ASSIGNMENT for THURSDAY (Please solve and print a copy
A. ADJUS ADJUSTIN TING G ENTRI ENTRIES ES.. Merchandising for for December December,, 20!. Prepare the necessary adjusting entries for JM Merchandising 1. The rm estimates estimates that that 2% of the outstanding outstanding accounts accounts receivable receivable is doubtful of of collection. The outstanding account receivable as of December 31 2!1" amounts P#!!!!! and the unadjusted balance of $lloance for doubtful accounts at the beginning of the period totals P2!!!. 2. &n 'ovember 1 2!1" the the rm signed signed a "(month "(month advertising advertising contract contract for P1)!!! P1)!!! and paid the full amount in advance. 3. &n *arch *arch 1 2!1" the rm purchased purchased store store e+uipment for for P)!!!!. $t that time the e+uipment as estimated to have a useful life of ve years and a salvage value of P2!!!. ,. &n December 31 2!1" the rm rm oed salaries of P3!!!! P3!!!! to part(time employees. employees. These salaries salaries ill not be paid until -anuary 3 2!1#. . &n &ctober &ctober 1 the balance balance of /nearned 0evenue 0evenue totaled totaled P3"!!!. P3"!!!. This represents represents ,( ,( months advanced rent received from *r. -orge Dy for using the companys unutilied space.
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". &n December 31 2!1" an inventory of store supplies shoed that items costing P12!! ere on hand. $t the beginning of the year store supplies as P!! and during the year the company purchased supplies orth P#!!!. #. *erchandise nventory per physical count on December 31 is P,,!!!. ". 1. $dvertising contract entered into by -ulian 4nterprises as recorded at P1!2!2!! as Prepaid $dvertising . t as a 2!(month contract signed on *arch 31 2!1". 2. &n December 2!1" *ayi5a 6o. received P)!!!! representing advance collection of a 1!% commission on sales and recorded as /nearned 6ommission ncome. 7ales for the month amounted to P23!!!!. 3. &n December # 2!1" -ohn borroed P"!!!! a 1#% 8!(day note from 9anco *anila. 'o interest has been recorded in the boo5s as at December 31. ,. 6ris :ousing charges its tenants the folloing rates. P!! per day for transient occupants and P#!! per month for permanent lodgers. $s of December 312!1" the rm has not received any payment of its to permanent lodgers for the last +uarter of 2!1". . $n e+uipment as purchased on -anuary 31 2!1" for P3!!!!! cash by &riental Trading. 9ased on the companys estimates scrap value is 2!% of cost and useful life is years. ". $ccounts 0eceivable at year(end amounting to P1!!!! hile $lloance for doubtful accounts shoed a balance of P1!3!! before adjustments. t is ;<s policy to record 1!% of $ccounts 0eceivable as doubtful of collection. #. 0omy Tradings inventory count of goods as at December 31 2!1, total P12!!. P0&9;4* 7&;='>
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3. 7ummer 6ompany purchased merchandise from ?inter Trading. @olloing are the terms of saleA The list price oBered by ?inter as P)"!!! less 2!. The merchandise as sold at @&9 shipping point and the cost of freight as P2,!!. ?inter Trading also oBered 7ummer 6ompany a credit term of 2C1! nC3! and the cash discount does not apply to the shipping cost. #ha$ is $he ne$ cos$ of goods %&rchased b' S&mmer (om%an', ass&ming $he goods %&rchased )as %aid )i$hin $he disco&n$ %eriod* ,. 6 @&/0 Trading sold merchandise to 3* 4nterprises amounting to P8)!! ith a !% don payment and the balance on account. $fter three days P12! as returned by 3* 4nterprise. f 6 @&/0 received P22!!! as full settlement of 3*s account ho) m&ch %ar$ia+ %a'men$ )as made %rior $o f&++ se$$+emen$* . @or the year ended December 31 2!13 :ealthy Trading disclosed the folloing information regarding its operationsA >ross Prot P2!!!!! Purchases all on credit #!!! Purchase 0eturns and alloances 1!!!! @reight(in 2!!! >ross 7ales 3!!!! $s per physical count on December 312!1" inventory on hand amounted to P#"!!. t as determined that the company as able to sell only #!% of total goods available for sale. o) m&ch is $he Sa+es Re$&rns and A++o)ances for $he 'ear* ". @or the scal year ending *arch 31 2!1" there ere net purchases of P"!!!!!. *erchandise nventory at the beginning of the period as P#!!!! hich had increased by P!!! as of year end. @reight out as P)!!!. f 'et sales revenue is e+ual to P1,!% of cost of sales and &perating 4penses is e+ual to 2!% of 'et 7ales . o) m&ch is Ne$ -ro$ for $he 'ear. #. *$D&''$ 6ompany purchased a ne store e+uipment on -anuary 1 2!1 at a cost of P,!!!!. The e+uipment has an estimated useful life of years and an estimated salvage value of 1!% of cost. Ass&ming $ha$ $he com%an' fo++o)s $he s$raigh$ +ine me$hod of de%recia$ion, ho) m&ch is $he de%recia$ion e/%ense $ha$ sho&+d be r ecorded for $he 'ear ended 20! * ). &Ece 7upplies on :and at the start of the year amounted to P1!!!. &Ece supplies purchased during the year amounted to P!!!! less 1! on terms 1C1! nC3!. Defective supplies amounting to P1!!! ere returned and the balance as fully paid ithin the discount period. $pproimately 2!% of the total supplies available ere unused at the end of the end of the year. o) m&ch 1ce S&%%+ies )ere &sed d&ring $he %eriod* 8. During the month of *arch 2!1" $more Trading had the folloing cash FosA 6ash investment of the oner P!!!! 6ash received from sale of old e+uipment 1!!! 6ash paid for operating epenses !!!! 6ash collected from customers 1!!!! 6ash received from interest on nvestment in !!! Trading 7ecurities 6ash paid for interest on loans 3!!! 6ash paid for &Ece supplies 1!!!! 6ash received from interest on notes receivables 2!!! o) m&ch )as $he ne$ cash ino) 3o&$o)4 from o%era$ing ac$i5i$ies*
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1! The balance of $ccounts 0eceivable of &riental Trading at *arch 31 2!1" end of accounting period totaled P,32)!!. The $ccountant estimates that about 2% of the accounts receivable is doubtful of collection. 9efore ma5ing the adjusting entry the alloance for doubtful accounts has a credit balance of P23!". :o much is the doubtful accounts epense that must be recognied by the company as at *arch 31 2!1"G 11. The Prepaid nsurance account of -*0 *ar5eting had a beginning balance of P"!!!. During the year an insurance premium as paid and debited Prepaid nsurance for P12!!!. The balance of the Prepaid nsurance account at the end of the year after ma5ing the annual adjusting entry as P3!!!. #ha$ amo&n$ sho&+d be re%or$ed as Ins&rance E/%ense for $he 'ear* 2. &n *arch 31 2!1" *'0 6ompany received P#!!!! a 12(month promissory at % annual interest in settlement of goods sold. nterest payments by the customer are made ithout fail every +uarter starting -une 3! 2!1". o) m&ch in$eres$ m&s$ be co++ec$ed b' MNR (om%an' on December 6, 20!*
7INAN(IA8 STATEMENTS Design ome 7&rnishings is a retail store. &n December 31 2!1" the rmHs general ledger contained the folloing accounts and balances. $djusted Trial balance follosA Re9&ired: I1J Prepare a @unctional form ncome 7tatement for the year ending December 31 2!1" I2J Prepare a 7tatement of 6hanges in &ners 4+uity for the year ending December 31 2!1" I3J Prepare a classied report form 7tatement of @inancial Position December 31 2!1". I,J 'otes to @inancial 7tatementsA 'ote 1 K 'et 7ales 'ote K Property Plant and 4+uipment 'ote 2 ( 6ost of >oods 7old 'ote " K Trade and &ther Payables 'ote 3 ( Trade and &ther 0eceivables 'ote # K Distribution 4penses 'ote , K Prepaid 4penses 'ote )K $dministrative 4penses
