DR. CARLOS S.

LANTING COLLEGE
BASIC EDUCATION DEPARTMENT-SENIOR HIGH SCHOOL
FUNDAMENTALS OF ABM 1
ACTIVITY 5

PROBLEM: COMPLETING THE ACCOUNTING CYCLE OF A MERCHANDISING BUSINESS –

PERIODIC INVENTORY SYSTEM

Listed below are the Feb. 1, 2023 account balances of Teresita Buenaflor Shoes:

110 Cash 33,000

120 Accounts Receivable 192,000
130 Merchandise Inventory 413,000
140 Supplies 51,000
150 Prepaid Insurance 48,000
160 Land 460,000
170 Building 1,750,000
175 Accumulated Depreciation-Building 350,000
180 Equipment 2,310,000
185 Accumulated Depreciation-Equipment 630,000
210 Accounts Payable 108,000
220 Salaries Payable
230 Mortgage Payable 2,600,000
310 Buenaflores, Capital 1,569,000
320 Buenaflores, Withdrawals
330 Income Summary
410 Sales
420 Sales Returns and Allowances
430 Purchases
510 Purchases
520 Purchases Returns and Allowances
530 Purchases Discounts
540 Transportation In
610 Salaries Expense
620 Supplies Expense
630 Insurance Expense
640 Depreciation Expense-Building
650 Depreciation Expense-Equipment
660 Transportation Out
670 Advertising Expense
680 Interest Expense
690 Miscellaneous Expense

5,257,000.00 P5,257,000.00

During February 2023, the following transactions occurred:

1 Collected P113,000 from customers on account.

2 Paid P64,000 of accounts due less discounts of 3%.
4 Purchased merchandise, P170,000. Terms: FOB shipping point; 3/10, n/30.
5 Sold merchandise on account to Gonzales Inc., P270,000. Terms: FOB
7 Paid for advertising for the month of February, P6,000.
7 Sold merchandise for cash, P250,000.
8 Paid the amount due from the Feb. 4 transaction.
9 Paid Iloilo Freight P4,000 for delivering merchandise last Feb. 4.
10 Received returns from the Gonzales Inc., P70,000.
12 Received payment from the Gonzales Inc. less returns and discounts.
14 Paid P26,000 interest on the mortgage payable.
15 Paid salaries, P51,000.
16 Sold merchandise on account to Ronzales Corp., P392,000. Terms: FOB
destination; 2/10, n/30.
18 Paid P4,000 freight charges on the sale of Feb. 16.
19 Acquired supplies for cash, P21,000.
20 Purchased P125,000 of merchandise from Lozada Imports on account.
Terms: FOB destination; 3/10, n/30.
22 Paid P7,000 miscellaneous expenses.
23 Received payment from Ronzales Corp. less discounts.
24 Purchased P373,000 of merchandise on account from Agustin Enterprises.
Terms: FOB shipping point; 3/10, n/30.
24 Paid La Paz Express P9,000 freight for delivering merchandise acquired from
Agustin.
25 Sold merchandise to Ronzales Corp. on account, P420,000. Terms: FOB
shipping point; 2/10, n/30.
26 Received returns from Ronzales Corp., P71,000.
28 Buenaflor withdrew P400,000 from the business.
28 Returned merchandise purchased from Agustin on June 24, P25,000.

Required:

1. Post the Feb. 1, 2023 account balances to the ledger accounts.

2. Record the transactions for the month of February in a journal and post the
transactions to the ledger.
3. Prepare the unadjusted trial balance.
4. Prepare the adjusting entries using the following information:
a. Salaries in the amount of P51,000 have accrued on Feb. 28.
b. Insurance coverage with premiums of P2,000 has expired at month-end.
c. Depreciation on the building and on the equipment for the month amounted to
P9,000 and P12,000, respectively.
d. Supplies on hand at month-end amounted to P14,000.
e. A count of the merchandise inventory on Feb. 28, 2023 amounted to P397,000.
5. Prepare the adjusted trial balance.
6. Prepare an income statement for the month-ended Feb. 28, 2023, and a balance sheet as of Feb.
28, 2023.
7. Prepare closing entries for the month.
8. Prepare the post-closing trial balance.

Note: Use your general journal, general ledger, and 14/16 column-worksheet.