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HANDOUT FOR REVIEW FOR BOOKKEEPING NCIII

SETS FOR PERPETUAL AND PERIODIC INVENTORY SYSTEMS 2016


JUNE 2016
1 The business, HOLLYWOOD TRADING, was registered to a single proprietorship
with the Department of Trade and Industry. Rhea Reyes
invested P150,000.
2 Bought office equipment for P100,000.
2 Bought merchandise on account from RFC Supply Co. P35,000, terms 2/10, n/30
3 Bought office supplies on cash basis for P700
4 Sold merchandise on account P25,200, FOB Destination terms 2/10, n/30. The
cost of merchandise was P22,200
5 Paid P200 freight on June 4 sale
6 Received credit from RFC Supply Co. for merchandise returned P300
11 Paid RFC
13 Collected from June 4 customers
14 Bought merchandise on cash basis for P24,500
15 Salaries paid P5,500
16 Borrowed money from RCBC Bank, signed a promissory note for P150,000
17 Received refund from a supplier on cash purchase on June 14 of P2,500
18 Bought merchandise from LCC, P54,200, FOB Shipping Point, terms 2/10 n/30.
20 Paid freight on June 18 purchase, P700
23 Sold merchandise for P36,400, The merchandise sold had a cost of P30,500.
26 Bought merchandise for cash, P22,300
27 Paid LCC on June 18purchase, P9,000. No discount allowed for partial payment.
28 R. Reyes got cash out of the business, P35,000
29 Made refund to cash customers for defective merchandise P900
30 Sold merchandise on account P13,700, n/30. Cost of the merchandise sold is
P11,000
30 Paid for the following: Advertising P1,000; Utilities P400; Rent P3,500; Salaries
P2,500
30 Check merchandise inventory on June 30. P30,000 worth of merchandise was
checked
CHART OF ACCOUNTS
ASSETS LIABILITIES

101 CASH 201 ACCOUNTS PAYABLE


102 ACCOUNTS RECEIVABLE 202 NOTES PAYABLE
103 MERCHANDISE INVENTORY
104 SUPPLIES EQUITY
111 EQUIPMENT
301 REYES, CAPITAL
EXPENSES 302 REYES, DRAWING
303 INCOME SUMMARY
501 PURCHASES / COST OF GOODS SOLD
502 PURCHASES RETURNS AND ALLOWANCES
503 PURCHASES DISCOUNTS
504 FREIGHT IN
601 SALARIES INCOME
602 ADVERTISING
603 FREIGHT OUT 401 SALES
604 RENT 402 SALES RETURNS & ALLOWANCES
605 UTILITIES 403 SALES DISCOUNTS

* BOLD indicates cost of goods sold; to be used in perpetual inventory system


** ITALICIZED indicates checked merchandise; to be used in periodic inventory system
HANDOUT FOR REVIEW FOR BOOKKEEPING NCIII

JOURNAL ENTRIES: PERIODIC & PERPETUAL

DATE PARTICULARS RF DEBIT CREDIT


JUNE 1 CASH 101 150 000
REYES, CAPITAL 301 150 000
Initial Investment
#
2 EQUIPMENT 111 100 000
CASH 101 100 000
Bought equipment for cash

#
2 MERCHANDISE INVENTORY 103 35 000

ACCOUNTS PAYABLE – RFC SUPPLY CO. 201 35 000

Terms 2/10, n/30

#
PURCHASES 501 35 000

ACCOUNTS PAYABLE – RFC SUPPLY CO. 201 35 000

Terms 2/10, n/30

#
3 SUPPLIES 104 700

CASH 101 700

Bought supplies for cash

#
4 ACCOUNTS RECEIVABLE 201 25,200

SALES 401 25,200

Terms 2/10, n/30

COST OF GOODS SOLD 501 22,200

MERCHANDISE INVENTORY 103 22,200

For cost of goods sold

#
4 ACCOUNTS RECEIVABLE 102 25,200

SALES 401 25,200

Terms FOB Destination, 2/10 n/30

#
5 FREIGHT OUT 200

CASH 200

Freight on June 4 sales

#
6 ACCOUNTS PAYABLE – RFC SUPPLY CO. 201 300

MERCHANDISE INVENTORY 103 300


HANDOUT FOR REVIEW FOR BOOKKEEPING NCIII

Returned defective merchandise

#
6 ACCOUNTS PAYABLE – RFC SUPPLY CO. 201 200

PURCHASES, RETURNS & ALLOWANCES 502 200

Returned defective merchandise

#
11 ACCOUNTS PAYABLE – RFC SUPPLY CO. 201 34,700

CASH 101 34,006

Purchases discount 503 694

Paid RFC

#
11 ACCOUNTS PAYABLE – RFC SUPPLY CO. 201 34,700

CASH 101 34,006

MERCH INVENTORY 403 694

Paid RFC

#
13 CASH 101 24,696

SALES DISCOUNT 403 504

ACCOUNTS RECEIVABLE 102 25,200

Collection of accounts in full

#
14 MERCHANDISE INVENTORY 103 24,500

CASH 101 24,500

Bought merchandise for cash


#
14 PURCHASES 103 24,500

CASH 101 24,500


Bought merchandise for cash

#
15 SALARIES EXPENSE 601 5,500

CASH 101 5,500

Paid salaries

#
16 CASH 101 150,000

NOTES PAYABLE – RCBC BANK 202 150,000

Borrowed money and issued promissory note

#
17 CASH 101 2,500

MERCHANDISE INVENTORY 103 2,500


Refund from defective purchase

#
HANDOUT FOR REVIEW FOR BOOKKEEPING NCIII

17 CASH 101 2,500

PURCHASES, RETURNS AND ALLOWANCES 103 2,500

Refund from defective purchase

#
18 MERCHANDISE INVENTORY 103 54,200

ACCOUNTS PAYABLE – LCC. 201 54,200

Terms 2/10, n/30

18 PURCHASES 501 54,200

ACCOUNTS PAYABLE – LCC 201 54,200

Terms 2/10, n/30

#
20 MERCHANDISE INVENTORY 103 700

CASH 101 700

Paid freight in

#
20 FREIGHT IN 504 700

CASH 101 700


Paid freight in

#
23 CASH 101 36,400

SALES 401 36,400

Cash sales

COST OF GOODS SOLD 501 30,500

MERCHANDISE INVENTORY 103 30,500

For cost of goods sold

#
23 CASH 101 36,400

SALES 401 36,400

Cash sales

#
26 MERCHANDISE INVENTORY 103 24,500

CASH 101 24,500

Bought merchandise for cash

26 PURCHASES 501 24,500

CASH 101 24,500

Bought merchandise for cash

#
HANDOUT FOR REVIEW FOR BOOKKEEPING NCIII

27 ACCOUNTS PAYABLE – LCC 201 9,000

CASH 101 9,000

Partial payment

28 REYES, DRAWING 302 35,000

CASH 101 35,000

Owner’s drawing

29 SALES RETURNS & ALLOWANCES 402 900

CASH 101 900

Refund to customers for defective merchandise

30 ACCOUNTS RECEIVABLE 102 13,700

SALES 401 13,700

Sales on account n/30

COST OF GOODS SOLD 502 11,000

MERCHANDISE INVENTORY 103 11,000

For the cost of goods sold

30 ACCOUNTS RECEIVABLE 102 13,700

SALES 401 13,700

Sales on account n/30

30 ADVERTISING EXPENSE 603 1,000

UTILITIES EXPENSE 605 400

RENT EXPENSE 604 3,500

SALARIES EXPENSE 601 1,500

CASH 6,400

Month-end payment of expenses

*BOLD indicates transaction made in the perpetual inventory system


**ITALICIZED indicates transactions made in the periodic inventory system
HANDOUT FOR REVIEW FOR BOOKKEEPING NCIII

PERPETUAL ----- LEDGER


Cash Acc # 101
Date Items ref Balance
2016 Debit Credit Debit Credit
June 1 Initial investment J1 150,000 150,000
2 Bought equipment for cash J1 100,000 50,000
3 Bought supplies for cash J1 700 49,300
5 Freight on June 4 sales J1 200 49,100
11 Paid RFC J1 34,006 15,094
13 Collection of accounts in full J1 24,696 39,790
14 Bought merchandise for cash J1 24,500 15,290
15 Paid salaries J1 5,500 9,790
16 Borrowed money & issued J2 150,000 159,790
promissory note
17 Refund from defective J2 2,500 162,290
purchase
20 Paid freight-in J2 700 161,590
23 Cash sales J2 36,400 197,990
26 Bought merchandise for cash J2 22,300 175,690
27 Partial payment J2 9,000 166,690
28 Owner’s drawing J2 35,000 131,690
29 Refunded to customers for J2 900 130,790
defective merchandise
30 Month-end payment of J2 6,400 124,390
expenses

Accounts Receivable Acc # 102


Date Items Ref Balance
2016 Debit Credit Debit Credit
June 4 j-1 25,200 25,200
13 j-1 25,200 0
30 j-1 13,700 13,700

Merchandise Inventory Acc # 103


Date Items Ref Balance
2016 Debit Credit Debit Credit
2 j-1 35,000 35,000
4 j-1 22,200 12,800
6 j-1 300 12,500
11 j-1 694 11,806
14 j-1 24,500 36,306
17 j-2 2,500 33,806
18 j-2 54,200 88,006
20 j-2 700 88,706
23 j-2 30,500 58,206
26 j-2 22,300 80,506
30 j-2 11,000 69,506

Supplies Acc # 104


Date Items ref Balance
2016 Debit Credit Debit Credit
June 3 j-1 700 700
Equipment Acc # 111
Date Items ref Balance
2016 Debit Credit Debit Credit
June 2 j-1 100,000 100,000
HANDOUT FOR REVIEW FOR BOOKKEEPING NCIII

Accounts Payable Acc # 201


Date Items ref Balance
2016 Debit Credit Debit Credit
June 2 j-1 35,000 35,000
6 j-1 300 34,700
11 j-1 34,700 0
18 j-2 54,200 54,200
27 j-2 9,000 45,200

Notes Payable Acc # 202


Date Items ref Balance
2016 Debit Credit Debit Credit
June 16 j-2 150,000 150,000

Reyes, Capital Acc # 301


Date Items ref Balance
2016 Debit Credit Debit Credit
June 1 j-1 150,000 150,000
30 Closing Entries j-4 1,904 148,096
30 Closing Entries j-4 35,000 113,096

Reyes, Drawing Acc # 302


Date Items ref Balance
2016 Debit Credit Debit Credit
June 28 j-3 35,000 35,000
30 Closing Entries j-4 35,000 0

Income Summary Acc # 303


Date Items ref Balance
2016 Debit Credit Debit Credit
June 30 Closing Entries j-4 73,896 73,896
30 Closing Entries j-4 75,800 (1,904)
30 Closing Entries j-4 1,904 0

Sales Acc # 401


Date Items ref Balance
2016 Debit Credit Debit Credit
June 4 j-1 25,200 25,200
23 j-2 36,400 61,600
29 j-2 13,700 75,900
30 Closing Entries j-4 75,300 0
HANDOUT FOR REVIEW FOR BOOKKEEPING NCIII

Sales Returns and Allowances Acc # 402


Date Items ref Balance
2016 Debit Credit Debit Credit
June 29 j-2 900 900
30 Closing Entries j-4 900 0

Sales Discount Acc # 403


Date Items ref Balance
2016 Debit Credit Debit Credit
June 13 j-1 504 504
30 Closing Entries j-4 504 0

Cost of GOODS Sold Acc # 501


Date Items ref Balance
2016 Debit Credit Debit Credit
June 4 j-1 22,200 22,200
23 j-2 30,500 52,700
30 j-2 11,000 63,700
30 Closing Entries j-4 63,700 0

Advertising Expense Acc # 601


Date Items ref Balance
2016 Debit Credit Debit Credit
June 30 j-2 1000 1,000
30 Closing Entries j-4 1000 0

Freight -Out Acc # 602


Date Items ref Balance
2016 Debit Credit Debit Credit
June 5 j-1 200 200
30 Closing Entries j-4 200 0

Rent Expense
Date Items ref Balance
2016 Debit Credit Debit Credit
June 30 j-2 3,500 3,500
30 Closing Entries j-4 3,500 0

Salaries Expense
Date Items ref Balance
2016 Debit Credit Debit Credit
June 15 j-2 5,500 5,500
30 j-2 1,500 7000
30 Closing Entries j-4 7000 0

Utilities Expense
Date Items ref Balance
2016 Debit Credit Debit Credit
June 30 j-2 400 400
30 Closing Entries j-4 400 0
HANDOUT FOR REVIEW FOR BOOKKEEPING NCIII

HOLLYWOOD TRADING
PRELIMINARY TRIAL BALANCE
JUNE 30, 2016
ACCOUNT # ACCOUNT TITLES DEBIT CREDIT
101 Cash 124,390
102 Accounts Receivables 13,700
103 Merchandise Inventory 69,506
104 Supplies 700
111 Equipment 100,000
201 Accounts Payable 45,200
202 Notes Payable 150,000
301 Reyes, Capital 150,000
302 Reyes, Drawings 35,000
401 Sales 75,300
402 Sales Returns and Allowances 900
403 Sales Discount 504
501 Cost of Goods Sold 63,700
601 Advertising Expense 1,000
602 Freight-Out 200
603 Rent Expense 3,500
604 Salaries Expense 700
605 Utilities Expense 400
TOTALS P 420,500 P 420,500

HOLLYWOOD TRADING
STATEMENT OF FINANCIAL PERFROMANCE
FOR THE PERIOD ENDED: JUNE 30, 2016
Sales 75,300
Less: Sales Returns & Allowances 900
Sales Discount 504 1404
Net Sales 73,896
Less: Cost of Goods Sold 65,700
Gross Profit 10,196
Less: Operating Expense
Advertising Expense 1,000
Freight-Out 200
Rent Expense 3,500
Salaries Expense 7,000
Utilities Expense 400 12,100
Net Loss P 1,904

HOLLYWOOD TRADING
STATEMENT OF CHANGES IN OWNER’S EQUITY
FOR THE PERIOD ENDED, JUNE 30,2016
R. Reyes, Capital, June 1 P 0
Initial investment 150,000
R. Reyes, Drawings (35,000)
Net Loss (1,904)
R. Reyes, Capital, June 30 P 113,096
HANDOUT FOR REVIEW FOR BOOKKEEPING NCIII

HOLLYWOOD TRADING
STATEMENT OF FINANCIAL POSITION
FOR THE PERIOD ENDED, JUNE 30,2016
ASSETS
Current Assets
Cash P 124,390
Accounts Receivable 13,700
Merchandise Inventory 69,506
Prepaid Supplies 700
Total Current Assets P 208,296
Non-Current Assets
Equipment 100,000
TOTAL ASSETS P 308,296

LIABILITIES
Current Liabilities
Accounts Payable P 45,200
Non-Current Liabilities
Notes Payable 150,000
TOTAL LIABILITIES P 195,200

OWNER’S EQUITY
R. Reyes, Capital 113,096
TOTAL LIABILITIES & OWNER’S EQUITY P 308,296

HOLLYWOOD TRADING
STATEMENT OF CASH FLOWS
FOR THE PERIOD ENDED, JUNE 30,2016
CASH FLOW FROM OPERATING ACTIVITIES
Cash Received From
Sales P 36,400
Receivables Collection 24,696
Refund from Purchases 2,500
P 63,596
Payment for
Office Supplies (700)
Freight on Sold Goods (200)
Goods Bought (89,806)
Operating Expense (11,900)
Refund to Customers (900)
Freight on Purchases (700)
Net Cash Flow from Operating Activities P ( 40,610)

Net Cash Flow from Financing Activities


Office Equipment Bought (100,000)

Net Cash Flow from Financing Activities


Initial Investment 150,000
Borrowings 150,000
Drawings (35,000)
Net Cash Flow from Financing Activities P 265,000
INCREASE IN CASH AND CASH EQUIVALENTS 124,390
ADD CASH& CASH EQUIVALENTS, BEG 0
CASH & CASH EQUIVALENTS, JUNE 30 P 124,390
HANDOUT FOR REVIEW FOR BOOKKEEPING NCIII

CLOSING ENTRIES
Date Items ref Debit Credit
2016
JUNE 30 Sales 401 75,300
Income Summary 303 73,896
Sales Returns & Allowances 402 900
Sales Discount 403 504

30 Income Summary 303 75,800


Cost of Goods Sold 501 63,700
Advertising Expense 601 1,000
Freight-out 602 200
Rent Expense 603 3,500
Salaries Expense 604 7,000
Utilities Expense 605 400

30 R. Reyes, Capital 301 1,904


Income Summary 303 1,904

30 R. Reyes, Capital 301 35,000


R. Reyes, Drawings 302 35,000

HOLLYWOOD TRADING
POST-CLOSING TRIAL BALANCE
JUNE 30, 2016
DEBIT CREDIT
CASH P 124,390
ACCOUNTS RECEIVABLE 13,700
MERCHANDISE INVENTORY 69,506
SUPPLIES 700
EQUIPMENT 100,000
ACCOUNTS PAYABLE P 45,200
NOTES PAYABLE 150,000
R. REYES, CAPITAL _ 113,096 _
TOTAL P 308,296 P 308,296

PROBLEM 2

1.UCPB, a bank lent P200,000 to a customer on July 1 that required the customer to pay an annual
percentage rate (APR) of 10% on the amount of the loan. The loan is due in six months and no payment
of interest or principal is to be made until the note is due on December 31. UCPB prepares monthly
financial statements at the end of each calendar month. Provide an answer for August only.

2. On December 1, Y Insurance Co. received P2,400 from your company for the annual insurance
premium covering the twelve-month period beginning on December 1. Y Insurance Co. recorded the
P2,400 receipt as of December 1 with a debit to the current asset Cash and a credit to the current liability
Unearned Revenues. Y Insurance Co. prepares monthly financial statements at the end of each calendar
month. Provide an answer for April only.

3. On January 1, Y Company began operations. On January 4, it purchased P3,500 of supplies and


recorded the transaction with a debit to the balance sheet account Supplies and a credit to the current
liability Accounts Payable. Y company prepares monthly financial statements at the end of each calendar
HANDOUT FOR REVIEW FOR BOOKKEEPING NCIII

month. At the end of the day on January 31, Y company estimated that P3,400 of the supplies were still
on hand in the supply room. The following questions pertain to the adjusting entry that should be entered
by Y company.

Requirement: Answer the questions pertaining to the adjusting entries for each of the cases. Use the
answer sheet provided for Case 2 Set 2.

What is Case 1 Case 2 Case 3


ADJUSTING ENTRY DATE August 1 April 30 January 31
DEBIT ACCOUNT TITLE Interest Receivable Unearned Revenue Supplies Expense
CREDIT ACCOUNT TITILE Interest Income Revenue Supplies
DEBIT & CREDIT AMOUNT P 1,667 P 200 P 2,300

PERIODIC ----- LEDGER


Cash Acc # 101
Date Items ref Balance
2016 Debit Credit Debit Credit
June 1 Initial investment j-1 150,000 150,000
2 Bought equipment for j-1 100,000 50,000
cash
3 Bought supplies for cash j-1 700 49,300
5 Freight on June 4 sales j-1 200 49,100
11 Paid RFC j-1 34,006 15,094
13 Collection of accounts in full j-1 24,696 39,790
14 Bought merchandise for cash j-1 24,500 15,290
15 Paid salaries j-1 5,500 9,790
16 Borrowed money & issued j-2 150,000 159,790
promissory note
17 Refund from defective J-2 2,500 162,290
purchase
20 Paid freight-in j-2 700 161,590
23 Cash sales j-2 36,400 197,990
26 Bought merchandise for cash j-2 22,300 175,690
27 Partial payment j-2 9,000 166,690
28 Owner’s drawing j-2 35,000 131,690
29 Refunded to customers for j-2 900 130,790
defective merchandise
30 Month-end payment of j-2 6,400 124,390
expenses

Accounts Receivable Acc # 102


Date Items Ref Balance
2016 Debit Credit Debit Credit
June 4 j-1 25,200 25,200
13 j-1 25,200 0
30 j-2 13,700 13,700

Merchandise Inventory Acc # 103


Date Items Ref Balance
2016 Debit Credit Debit Credit
June 30 J3 30,000 30,000
HANDOUT FOR REVIEW FOR BOOKKEEPING NCIII

Supplies Acc # 104


Date Items ref Balance
2016 Debit Credit Debit Credit
June 3 j-1 700 700

Equipment Acc # 111


Date Items ref Balance
2016 Debit Credit Debit Credit
June 2 j-1 100,000 100,000

Accounts Payable Acc # 201


Date Items ref Balance
2016 Debit Credit Debit Credit
June 2 j-1 35,000 35,000
6 j-1 300 34,700
11 j-1 34,700 0
18 j-2 54,200 54,200
27 j-2 9,000 45,200

Notes Payable Acc # 202


Date Items ref Balance
2016 Debit Credit Debit Credit
June 16 j-2 150,000 150,000

Reyes, Capital Acc # 301


Date Items ref Balance
2016 Debit Credit Debit Credit
June 1 j-1 150,000 150,000
30 Closing Entries j-4 41,410 108,096
30 Closing Entries j-4 35,000 93,390

Reyes, Drawing Acc # 302


Date Items ref Balance
2016 Debit Credit Debit Credit
June 28 j-3 35,000 35,000
30 Closing Entries j-4 35,000 0

Income Summary Acc # 303


Date Items ref Balance
2016 Debit Credit Debit Credit
June 30 Closing Entries J3 73,896 73,896
30 Closing Entries J3 103,206 (29,310)
30 Closing Entries J3 12,100 (41,410)
30 Closing Entries J3 41,410 0
HANDOUT FOR REVIEW FOR BOOKKEEPING NCIII

Sales Acc # 401


Date Items ref Balance
2016 Debit Credit Debit Credit
June 4 J1 25,200 25,200
23 J2 36,400 61,600
30 J2 13,700 75,300
30 Closing Entries J3 75,300 0
Sales Returns and Allowances Acc # 402
Date Items ref Balance
2016 Debit Credit Debit Credit
June 29 j-2 900 900
30 Closing Entries j-4 900 0

Sales Discount Acc # 403


Date Items ref Balance
2016 Debit Credit Debit Credit
June 13 j-1 504 504
30 Closing Entries j-4 504 0

Purchases
Date Items ref Balance
2016 Debit Credit Debit Credit
June 2 J1 35,000 35,000
14 J1 24,500 59,500
18 J2 54,200 113,700
26 J2 22,300 136,000
30 Closing Entries J3 136,000 0

Purchases Returns & Allowances


Date Items ref Balance
2016 Debit Credit Debit Credit
June 6 J1 300 300
17 J2 2,500 2,800
30 Closing Entries J3 2,800 0

Purchases Discounts
Date Items ref Balance
2016 Debit Credit Debit Credit
June 11 J1 694 694
30 Closing Entries J3 694 0

Freight-In Acc # 501


Date Items ref Balance
2016 Debit Credit Debit Credit
June 20 j-2 700 700
30 j-3 700 0
HANDOUT FOR REVIEW FOR BOOKKEEPING NCIII

Salaries Expense
Date Items ref Balance
2016 Debit Credit Debit Credit
June 15 J2 5,500 5,500
30 J2 1,500 7,000
30 Closing Entries J3 7,000 0
Advertising Expense Acc # 601
Date Items ref Balance
2016 Debit Credit Debit Credit
June 30 j-2 1000 1,000
30 Closing Entries j-4 1000 0

Freight -Out Acc # 602


Date Items ref Balance
2016 Debit Credit Debit Credit
June 5 j-1 200 200
30 Closing Entries j-4 200 0

Rent Expense
Date Items ref Balance
2016 Debit Credit Debit Credit
June 30 j-2 3,500 3,500
30 Closing Entries j-4 3,500 0

Utilities Expense
Date Items ref Balance
2016 Debit Credit Debit Credit
June 30 j-2 400 400
30 Closing Entries j-4 400 0

HOLLYWOOD TRADING
PRELIMINARY TRIAL BALANCE
JUNE 30, 2016
101 Cash 124,390
102 Accounts Receivable 13,700
103 Merchandise Inventory 30,000
104 Supplies 700
111 Equipment 10,000
201 Accounts Payable 45,200
202 Notes Payable 150,000
301 Reyes, Capital 93,390
302 Reyes, Drawings 35,000
401 Sales 75,300
402 Sales Returns & Allowances 900
403 Sales Discount 504
501 Purchases 136,000
502 Purchases Returns & Allowances 2,800
503 Purchase Discounts 694
504 Freight-In 700
601 Advertising Expense 1,000
602 Freight-Out 200
603 Rent Expense 3,500
604 Salaries Expense 7,000
605 Utilities Expense 400
TOTALS P 423,994 P 423,994
HANDOUT FOR REVIEW FOR BOOKKEEPING NCIII

HOLLYWOOD TRADING
COST OF GOODS SOLD
FOR THE PERIOD ENDED, JUNE 30, 2016
Purchases P 136,000
Less: Purchases Returns and Allowances (2,800)
Purchases Discounts (694)
Add: Freight-In 700
Net Cost of Purchases 133,206
Less: Merchandise Inventory, June 30 30,000
Cost of Goods Sold P 103,206

HOLLYWOOD TRADING
STATEMENT OF FINANCIAL PERFROMANCE
FOR THE PERIOD ENDED: JUNE 30, 2016
Sales 75,300
Less: Sales Returns & Allowances 900
Sales Discount 504 1404
Net Sales 73,896
Less: Cost of Goods Sold 103,206
Gross Profit (29,310)
Less: Operating Expense
Advertising Expense 1,000
Freight-Out 200
Rent Expense 3,500
Salaries Expense 7,000
Utilities Expense 400 (12,100)
Net Loss P 41,410

HOLLYWOOD TRADING
STATEMENT OF CHANGES IN OWNER’S EQUITY
FOR THE PERIOD ENDED, JUNE 30, 2016
Reyes, Capital, June 1 150,000
Less: Net Loss 41,410
Reyes, Drawings 35,000 76,410
Reyes, Capital, June 30 P 73,590

HOLLYWOOD TRADING
STATEMENT OF FINANCIAL POSITION
JUNE 30, 2016
ASSETS
Current Assets
Cash 124,390
Account Receivable 13,700
Merchandise Inventory 30,000
Supplies 700
Total Current Assets P 168,790
Non-Current Assets
Equipment 100,000
TOTAL ASSETS P 268,790

LIABILITIES
Current Liabilities
Accounts Payable 45,200
Non-Current Liabilities
HANDOUT FOR REVIEW FOR BOOKKEEPING NCIII

Notes Payable 150,000


TOTAL LIABILITIES 195,200

OWNER’S EQUITY 73,590


TOTAL LIABILITIES & OWNER’S EQUITY P 268,790

HOLLYWOOD TRADING
STATEMENT OF CASH FLOWS
FOR THE PERIOD ENDED, JUNE 30,2016
CASH FLOW FROM OPERATING ACTIVITIES
Cash Received From
Sales P 36,400
Receivables Collection 24,696
Refund from Purchases 2,500
P 63,596
Payment for
Office Supplies (700)
Freight on Sold Goods (200)
Goods Bought (89,806)
Operating Expense (11,900)
Refund to Customers (900)
Freight on Purchases (700)
Net Cash Flow from Operating Activities P ( 40,610)

Net Cash Flow from Financing Activities


Office Equipment Bought (100,000)

Net Cash Flow from Financing Activities


Initial Investment 150,000
Borrowings 150,000
Drawings (35,000)
Net Cash Flow from Financing Activities P 265,000
INCREASE IN CASH AND CASH EQUIVALENTS 124,390
ADD CASH& CASH EQUIVALENTS, BEG 0
CASH & CASH EQUIVALENTS, JUNE 30 P 124,390

CLOSING ENTRIES
Date Items ref Debit Credit
2016
JUNE 30 Sales 401 75,300
Income Summary 303 73,896
Sales Returns & Allowances 402 900
Sales Discount 403 504

30 Merchandise Inventory, June 30 103 30,000


Purchases Returns & Allowances 502 2,800
Purchases Discounts 503 694
Income Summary 303 103,206
Purchases 136,000
Freight-In 700

30 Income Summary 303 12,100


Advertising Expense 601 1,000
Freight-Out 602 200
Rent Expense 603 3,500
HANDOUT FOR REVIEW FOR BOOKKEEPING NCIII

Salaries Expense 604 7,000


Utilities Expense 605 400

30 Reyes, Capital 301 41,410


Income Summary 303 41,410

30 Reyes, Capital 301 35,000


Reyes, Drawings 302 35,000

HOLLYWOOD TRADING
POST-CLOSING TRIAL BALANCE
JUNE 30, 2016
DEBIT CREDIT
CASH P 124,390
ACCOUNTS RECEIVABLE 13,700
MERCHANDISE INVENTORY 30,000
SUPPLIES 700
EQUIPMENT 100,000
ACCOUNTS PAYABLE P 45,200
NOTES PAYABLE 150,000
R. REYES, CAPITAL _ 73,590 _
TOTAL P 268,790 P 268,790

PROBLEM 2

1.X company borrowed P200,000 by signing a six-month note that specifies interest at an annual
percentage rate (APR) of 10%. No interest or principal payment is due until the note matures on December
31. X Company prepares financial statements at the end of each calendar month. Provide an answer for
the end of August only.

2. On December 1, X paid its insurance agent P 2,400 for the annual insurance premium covering
the twelve-month period beginning on December 1. The P2,400 payment was recorded on December 1
with a debit to the current asset Prepaid insurance and a credit to the current asset Cash. X company
prepares monthly financial statements at the end of each calendar month. Provide an answer for the
month end of February only.

3. On January 1, X began operations. On January 4, it purchased P 3,500 of supplies and recorded


the transaction with a debit to the income statement account. Supplies Expense and a credit to the current
liabilities Account Payable. X prepares monthly financial statements at the end of calendar month. At the
end of the day on January 31, X company estimated that P 1,400 of the supplies were still on hand in the
supply room

Requirement: Answer the questions pertaining to the adjusting entries for each of the cases. Use the
answer sheet provided for Case 1 Set 1.

What is Case 1 Case 2 Case 3


ADJUSTING ENTRY DATE August 30 February 28 January 31
DEBIT ACCOUNT TITLE Interest Expense Insurance Expense Supplies
CREDIT ACCOUNT TITILE Interest Payable Prepaid Insurance Supplies Expense
DEBIT & CREDIT AMOUNT P 1,667 P 200 P 1,400