Allowances Code No. 504

2018
Dec 31 Total returns in purchases GJ P 4,000 P 4,000
TOTAL P0
GENERAL LEDGER - EXPENSES
Account Name: Salaries Expense Code No. 601

2018
Dec 31 Total salaries paid to employees CDJ P 59,000 P 59,000
31 Total salaries expense from premium payable GJ 6,000 65,000
31 Adjustment made at the end of the month AJE2 4,000 69,000
TOTAL P0
Account Name: Rent Expense Code No. 602

2018
Dec 2 Rent paid on cash CDJ P 15,000 P 15,000
31 Adjustment made at the end of the month AJE8 P 10,000 5,000
31 Closed to income summary CE5 5,000 0
TOTAL P0
Account Name: Office Supplies Expense Code No. 603

2018
Dec 2 Office supplies paid on cash CDJ P 10,000 P 10,000
TOTAL P0
Account Name: Insurance Expense Code No. 604

2018
Dec 2 Insurance paid on cash CDJ P 15,000 P 15,000
TOTAL P0
Account Name: Store Supplies Expense Code No. 605

2018
Dec 2 Store supplies paid on cash CDJ P 8,000 P 8,000
TOTAL P0
Account Name: Utilities Expense Code No. 606
2018
TOTAL P0
Account Name: Depreciation expense- Store Furniture & Fixtures Code No. 607
2018
TOTAL P0
Account Name: Depreciation expense- Store equipment Code No. 608

2018
TOTAL P0
Account Name: Taxes and Licenses Code No. 609

2018
Dec 31 Taxes and licenses paid on cash CDJ P 8,000 P 8,000
TOTAL P0
Account Name: Uncollectible Accounts Code No. 610

2018
TOTAL P0
Account Name: Freight-out Code No. 611

2018
Dec 31 Total freight costs paid CDJ P 4,000 P 4,000
TOTAL P0
Account Name: SSS Contribution Code No. 612
2018
Dec 31 Total employer’s share GJ P 1,000 P 1,000
TOTAL P0
Account Name: Pag-ibig Contribution Code No. 613

2018
Dec 31 Total employer’s share GJ P 500 P 5000
31 Closed to income summary CE5 P 500 0
TOTAL P0
Account Name: Philhealth Contribution Code No. 614

2018
Dec 31 Total employer’s share GJ P 500 P 500
31 Closed to income summary CE5 P 500 0
TOTAL P0
ADJUSTING ENTRIES
2018
Dec 31 Utilities Expense 606 P 3,500
Utilities Payable 204 P 3,500
To adjust utilities expense account
31 Salaries Expense 601 4,000

Salaries Payable 203 4,000
To adjust salaries expense account
31 Depreciation Expense - Store Furniture and Fixtures 607 1,000

Accumulated Depreciation - Store Furniture and Fixtures 111 1,000
To depreciate store furniture and fixture account
31 Depreciation Expense - Store Equipment 608 1,572

Accumulated Depreciation - Store Equipment 113 1,572
To depreciate store equipment account
31 Office Supplies 105 4,000

Office Supplies Expense 603 4,000
To adjust expired office supplies account
31 Store Supplies 106 3,000

Store Supplies Expense 605 3,000
To adjust expired store supplies account
31 Uncollectible Accounts 610 3,360

Allowance for Uncollectible Accounts 103 3,360
To estimate doubtful accounts
31 Prepaid Rent 108 10,000

Rent Expense 602 10,000
To adjust rent expense
31 Prepaid Insurance 107 12,000

Insurance Expense 604 12,000
To adjust insurance expense
WAIKIKI RETAILERS
WORKSHEET
FOR THE YEAR ENDED DECEMBER 31, 2018
CODE ACCOUNT TITLE TRIAL BALANCE ADJUSTING ENTRIES INCOME STATEMENT BALANCE SHEET
Debit Credit Debit Credit Debit Credit Debit Credit
101 Cash P 480,029 P 480,029
102 Accounts Receivable 67,200 67,200
104 Merchandise Inventory 500,000 P 500,000
109 Input Tax 31,405 31,405
110 Store Furniture and 120,000 120,000
Fixtures
112 Store Equipment 148,036 148,036
201 Accounts Payable P 121,000 P 121,000
206 SSS Premium Payable 2,000 2,000
207 Pagibig Premium 1,000 1,000
Payable
208 Philhealth Premium 1,000 1,000
Payable
209 Witholding Tax Payable 4,000 4,000
210 Output Tax Payable 42,070 42,070
301 Won, Capital 1,160,000 1,160,000
401 Sales 363,000 P 363,000
402 Sales Discounts 5,420 5,420
403 Sales Returns and 7,000 7,000
Allowances
501 Purchases 210,000 210,000
502 Freight In 4,300 4,300
503 Purchase Discount 2,320 2,320
504 Purchase Returns and 4,000 4,000
Allowances
601 Salaries Expense 65,000 4,000 69,000
602 Rent Expense 15,000 10,000 5,000
603 Office Supplies 10,000 4,000 6,000
Expense
604 Insurance Expense 15,000 12,000 3,000
605 Store Supplies Expense 8,000 3,000 5,000
609 Taxes and Licenses 8,000 8,000
611 Freight Out 4,000 4,000
612 SSS Contribution 1,000 1,000
613 Pagibig Contribution 500 500
614 Philhealth Contribution 500 500
Subtotal P1,700,390 P1,700,390
103 Allowance for 3,360 3,360
Uncollectible Accounts
104 Merchandise Inventory, 540,000 540,000
End
105 Office Supplies 4,000 4,000
106 Store Supplies 3,000 3,000
107 Prepaid Insurance 12,000 12,000
108 Prepaid Rent 10,000 10,000
111 Accumulated 1,000 1,000
Depreciation- Store
furniture and fixtures
113 Accumulated 1,572 1,572
Depreciation- Store
Equipment
203 Salaries Payable 4,000 4,000
204 Utilities Payable 3,500 3,500
606 Utilities Expense 3,500 3,500
607 Depreciation Expense- 1,000 1,000
Store furniture and
fixtures
608 Depreciation Expense- 1,572 1,572
Store Equipment
610 Uncollectible Accounts 3,360 3,360
Total P 83,8152 P 909,320 P 1,415,670 P 1,344,986
NET INCOME 71,168 71,168
P909,320 P909,320 P1,415,670 P1,415,670
CLOSING ENTRIES

2018
Dec 31 Income Summary 303 P 500,000
Merchandise Inventory, Beginning 104 P 500,000
To remove the beginning inventory
Dec 31 Merchandise Inventory, End 104 540,000

Income Summary 303 540,000
To establish the ending merchandise inventory
Dec 31 Income Summary 303 226,720

Sales Discounts 402 5,420
Sales Returns and Allowances 403 7,000
Purchases 501 210,000
Freight in 502 4,300
To close all temporary accounts with debit balances.
Dec 31 Sales 401 363,000

Purchases Returns and Allowances 504 4,000
Purchase Discounts 503 2,320
Income Summary 303 369,320
To close all temporary accounts with credit balances.
Dec 31 Income Summary 111,432

Depreciation expense-Store Equipment 608 1,572
Depreciation expense-Store furniture and fixtures 607 1,000
Insurance Expense 604 3,000
Office Supplies Expense 603 6,000
Rent Expense 602 5,000
Salaries Expense 601 69,000
Store Supplies Expense 605 5,000
Taxes and Licenses 609 8,000
Utilities Expense 606 3,500
Uncollectible Accounts 610 3,360
Freight-out 611 4,000
SSS Contribution 612 1,000
Pag-ibig Contribution 613 500
Philhealth Contribution 614 500
To close all expense accounts.
Dec 31 Income Summary 303 71,168

Won, Capital 301 71,168
To close the income summary account.
Dec 31 Output Tax 210 42,070

Input Tax 109 31,405
VAT Payable 211 10,665
To close output tax and input tax to VAT Payable.
WAIKIKI Retailers
Statement of Comprehensive Income
For the Year Ended December 31,2018
Gross Sales P 363,000
Less: Sales Return and Allowances P 7,000
Sales Discounts 5,420 12,420
Net Sales 350,580
Less: Cost of Goods Sold
Merchandise Inventory, 12/1/18 500,000
Add: Purchases P 210,000
Less: Purchases Returns and Allowances P 4,000
Purchases Discounts 2,320 6,320
Net Purchases 203,680
Add: Freight-in 4300
Net Cost of Purchases 207,980
Total Goods Available for Sale 707,980
Less: Merchandise Inventory, 12/31/18 540,000
Cost of Goods Sold 167,980
Gross Profit 182,600
Less: Operating Expenses
Salaries Expense 69,000
Rent Expense 5,000
Office Supplies Expense 6,000
Insurance Expense 3,000
Store Supplies Expense 5,000
Utilities Expense 3,500
Depreciation Expense – Store Furniture & Fixtures 1,000
Depreciation Expense – Store Equipment 1,572
Taxes and Licenses 8,000
Uncollectible Accounts 3,360
Freight-out 4,000
SSS Contribution 1,000
Pag-ibig Contribution 500
Philhealth Contribution 500
Total Operating Expenses 111,432
Net Income from Operations P 71,168
WAIKIKI Retailers
Statement of Changes in Financial Position
As of December 31,2018
ASSETS LIABILITIES AND OWNER’S EQUITY
CURRENT ASSETS CURRENT LIABILITIES

Cash P 480,029 Accounts payable P 121,000
Accounts Receivable P 67,200 Salaries payable 4,000
Less: Allowance for 3,360 63,840 Utilities payable 3,500
Uncollectible Accounts
Merchandise Inventory, End 540,000 SSS premium payable 2,000
Office Supplies 4,000 Pag-ibig premium payable 1,000
Store Supplies 3,000 Philhealth payable 1,000
Prepaid Insurance 12,000 Withholding tax payable 4,000
Prepaid Rent 10,000 Output tax payable 42,070
Input Tax 31,405 TOTAL CURRENT P 178,570
LIABILITIES
TOTAL CURRENT ASSETS P 1,144,274 NON- CURRENT 0
LIABILITIES
NON-CURRENT ASSETS Total Liabilities P 178,570
Store Furniture and 120,000
Fixtures
Less: Accumulated 1,000 119,000 OWNER’S EQUITY
Depreciation- Store
Furniture and Fixtures
Store Equipment 148,036 Won, Capital Beginning 1,160,000
Less: Accumulated 1,572 146,464 Add: Net Income 70,684
Depreciation- Store
Equipment
TOTAL NON-CURRENT P 265,464 TOTAL OWNER’S EQUITY 1,231,168
ASSETS
TOTAL ASSETS P 1,409,254 TOTAL LIABILITIES AND P 1,409,254

OWNER’S EQUITY
WAIKIKI Retailers
Statement of Changes in Owner's Equity
For the Year Ended December 31, 2018
Won, Capital Beginning P 1,160,000

Add: Net Income 71,168
Total 1,231,168
Less: Won, Withdrawals 0
Won, Capital Ending P 1,231,168
WAIKIKI Retailers
Statement of Cash Flow
For the Year Ended December 31, 2018
Cash Flow from Operating Activities
Cash received from customers P 325,450
Cash paid for operating expenses:
Rent expense P 15,000
Salaries expense 59,000
Office Supplies expense 10,000
Store Supplies expense 8,000
Insurance expense 15,000
Taxes and Licenses 8,000
Freight out 4,000 (119,000)
Cash paid to suppliers:
Paid merchandise from Josen Wholesalers 44,800
Settled account in Zel Company 62,563
Settled account in Nica Merchandising 64,758
Freight in 4,300 (176,421)
Net Cash provided by Operating Activities 30,029
Cash Flows from Investing Activities 0
Cash Flow from Financing Activities
Cash investment of owner 450,000
Net Cash provided by Financing Activities 450,000
Cash balance at the end of the period P 480,029

WAIKIKI Retailers
Post-Closing Trial Balance
December 31, 2018
Cash P 480,029
Accounts Receivable 67,200
Allowance for Uncollectible Accounts P 3,360
Merchandise Inventory 540,000
Office Supplies 4,000
Store Supplies 3,000
Prepaid Insurance 12,000
Prepaid Rent 10,000
Store furniture and fixtures 120,000
Accumulated Depreciation-Store furniture and fixtures 1,000
Store equipment 148,036
Accumulated Depreciation-Store Equipment 1,572
Accounts Payable 121,000
Utilities Payable 3,500
Salaries Payable 4,000
SSS premium payable 2,000
Pag-ibig premium payable 1,000
Philhealth payable 1,000
Withholding tax payable 4,000
VAT Payable 10,665
Won, Capital 1,231,168
TOTALS P 1,384,265 P 1,384,265
NARRATIVE REPORT
Mr. Ike Won owned and managed the WAIKIKI Retailers, which is a VAT- registered entity. He opened his
business on the first day of December 2018. The business adopts the expense method of prepayments and the income
method of pre-collection. In addition, there are four financial transactions under the special journals of Sales,
Purchase, and Cash Receipt Journals. Moreover, in the Cash Disbursement Journal, there are 16 financial transactions
while the other 7 financial transactions are posted in the General Journal.
The Unadjusted Trial Balance is the next step after recording transactions using Special Journals and posting
them to the Subsidiary Ledger. After posting the transactions, the merchandising business recorded a total of P
1,700,390 in the Trial Balance for debit and credit accounts. Some accounts must be updated, just like any other
business transaction, to reflect the true income of the company and all of its actual values. For December, WAIKIKI
Retailers made adjustments. In December, a total of P 46,432 adjustments were made. The total balance on the
Income Statement is P909,320, whereas the total amount on the Balance Sheet is P 1,415,670.
Mr. Ike Won's WAIKIKI Retailers company has total assets of P 1,409,738 and liabilities of P 178,570 with
the owner’s equity being the capital added to the net income of P 1,231,168. At the end of the fiscal year, December
31, 2018, the company had a total cash balance of P 480,029. The entry is then closed, giving the Post-Closing Trial
Balance a total of P1, 384,265.
The operation of WAIKIKI Retailers gained a final net income of P 71,168 in the first quarter of December
2018, demonstrating the business' profitability. For instance, Mr. Won's Beginning Capital is equal to Mr. Won's Net
Income, resulting in Mr. Won's ending capital of P 1,231,168 which can be used for future expenditures or operations.
Therefore, the overall operation of the merchandising business of Mr. Ike Won achieve their goal of gaining profit
across their entire operation. As a result, the VAT-registered business can proceed to the next operation and handle
the entire business prior to the existing operation.
RATING OF MEMBERS:
LEADER: SALENDREZ, JANE NICOLE F.
MEMBERS RATING (1-10)

SALIGAO, IELLA MARIZ M. 10
UNTALAN, LEAH MARIE C. 10
UNTALAN, SOPHIA CELINE A. 8.5
VALDEZ, JHOANNE F. 8.5
VICERAL, CHARLENE S. 8.5

Group 8 Practice Set - Merchandising Business

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Group 8 Practice Set - Merchandising Business

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Republic of the Philippines

BATANGAS STATE UNIVERSITY

PRACTICE SET ON FINANCIAL ACCOUNTING

IN PARTIAL FULFILLMENT OF THE COURSE SUBJECT

ACC101: FINANCIAL ACCOUNTING AND REPORTING 1

WENNIE F. MEDINA, CPA, MBA

BACHELOR OF SCIENCE IN ACCOUNTANCY

GROUP LEADER: SALENDREZ, JANE NICOLE F.

Practice Set - Merchandising Business

2 • Issued checks for the following:

Net Cash paid 34,000

Additional data for adjustments:

Check Description Sundry/Other

DATE ACCOUNT TITLES AND EXPLANATION PR DEBIT CREDIT

10 Sales Returns and Allowances 403 2,000

13 Accounts Payable - Zel Company 201 3,360

15 Sales Returns and Allowances 403 3,000

20 Accounts Payable - Nica Merchandising 201 1,120

23 Sales Returns and Allowances 403 2,000

30 Salaries expense 601 6,000

30 SSS Contribution 612 1,000

PR Account Titles Debit Credit

DATE PARTICULARS PR DEBIT CREDIT BALANCE

DATE PARTICULARS PR DEBIT CREDIT BALANCE

DATE PARTICULARS PR DEBIT CREDIT BALANCE

SUMMARY OF ACCOUNTS RECEIVABLE - SUBSIDIARY LEDGER

DATE PARTICULARS PR DEBIT CREDIT BALANCE

RAM'S STEEL PARTS INC.

SUMMARY OF ACCOUNTS PAYABLE - SUBSIDIARY LEDGER

Account Name: Cash Code No. 101

Account Name: Accounts Receivable Code No. 102

Account Name: Allowance for Uncollectible Accounts Code No. 103

Account Name: Merchandise inventory Code No. 104

Account Name: Office Supplies Code No. 105

Account Name: Store Supplies Code No. 106

Account Name: Prepaid Rent Code No. 108

Account Name: Input Tax Code No. 109

Account Name: Store Furniture & Fixtures Code No. 110

Account Name: Store Equipment Code No. 112

Account Name: Accounts Payable Code No. 201

Account Name: Salaries Payable Code No. 203

Account Name: Utilities Payable Code No. 204

Account Name: SSS Premium Payable Code No. 206

Account Name: Pag-ibig Premium Payable Code No. 207

Account Name: PhilHealth Payable Code No. 208

Account Name: Output Tax Payable Code No. 210

Account Name: VAT Payable Code No. 211

Account Name: Won, Capital Code No. 301

Account Name: Income Summary Code No. 303

Account Name: Sales Code No. 401

Account Name: Sales Discount Code No. 402

Account Name: Sales Returns and Allowances Code No. 403

Account Name: Purchases Code No. 501

Account Name: Freight-in Code No. 502

Account Name: Purchases Discount Code No. 503

Account Name: Purchase Returns and Allowances Code No. 504

Account Name: Salaries Expense Code No. 601

Account Name: Rent Expense Code No. 602

Account Name: Office Supplies Expense Code No. 603

Account Name: Insurance Expense Code No. 604

Account Name: Store Supplies Expense Code No. 605

Account Name: Depreciation expense- Store equipment Code No. 608

Account Name: Taxes and Licenses Code No. 609