PROBLEM 4 & 5

Accounting for a Merchandising Business

JUNE 1: INITIALLY INVESTED P 1,000,000
CASH AND A LAND WORTH P 1,200,000.
Cash 1,000,000
Land 1,200,000
River, Capital 2,200,000
JUNE 4: BOUGHT 2 COMPUTERS FOR P 50,000 EACH. THE ESTIMATED
USEFUL LIFE OF EACH COMPUTER IS 5 YEARS AND THE COMPANY OPTED
TO USE STRAIGHT-LINE METHOD OF DEPRECIATION.

Computer Equipment 100,000

Cash 100,000
JUNE 5 BOUGHT SUPPLIES WORTH P 15,000

Supplies 15,000
Cash 15,000
JUNE 7 ISSUED A PROMISSORY NOTE TO ABC FINANCE CO. TO BORROW P 25,000
AT 12% INTEREST. THE PRINCIPAL AND THE INTEREST ARE DUE ON AUGUST 31,
2018.

Cash 25,000
Notes payable 25,000
JUNE 10: PURCHASED INVENTORIES ON ACCOUNT FROM APARTMENT
10 CLOTHING FOR P 250,000. TERMS: FOB DESTINATION, FREIGHT
PREPAID. AS OF JUNE 10, 2018, GOODS ARE NOT YET RECEIVED.

NO ENTRY
JUNE 12 PURCHASE INVENTORIES ON CREDIT FROM
FOREVER AGAPE & CO. FOR P 300,000. TERMS: 2/10, N/30.

Periodic System
Purchases 300,000
Accounts payable 300,000

Perpetual System
Inventory 300,000
Accounts payable 300,000
JUNE 15 PAID ELECTRICITY AND WATER
BILL OF P 10,000 AND P 2,000, RESPECTIVELY.

Utilities Expense 12,000

Cash 12,000
JUNE 17 SOLD 5,000 WORTH OF INVENTORIES WITH 20%
GROSS PROFIT RATE.

Periodic system

Cash 6,000
Sales 6,000
Perpetual system
Cash 6,000
Sales 6,000

Cost of goods sold 5,000

Inventory 5,000
JUNE 19 RECEIVED THE 250,000 WORTH OF INVENTORIES
AND INVOICE. SHIPPING COSTS WERE ALSO PAID WORTH P
5,000.
Periodic System:
Purchases 250,000
Accounts payable 250,000

Accounts payable 5,000

Cash 5,000
Perpetual System:
Inventory 250,000
Accounts payable 250,000

Accounts payable 5,000

Cash 5,000
JUNE 20 PAID THE JUNE 12, 2018 TRANSACTION.

Periodic system
Accounts payable300,000
Purchase discount 6,000
Cash 294,000

Perpetual system
Accounts payable300,000
Inventory 6,000
Cash 294,000
JUNE 25 RIVER WITHDRAW P 15,000 CASH FOR
PERSONAL USE.

River, Drawing 15,000

Cash 15,0000
JUNE 26 UNUSED SUPPLIES, P
7,500.
AJE:

Supplies Expense 7,500

Supplies 7,500
JUNE 30 SALARIES FOR SALES ASSISTANTS, P 55,000.

AJE:

Salaries Expense 55,000

Salaries payable 55,000
JUNE 30: ADJUSTMENTS

Depreciation Expense- Computer Equipment 1,666.67

Accumulated Depreciation- Computer equipment 1,666.67

Interest Expense 191.67

Interest payable 191.67
JUNE 30: ADJUSTMENTS

If company uses periodic system:

Inventory 539,000
Cost of goods sold 5,000
Purchase Discount 6,000
Purchases 550,000
CLOSING ENTRIES:
Sales 6,000
Income summary 6,000

Income summary 81,358.34

Cost of goods sold 5,000
Utilities Expense 12,000
Supplies Expense 7,500
Salaries Expense 55,000
Depreciation Expense- Computer equipment 1,666.67
Interest Expense 191.67

River. Capital 75,358.34

Income Summary 75,358.34

River, Capital 15,000

River, Drawing 15,000
BALANCES AS OF JUNE 30,2018:
1) Cash – 590,000 7.) Notes payable – 25,000
1) Inventories – 539,000 8.) Total Assets - 2,434,833.33
1) Land – 1,200,000 9.) Total liabilities – 325,191.67
1) Computer Equipment, net – 98,333.33 10.) River, Capital – 2,109,641.66
1) Supplies – 7,500 11.) Net Sales – 6,000
1) Interest Payable – 191.67 12.) Net Income/Loss – (75,358.34)
 
APRIL 1 J. MANUEL OPENS A BOOKSTORE INVESTING THE FF. ASSETS: P
160,000 CASH, A 30-DAY, 6% NOTE FROM V.CRUZ FOR P 16,600, P 20,400 STORE
EQUIPMENT AND BOOKS AND SCHOOL SUPPLIES WORTH P 132,000

Cash 160,000
Notes receivable 16,600
Store equipment 20,400
Inventory 132,000
J, Manuel, Capital 329,000
APRIL 2 PAID RENT FOR THE MONTH, P
13,200
Prepaid rent 13,200
Cash 13,200
APRIL 3 PURCHASED BOOKS FROM NATIONAL
BOOKSTORE FOR CASH P 56,000.

Periodic System
Purchases 56,000
Cash 56,000
APRIL 5 SOLD MERCHANDISE TO J. AGBAYANI STORE
ON ACCOUNT, P 20,160. TERMS: 2/10, N/60 FOB BICOL,
PREPAID, FREIGHT COST, P 900.

Periodic System

Accounts receivable 20,160

Sales 20,160
Accounts receivable 900
Cash 900
APRIL 6 J. AGBAYANI STORE RETURNED
MERCHANDISE WORTH P 2,240, CREDIT MEMO WAS ISSUED
FOR THE SAME AMOUNT.

Sales returns & allowances 2,240

Accounts receivable 2,240
APRIL 12 PURCHASED BOOKS FROM C. SILAYAN STORE,
P 67,200. TERMS: 20% DOWN AND THE BALANCE, 2/10, N/30.

Purchases 67,200
Cash 13,440
Accounts payable 53,760
APRIL 13 J. MANUEL WITHDREW BOOKS COSTING P
5,000 AND 2,000 CASH FROM THE BUSINESS FOR PERSONAL
USE.

J, Manuel, Drawing 7,000

Inventory 5,000
Cash 2,000
APRIL 14 SOLD MERCHANDISE TO C. MARTIN STORE ON
ACCOUNT P 16,800. TERMS: 2/10, N/30, FOB CALOOCAN,
PREPAID, FREIGHT COST, P 600.

Accounts receivable 16,800

Sales 16,800

Freight-out 600
Cash 600
APRIL 15 RECEIVED CREDIT MEMO FROM C.
SILAYAN STORE FOR BOOKS RETURNED, P 4,448

Accounts payable 4,448

Purchase returns & allowances 4,448
APRIL 18 RECEIVED A CHECK FROM J. AGBAYANI STORE
IN FULL PAYMENT OF THEIR ACCOUNT.

Cash 18,820
Accounts receivable 18,820
APRIL 19 RECEIVED P 3,360 ALLOWANCE FOR
INFERIOR QUALITY OF BOOKS PURCHASED FOR CASH.

Cash 3,360
Purchase returns & allowances 3,360
APRIL 20 PURCHASED BOOKS FOR AND SCHOOL
SUPPLIES FOR SALE FROM L. ALINDOGAN STORE FOR P
44,800,PAYING P 4,480 D0WN, ISSUING A 10-DAY, 6% NOTE
FOR P 20,000, AND THE BALANCE, N/30.
Purchases 44,800
Cash 4,480
Notes payable 20,000
Accounts payable 20,320
APRIL 21 PURCHASED AN ADDING MACHINE FROM CASIO
PHIL. FOR P 7,000. TERMS: 1/15, N/30.

Store equipment 6,930

Accounts payable 6,930
APRIL 22 PURCHASED BOOKS FOR CASH P 33,600, FOB
QUEZON CITY, PREPAID, FREIGHT COST, P800.

Purchases 33,600
Cash 33,600
Freight- in 800
Accounts payable 800
APRIL 23 PAID C. SILAYAN STORE THE AMOUNT DUE.

Accounts payable 49,312

Cash 49,312
APRIL 23 SOLD L. TOLENTINO STORE MERCHANDISE, P
44,800 LIST PRICE, MARKED 10% AND 20% OFF. TERMS:1/15, N/30.

Accounts receivable 32,256

Sales 32,256
26 COLLECTED THE AMOUNT DUE
FROM C. MARTIN STORE.

Cash 16,800
Accounts receivable 16,800
27 PAID L.ALINDOGAN STORE THE
AMOUNT DUE.

Accounts payable 20,320

Notes payable 20,000
Interest Expense 23.33
Cash 40,343.33
28 PAID CASIO PHIL . THE AMOUNT DUE.

Accounts payable 6,930

Cash 6,930
 29 PAID EMPLOYEE WAGES, P
15,500.
Wages Expense 15,500
Cash 15,500
30 COLLECTED THE AMOUNT DUE FROM V. CRUZ.

Cash 16,680.23
Notes receivable 16,600
Interest income 80.23