JOSE RIZAL UNIVERSITY

ACC C101 MODULE #5.0 - MERCHANDISING OPERATIONS

WEEK 9: OCT 11 - 16 2021
EXERCISE #5.1 - LOPEZ GROCERY - ACCTG WORKSHEET ON PERIODIC SYSTEM
EXERCISE #5.1 - LOPEZ GROCERY - ACCTG WORKSHEET ON PERIODIC SYSTEM

GIVEN: ADJUSTED ACCOUNT BALANCES, DEC 31, 2020

OF LOPEZ GROCERY

DEC 31'20
ADJUSTED
ACCOUNT TITLES BALANCES
PETTY CASH FUND 5,000
CASH IN BANK 86,000
ACCOUNTS RECEIVABLE 420,000
MERCHANDISE INVENTORY, JAN 1 200,000
PREPAID INSURANCE 6,000
OFFICE EQUIPMENT 80,000
ACCUM DEPRN - EQUIPMENT 8,000
INTEREST PAYABLE 1,000
ACCOUNTS PAYABLE 120,000
LOANS PAYABLE 100,000
GABBY LOPEZ, CAPITAL 300,000
GABBY LOPEZ, WITHDRAWAL 50,000
SALES 1,550,000
SALES DISCOUNTS 10,000
SALES RETS & ALLOWANCES 40,000
PURCHASES 600,000
FREIGHT-IN 20,000
PURCHASE DISCOUNTS 15,000
PURCHASE RETS & ALLOWANCES 25,000
SALARIES AND WAGES 240,000
RENT EXPENSES 180,000
TAXES AND LICENSES 20,000
UTILITIES EXPENSE 80,000
REPAIR EXPENSES 45,000
INSURANCE EXPENSE 15,000
DEPRECIATION EXPENSE 8,000
BAD DEBTS EXPENSE 4,000
INTEREST EXPENSE 10,000
TOTAL 4,238,000

MERCHANDISE INVENTORY, DEC 31'20 180,000

REQUIRED:
A PREPARE AN ACCOUNTING WORKSHEET
B CLOSING JOURNAL ENTRIES
CLOSE THE JAN 1 MDSE INVENTORY
SET UP THE DEC 31 MDSE INVENTORY
C HOW MUCH IS THE NET INCOME (OR LOSS)?
D DRAFT AN INCOME STATEMENT FOR LOPEZ MERCANTILE
E DRAFT A BALANCE SHEET FOR LOPEZ MERCANTILE
F COMPUTE FOR LOPEZ' CURRENT RATIO AND DEBT RATIO. EXPLAIN RELEVANCE
END OF EX. #5.1 - LOPEZ GROCERY

LEAVE EX.#5.1 - LOPEZ GROCERY EXERCISE AS IS; COPY PASTE HERE THE PROBLEM AND DO YOUR ANALYSIS HERE.
A ACCOUNTING WORKSHEET FOR DEC 31, 2020.

LOPEZ GROCERY
ACCOUNTING WORKSHEET
YEAR ENDING DECEMBER 31 2020
DEC 31'20 ADJUSTED
LEDGER BALANCES INCOME STATEMENT BALANCE SHEET
ACCOUNT TITLES BALANCES DR CR DR CR DR CR
PETTY CASH FUND 5,000 5,000 5,000
CASH IN BANK 86,000 86,000 86,000
ACCOUNTS RECEIVABLE 420,000 420,000 420,000
MDSE INVTY, JAN 1 200,000 200,000 200,000
MDSE INVENTY, DEC 31 P180,000 180,000 0 180,000 180,000
PREPAID INSURANCE 6,000 6,000 6,000
OFFICE EQUIPMENT 80,000 80,000 80,000
ACCUM DEPRN - EQUIPMENT 8,000 8,000 8,000
INTEREST PAYABLE 1,000 1,000 1,000
ACCOUNTS PAYABLE 120,000 120,000 120,000
LOANS PAYABLE 100,000 100,000 100,000
GABBY LOPEZ, CAPITAL 300,000 300,000 300,000
GABBY LOPEZ, WITHDRAWAL 50,000 50,000 50,000
SALES 1,550,000 1,550,000 1,550,000
SALES DISCOUNTS 10,000 10,000 10,000
SALES RETS & ALLOWANCES 40,000 40,000 40,000
PURCHASES 600,000 600,000 600,000
FREIGHT-IN 20,000 20,000 20,000
PURCHASE DISCOUNTS 15,000 15,000 15,000
PURCHASE RETS & ALLOWANCES 25,000 25,000 25,000
SALARIES AND WAGES 240,000 240,000 240,000
 RENT EXPENSES 180,000 180,000 180,000
TAXES AND LICENSES 20,000 20,000 20,000
UTILITIES EXPENSE 80,000 80,000 80,000
REPAIR EXPENSES 45,000 45,000 45,000
INSURANCE EXPENSE 15,000 15,000 15,000
DEPRECIATION EXPENSE 8,000 8,000 8,000
BAD DEBTS EXPENSE 4,000 4,000 4,000
INTEREST EXPENSE 10,000 10,000 10,000
4,418,000 2,119,000 2,119,000 827,000 529,000
1,472,000 1,770,000 298,000
Profit 298,000 827,000 827,000
1,770,000 1,770,000

B- CLOSING JOURNAL ENTRIES.

BRIEFLY EXPLAIN ALL JOURNAL ENTRIES

LOPEZ GROCERY
CLOSING JOURNAL ENTRIES (BASED ON WORKSHEET)
DEC 31 2020
DR CR
CLOSING ENTRY 1
SALES 1,550,000
INCOME SUMMARY 1,550,000

TO CLOSE SALES REVENUE

TO INCOME SUMMARY

CLOSING ENTRY 2
INCOME SUMMARY 573,000
SALES DISCOUNTS 10,000
SALES RETURNS & ALLOWNCS 40,000
WAGES EXPENSE 240,000
RENT EXPENSE 180,000
UTILITIES EXPENSE 80,000
MISC EXPENSE 0
INSURANCE EXPENSE 15,000
DEPRECIATION EXPENSE 8,000

TO CLOSE EXPENSE ACCTS

 TO INCOME SUMMARY

CLOSING ENTRY 3
COST OF GOODS SOLD 820,000
PURCHASES 600,000
FREIGHT-IN 20,000
INVENTORY, JAN 1, 2020/ BEG. 200,000

TO CLOSE TO
COST OF GOODS SOLD
PURCHASES, FREIGHT IN
AND INVENTORY, JAN 1'2020

CLOSING ENTRY 4
PURCHASE DISCOUNTS 15,000
PURCHASE RETS. & ALLOW 25,000
INVENTORY, DEC 31, 2020/END 180,000
COST OF GOODS SOLD 220,000

TO CLOSE TO
COST OF GOODS SOLD
PURCHASE DISCTS,
PURCH RETS. & ALLOW, AND
INVENTORY, DEC 31'20

CLOSING ENTRY 5
TORRES, CAPITAL 300,000
INCOME SUMMARY 300,000

TO CLOSE THE NET OPERATING

LOSS OF LOPEZ GROCERY
(SEE ACCTG WORKSHEET)

CLOSING ENTRY 6
G LOPEZ, CAPITAL 50,000
G LOPEZ, WITHDRAWAL 50,000

TO CLOSE DRAWING ACCT

TO CAPITAL

TOTAL CLOSING ENTRIES 3,513,000 3,513,000

C HOW MUCH IS THE NET INCOME (OR LOSS)? 298,000 PROFIT

D DRAFT THE INC STATEMRNY OF LOPEZ GROCERY E - DRAFT THE BALANCE SHEET OF LO[PEZ GROCERY
ANSWER: ANSWER:

LOPEZ GROCERY LOPEZ GROCERY

(DRAFT) INCOME STATEMENT (DRAFT) BALANCE SHEET
FOR THE YEAR ENDED DEC 31, 2020 DECEMBER 31, 2020

SALES REVENUE 1,550,000 CASH 91,000

LESS: SALES DISCOUNT (10,000) ACCOUNTS RECEIVABLE 420,000
SALES RETS & ALLOWANCS (40,000) INVENTORY 180,000
PREPAID INSURANCE 6,000
NET SALES 1,500,000 TOTAL CURRENT ASSETS 697,000

LESS COST OF GOODS SOLD: FURNITURE & EQUIPMENT 80,000

BEG. INVTY, JAN1, 20 200,000 ACCUM DEPRN - FURN & EQUIPT (8,000)
ADD PURCH 600,000 72,000
FREIGHT IN 20,000 TOTAL ASSETS 769,000
GROSS PURCHASES 620,000
LESS PURCH DISCT (15,000)
PURCH RETS & ALLOW (25,000) INTEREST PAYABLE 1,000
(40,000) ACCOUNTS PAYABLE 120,000
NET PURCH 580,000 WAGES PAYABLE 100,000
TOTAL AVAILABLE FOR SALE 780,000 TOTAL CURRENT LIABILITIES 221,000
LESS. END INV, DEC31,'19 (180,000)
COST OF GOODS SOLD 600,000
GROSS MARGIN 900,000
LOPEZ, BEGINNING CAPITAL 300,000
LESS OPERATING EXPENSES LESS: WITHDRAWALS (50,000)
WAGES EXPENSE 240,000 PROFIT 298,000
RENT EXPENSE 180,000 248,000
UTILITIES EXPENSE 80,000 LOPEZ, ENDING CAPITAL 598,000
DEPRN EXPENSE 8,000
INS EXPENSE 15,000 TOTAL LIABILITIES & CAPITAL 819,000
MISC EXPENSE 79,000
TOTAL OPER EXPENSES 602,000

Profit 298,000

F- CURRENT RATIO: 697,000

221,000 3 current ratio
RELEVANCE OF CURRENT RATIO:
means P3 of current assets will be backed up by P1 worth of current liability
DEBT RATIO: 221,000 0.287386216 debt ratio
769,000
RELEVANCE OF DEBT RATIO
tells the portion of the total asset that is financed with debts
 JOSE RIZAL UNIVERSITY
ACC C101 MODULE #5.0 - MERCHANDISING OPERATIONS
WEEKS 8 & 9: OCT 11 - 16 2021
EXERCISE #5.2 - LIN LIN GIFT SHOP INVENTORY SYSTEMS
EXERCISE #5.2 - LIN LIN GIFT SHOP INVENTORY SYSTEMS
REQUIRED:

(A) JOURNALIZE THE ABOVE TRANSACTIONS OF (B) JOURNALIZE THE ABOVE TRANSACTIONS OF
FINE GIFT SHOP. USE PERPETUAL INVENTORY FINE GIFT SHOP. USE THE PERIODIC SYSTEM
SYSTEM. ASSUME THAT THE COST OF GOODS (NO NEED TO EXPLAIN JOURNAL ENTRIES)
SOLD ON OCT 11 IS P22,500
(NO NEED TO EXPLAIN JOURNAL ENTRIES)

LEAVE EX.#5.1 - PROBLEM EXERCISE AS IS; COPY PASTE HERE THE PROBLEM AND DO YOUR ANALYSIS HERE.

TRANS. PERPETUAL INVENTORY SYSTEM PERIODIC INVENTORY SYSTEM 1 OCT 04 PURCHASED MDSE OF P25,600 ON
REF # JOURNAL ENTIES DR CR JOURNAL ENTIES DR CR ACCT UNDER THE TERMS 2/10, EOM
1 Inventory 25,600 Purchases 25,600 FOB SHIPPING POINT.
Accts Payable 25,600 Accts Payable 25,600
2 OCT 08 RETURNED P1,000 OF DEFECTIVE
MDSE PURCHASED ON OCT 04.
2 Accts Payable 1,000 Acct Payable 1,000
Inventory 1,000 Purch Returns & Allowances 1,000 3 OCT 09 PAID FREIGHT BILL OF P400 ON
OCT 04 PURCHASE.

4 OCT 11 SOLD MDSE ON ACCT FOR P30,000

3 Freight In 400 CREDIT TERMS WERE 2/5, n/30.
Cash 400
5 OCT 14 PAID AMOUNT OWED ON CREDIT
PURCHASED ON OCT 04 LESS
THE RETURN AND THE DISCOUNT.
4 Accts Receivable 30,000 Accts Receivable 30,000
Sales 30,000 Sales 30,000 6 OCT 15 GRANTED A SALES ALLOWANCE
OF P1,000 ON OCT 11 SALE.
COST IS P850.
5 Accts Payable 25,600 Accts Payable 25,600
Cash 19,480 Cash 19,480 7 OCT 24 RECEIVED CASH FROM THE OCT 11
Inventory 6,120 Purch Disc 6,120 CUSTOMER IN FULL SETTLEMENT
OF THE ACCOUNT LESS THE
ALLOWANCE AND THE DISCOUNT.
6 Sales Disc 1,850 Sales Rets & Allowances 1,850
Cash 1,850 Cash 1,850

7 Cash 28,150 Cash 28,150

Sales Disct 1,850 Sales Disct 1,850
Accts Receivable 30,000 Accts Receivable 30,000
- < END OF THE MONTH
 JOSE RIZAL UNIVERSITY
ACC C101 MODULE #5.0 - MERCHANDISING OPERATIONS
WEEKS 8 & 9: OCT 11 - 16 2021
EXERCISE #5.3 -FRESH SCENTS PERFUMERY
EXERCISE #5.3 -FRESH SCENTS PERFUMERY

GIVEN: THE FOLLOWING BALANCES WERE TAKEN FROM THE LEDGER

IN ALPHABETICAL ORDER:

LEAVE EX.#5.1 - LEAVE THE ABOVE PROBLEM AS IS; COPY PASTE HERE THE PROBLEM AND DO YOUR ANALYSIS HERE.

1
FRESH SCENTS PERFUMERY ACCOUNT TITLES
(DRAFT) INCOME STATEMENT SALES REVENUE
DECEMBER 31,2021 OWNER'S EQUITY, DEC 31 2020
Sales Revenue 408,000 COST OF GOODS SOLD
Interest Revenue 27,400 SELLING EXPENSES
Less: Sales Discount (14,000) ADMINISTRATIVE EXPENSES
Sales Returns and Allowances (12,300) INVENTORY, DEC 31 2020
Total Net Sales 409,100 INVENTORY, DEC 31 2021
ACCOUNTS PAYABLE
Less Cost of Goods Sold ACCUMULATED DEPRECIATIO
Beg. Inv. Jan 1, 2019 40,800 INTEREST REVENUE
Add. Purchases 0 UNEARNED SALES REVENUE
Freight In 0 SALES DISCOUNTS
Purchases Ret & Allow 0 SALES RETURNS AND ALLOWA
Less Purch Disct 0
Purch Returns and Allow 0

Net Purch 40,800

Total Available for Sale
Less End Inv. Dec. 31, 19 (39,200)
Cost of Goods Sold 196,800
Gross Margin 198,400

Less Operating Exps.

Administrativ Exps. 49,200
Selling Expns. 75,200
Total Oper. Expense 124,400

Net Income 74,000

#2 - A Opening Inventory 40,800

Closing Inventory 39,200
Cost of Good Sold 196,800

Cost of Goods Sold 196,800

Ave. Inventory 40,000 80,000 40,000

Inventory Turnover 5

#2 - B The two- years suggestion gives imporvements on the business inventory

ACCOUNT TITLES AMOUNT
SALES REVENUE 408,000
OWNER'S EQUITY, DEC 31 2020 252,340
COST OF GOODS SOLD 196,800
SELLING EXPENSES 75,200
ADMINISTRATIVE EXPENSES 49,200
INVENTORY, DEC 31 2020 40,800
INVENTORY, DEC 31 2021 39,200
ACCOUNTS PAYABLE 36,400
ACCUMULATED DEPRECIATION 34,600
INTEREST REVENUE 27,400
UNEARNED SALES REVENUE 14,500
SALES DISCOUNTS 14,000
SALES RETURNS AND ALLOWANCES 12,300
 JOSE RIZAL UNIVERSITY
ACC C101 MODULE #5.0 - MERCHANDISING OPERATIONS
WEEKS 8 & 9: OCT 11 - 16 2021
EXERCISE #5.5 - SM-X APPLIANCE STORE
EXERCISE #5.5 - SM-X APPLIANCE STORE

LEAVE EX.#5.5 - SM-X APPLIANCE STORE AS IS, COPY PASTE HERE THE PROBLEM AND DO YOUR ANALYSIS HERE.

1 Sales Rev 985,500 REF# ACCT TITLES DEC 31 2020

Sales Disc (5,800) 1 ACCOUNTS PAYABLE 66,500
Sales Rets & Allowances (8,300) 2 ACCUMULATED DEPRECIATION - EQUIPMENT 75,800
Net Sales 971,400 3 ADMINISTRATIVE EXPENSES 98,800
4 CASH 16,400
Beg. Invty 161,000 5 H SY, CAPITAL 258,300
Add. Purch 650,000 6 H SY, WITHDRAWAL 45,600
Freight-In 9,000 7 EQUIPMENT 187,000
Gross Purchases 659,000 8 FREIGHT-IN 9,000
Less Purch Disct 0 9 INVENTORY, DEC 31 2019 161,000
Purch Rets & Allow (4,800) 10 INVENTORY, DEC 31 2020 159,000
Net Purch 654,200 11 PURCHASES 650,000
Total Available for Sale 815,200 12 PURCHASES RETURNS & ALLOWANCES 4,800
Less. End Inv, Dec (159,000) 13 SALARY PAYABLE 4,200
Cost of Good Sold 656,200 14 SALES REVENUE 5,800
15 SALES RETURNS & ALLOWANCES 985,500
16 SALES DISCOUNTS 8,300
17 SELLING EXPENSES 44,600

Net Sales 971,400

Cost of Good Sold 656,200
Gross Profit 315,200

2 SM-X APPLIANCE STORE

CLOSING JOURNAL ENTRIES
DEC 31 2020
DR CR
CLOSING ENTRY 1
SALES 985,500
INCOME SUMMARY 985,500

TO CLOSE SALES REVENUE

TO INCOME SUMMARY
CLOSING ENTRY 2
INCOME SUMMARY 157,500
ADMINISTRATIVE EXPENSE 98,800
SALES RETURNS & ALLOWANCES 5,800
SALES DISCOUNTS 8,300
SELLING EXPENSES 44,600

TO CLOSE EXPENSE ACCTS

TO INCOME SUMMARY

CLOSING ENTRY 3
COST OF GOODS SOLD 820,000
PURCHASES 650,000
FREIGHT-IN 9,000
INVENT. DEC. 2019 161,000

TO CLOSE TO
COST OF GOODS SOLD
PURCHASES, FREIGHT IN
AND INVENTORY, JAN 1, 2020

CLOSING ENTRY 4
PURCHASE DISCOUNTS 8,300
PURCHASE RETS. & ALLOW 5,800
INVENTORY, DEC 31,2020/END 159,000
COST OF GOODS SOLD 173,100

TO CLOSE TO
COST OF GOODS SOLD
PURCHASE DISCTS,
PURCH RETS. & ALLOW, AND
INVENTORY, DEC 31'20

CLOSING ENTRY 5
H SY, CAPITAL 258,300
INCOME SUMMARY 258,300

TO CLOSE NET OPERATING

CLOSING ENTRY 6
H SY, CAPITAL 45,600
H SY, WITHDRAWAL 45,600
 TO CLOSE DRWAING ACCT
TO CAPITAL

TOTAL CLOSING ENTRIES 2,440,000 2,440,000

3 GROSS PROFIT RATE:

315,200 GROSS PROFIT YES HE DID SUCCED

971,400 NET SALES 32%

4 COST OF GOOD SOLD 656,200

AVE. INVENTORY 160,000 320,000 160,000

INVENTORY TURNOVER 4 YES HE REACHED THE GOAL OF 3.5 INVENTORY TURNOVER