Bookkeeping NC III Institutional Assessment III Demonstrative Problem on Merchandising Business Problem 3. Listed below are the accounts for January transactions of Papasa Ako Company: CHART OF ACCOUNTS
110 120 125 130 140 150 160 170 175 180 185 210 220 230 310 320 330 410 420 430 510 520 530 540 610 620 630 640 650 660 670 680 690 700
Cash Accounts Receivable Allowance for Bad Debts Merchandise Inventory Office Supplies Prepaid Insurance Land Building Accumulated Depreciation – Building Equipment Accumulated Depreciation – Equipment Accounts Payable Notes Payable Salaries Payable Papasa Ako, Capital Papasa Ako, Withdrawals Income Summary Sales Sales Returns and Allowances Sales Discounts Purchases Purchases Returns and Allowances Purchases Discounts Freight In Salaries Expense Supplies Expense Insurance Expense Depreciation Expense – Building Depreciation Expense – Equipment Freight Out Advertising Expense Interest Expense Bad Debts Expense Cost of Goods Sold
During the month of January 2017, the following transactions occurred:
January
1 3 5 7 8 9 10 12 14 15 16 18 19 20 21 22 24 25
26 27 28 29 29 30
Invested P200,000 cash, a parcel of land worth P500,000 and a building worth P800,000 to be used in the business. Bought equipment worth P60,000 for cash. Bought Office Supplies for cash, P30,000. Purchased merchandise on account from Pray Muna Company, P200,000. Terms: 3/10, n/30 Sold merchandise on account to Tiwala Lang Company, P200,000. The cost is P100,000 with a term of 2/15, n/30 Returned P50,000 worth of merchandise purchased last January 7 from Pray Muna Company. Paid P10,000 for the freight charges for delivering merchandise last January 7. Paid the full amount for the merchandise purchased from Pray muna Company. Bought insurance worth P3,000 in cash that is good for 3 months period. Borrowed cash of P50,000 from Kayang Kaya Company and issued a note. Received returns from Tiwala Lang Company, worth P40,000 and cost of P20,000 Paid P10,000 for the freight charges for delivering merchandise last January 8. Received payment in full from Tiwala Lang Company. Purchased merchandise for cash, P50,000. Sold merchandise for cash, P100,000. Cost is P50,000. Paid P30,000 for the note from the cash borrowed from Kayang Kaya Company. Paid salaries to workers, P10,000. Purchased merchandise on account from Nasa Diyos ang Awa, Nasa Tao ang Gawa Company worth P150,000 with down payment of P50,000 cash and balance is in term of n/15 . Paid P50,000 worth of merchandise from January 25 transaction. Sold merchandise on account to Hugod Ro Kailangan Company worth P 100,000 with down payment of P20,000. Cost is P50,000. Terms: n/30 Received payment of P50,000 from Hugod Ro Kailangan Company. Paid advertisement worth P 5,000. Paid interest worth P 5,000 Papasa Ako withdrew P20,000 cash from the business.
The ending inventory is P175,500 Additional Information (for adjustment purposes): 1. Office Supplies on hand is P10,000. 2. Building is depreciated annually with salvage value P200,000 and a useful life of 10 years. (Depreciate 1 month period only) 3. Equipment is depreciated annually with no salvage value and a useful life of 5 years. (Depreciate 1 month period only) 4. Prepaid Insurance unexpired portion is P2,000. 5. Salaries to workers of P10,000 was incurred but not yet paid. 6. Set up Bad Debts, 2% of Net Sales. Using Periodic Inventory and Perpetual Inventory Method, you are required to prepare the following:
1. 2. 3. 4. 5. 6.
Prepare Journal Entries Prepare Ledger Prepare Trial Balance Prepare Adjusting Entries Prepare Adjusted Trial Balance Prepare the following financial statements: a. Income Statement b. Statement of Changes in Owner’s Equity c. Statement of Financial Position d. Statement of Cash Flows 7. Prepare closing entries and close the book. 8. Prepare post-closing trial balance
