EVENT Date Account Title / Explanation PR Debit Credit

A invested ₱39,000. 1 Cash 110 39,000

Lopez, Capital 310 39,000
to record initial investment
Bought equipment for
₱10,000 2 Equipment 150 10,000
Cash 110 10,000
to record purchased of computer equipment
Bought merchandise on
account ₱15, 900, Term, 2/10,
n/30 2 Purchases 510 15,900
Accounts Payable 210 15,900
To records purchased of merchandise on account

Bought supplies for ₱700 3 Supplies 130 700

Cash 110 700
Sold merchandise on account To record purchase of supplies
₱15,200 F0B Destination,
terms 2/10, n/30. 4 Accounts Receivable 120 15,200
Sales 410 15,200
To record sales on account

Paid ₱200 freight 5 Freight Out 610 200

Cash 110 200
To record payment of freight on sales
Received credit memo for
merchandise return ₱300 6 Accounts Payable 210 300
Purchase Returns & Allowances 520 300
To record credit memo from Lowton

Paid LOWTOWN 11 Accounts Payable 210 15,600

Purchase Discount 530 312
Cash 110 15,288
To record payment of accounts payable to Lowton
Collected from December 4
customers 13 Cash 110 14,896
Sales Discount 430 304
Accounts Receivable 120 15,200
To record collections of Accounts Receivable

Bought merchandise ₱14,400 14 Purchases 510 14,400

Cash 110 14,400
To record purchased of merchandise

Salaries paid ₱1,500 15 Salaries Expense 620 1,500

Cash 110 1,500
To record payment of salaries

Borrowed money, signed a

promissory note for ₱12,000 16 Cash 110 12,000
Notes Payable 220 12,000
To record borrowed money from bank
Received refund ₱500. 17 Cash 110 500
Purchase Returns & Allowances 520 500
To record refund from supplier

Bought merchandise, ₱14,200

FOB Shipping. term, 2/10,
n/30 18 Purchases 510 14,200
Accounts Payable 210 14,200
To record purchased of merchandise on account

Paid freight ₱700 20 Freight-In 540 700

Cash 110 700
To record freight on purchases

Sold merchandise for ₱16,

400 23 Cash 110 16,400
Sales 410 16,400
To record cash sales

Bought merchandise for

₱12,300 26 Purchases 510 12,300
Cash 110 12,300
To record purchased of merchandise

Paid xx purchase, ₱9.000.

partial payment 27 Accounts Payable 210 9,000
Cash 110 9,000
To record partial payment to Mesda

Lopez get cash from the

business, P2,008 28 Lopez, Drawings 320 2,008
Cash 110 2,008
To record withdrawals

Made refund to customer for

defective merchandise, ₱900 29 Sales Returns & Allowance 420 900
Cash 110 900
To record refund to customers

Sold merchandise on account

₱13,700. term 2/10 n/30. 30 Accounts Receivable 120 13,700
Sales 410 13,700
To record sales on account
Paid the following: Salaries
₱1,500, Advertising ₱1,000,
Rent ₱3,500, Utilities ₱400. 31 Advertising Expense 630 1,000
Utilities Expense 650 400
Rent Expense 640 3,500
Salaries Expense 620 1,500
Cash 110 6,400
To record payment of various expenses
 Mr. Juan Lopez opened a mini grocery store with business name Lopez Fiesta Mart. Operations began
on December 1, 20XX, and the following transactions were completed during the month:
The business was registered as single proprietorship with the Department of Trade and Industry, Juan
1 Lopez invested ₱39,000.
2 Bought computer equipment for ₱10,000 cash.

2 Bought merchandise on account from LOWTOWN Supply Co. ₱15, 900, Term, 2/10, n/30
3 Bought office supplies on cash basis for ₱700

4 Sold merchandise on account ₱15,200 F0B Destination, terms 2/10, n/30. Cost of Merchandise P11,000
5 Paid ₱200 freight on December 4 sale
6 Received credit memo LOWTOWN Supply Co. for merchandise return ₱300
11 Paid LOWTOWN
13 Collected from December 4 customers
14 Bought merchandise on cash basis for ₱14,400
15 Salaries paid ₱1,500
16 Borrowed money from RCBC Bank, signed a promissory note for ₱12,000
17 Received refund from a supplier on cash purchase of December 14, ₱500.
18 Bought merchandise from MESDA, ₱14,200 FOB Shipping. term, 2/10, n/30
20 Paid freight on December 18 purchase ₱700
23 Sold merchandise for ₱16, 400, Cost of merchandise P12,000.
26 Bought merchandise tor cash ₱12,300

27 Paid MESDA on December 18 purchase, ₱9.000. No discount allowed on partial payment

28 Lopez get cash from the business, P2,008
29 Made refund to cash customer for defective merchandise, ₱900

30 Sold merchandise on account ₱13,700. term 2/10 n/30. Cost of merchandise P9,000.
31 Paid the following: Salaries ₱1,500, Advertising ₱1,000, Rent ₱3,500, Utilities ₱400.
The ending inventory forDecember 31 is P25,000.
Additional information for year-end adjustments.
Ø The useful life of the equipment is 5 years with a residual value of P1,000.
Ø Remaining unused supplies worth ₱300. Use asset method.
Acct No. Account Titles
110 Cash
120 Accounts Receivable
130 Supplies
140 Merchandise Inventory
150 Equipment
160 Accumulated Depreciation
210 Accounts Payable
220 Notes Payable
310 Lopez, Capital
320 Lopez, Drawings
410 Sales
420 Sales Returns & Allowances
430 Sales Discounts
510 Purchases
520 Purchase Returns & Allowances
530 Purchase Discount
540 Freight In
610 Freight Out
620 Salaries Expense
630 Advertising Expense
640 Rent Expense
650 Utilities Expense
660 Supplies Expense
670 Depreciation Expense
(OR, Sales Invoice)

(Receiving Report; Sales invoice from Supplier)

(OR)

(Sales Invoice)
(OR)

(Collection Receipt)
(Collection Receipt)
(RR, Sales Invoice)

(Collection Receipt)
(RR/Sales Invoice)
(OR)
(Sales Invoice)
(RR/Sales Invoice)

(Collection Receipt)
ACCOUNTING FOR MERCHANDISING BUSINESS
GENERAL JOURNAL - PAGE 01
Date Account Title / Explanation PR Debit Credit
1 Cash 110 39,000
Lopez, Capital 310 39,000
to record initial investment
2 Equipment 150 10,000
Cash 110 10,000
to record purchased of computer equipment
2 Purchases 510 15,900
Accounts Payable 210 15,900
To records purchased of merchandise on account
3 Supplies 130 700
Cash 110 700
To record purchase of supplies
4 Accounts Receivable 120 15,200
Sales 410 15,200
To record sales on account
5 Freight Out 610 200
Cash 110 200
To record payment of freight on sales
6 Accounts Payable 210 300
Purchase Returns & Allowances 520 300
To record credit memo from Lowton
11 Accounts Payable 210 15,600
Purchase Discount 530 312
Cash 110 15,288
To record payment of accounts payable to Lowton
13 Cash 110 14,896
Sales Discount 430 304
Accounts Receivable 120 15,200
To record collections of Accounts Receivable
14 Purchases 510 14,400
Cash 110 14,400
To record purchased of merchandise
15 Salaries Expense 620 1,500
Cash 110 1,500
To record payment of salaries
GENERAL JOURNAL - PAGE 02
16 Cash 110 12,000
Notes Payable 220 12,000
To record borrowed money from bank
17 Cash 110 500
Purchase Returns & Allowances 520 500
To record refund from supplier
18 Purchases 510 14,200
 Accounts Payable 210 14,200
To record purchased of merchandise on account
20 Freight-In 540 700
Cash 110 700
To record freight on purchases
23 Cash 110 16,400
Sales 410 16,400
To record cash sales
26 Purchases 510 12,300
Cash 110 12,300
To record purchased of merchandise
27 Accounts Payable 210 9,000
Cash 110 9,000
To record partial payment to Mesda
28 Lopez, Drawings 320 2,008
Cash 110 2,008
To record withdrawals
29 Sales Returns & Allowance 420 900
Cash 110 900
To record refund to customers
30 Accounts Receivable 120 13,700
Sales 410 13,700
To record sales on account
31 Advertising Expense 630 1,000
Utilities Expense 650 400
Rent Expense 640 3,500
Salaries Expense 620 1,500
Cash 110 6,400
To record payment of various expenses
 Cash Accounts Receivable
Shortcut or Ctrl+F Account 110 Cash Account
110 Cash Balance
120 Accounts Receivable Date Description Post Debit Credit Debit Credit Date
130 Supplies 1 Initial Investment GJ1 39,000 39,000 F 4
140 Merchandise Inventory 2 Purchase of Equipment GJ1 10,000 29,000 I 13
150 Equipment 3 Purchase of supplies GJ1 700 28,300 O 30
160 Accumulated Depreciation 5 Payment of Freight on sales GJ1 200 28,100 O
210 Accounts Payable 11 Payment of Merchandise GJ1 15,288 12,812 O
220 Notes Payable 13 Collection of Accounts Rec. GJ1 14,896 27,708 O
310 Lopez, Capital 14 Purchase of Merchandise GJ1 14,400 13,308 O
320 Lopez, Drawings 15 Payment of Salaries GJ1 1,500 11,808 O
410 Sales 16 Borrowed money from bank GJ2 12,000 23,808 F
420 Sales Return & Allowances 17 Refund from supplier GJ2 500 24,308 O
430 Sales Discounts 20 Payment if Freight in GJ2 700 23,608 O
510 Purchases 23 Cash Sales GJ2 16,400 40,008 O
520 Purchase Returns & Allowances 26 Purchase of Merchandise GJ2 12,300 27,708 O
530 Purchase Discount 27 Payment of merchandise GJ2 9,000 18,708 O
540 Freight In 28 Withdrawals GJ2 2,008 16,700 F
610 Freight Out 29 Refund to Customer GJ2 900 15,800 O
620 Salaries Expense 31 Payment of various exp. GJ2 6,400 9,400 O
630 Advertising Expense
640 Rent Expense
650 Utilities Expense
660 Supplies Expense
670 Depreciation Expense
IS Income Summary
Accounts Receivable Supplies
Account 120 Accounts Receivable Account 130 Supplies
Balance Balance
Description Post Debit Credit Debit Credit Date Description Post Debit Credit Debit Credit
GJ1 15,200 - 15,200 3 GJ1 700 700
GJ2 - 15,200 - 31 GJ3 400 300
GJ2 13,700 - 13,700
Merchandise Inventory Equipment
Account 140 Merchandise Inventory Account 150 Equipment
Balance Balance
Date Description Post Debit Credit Debit Credit Date Description Post Debit Credit Debit Credit
30 Closing Entries GJ 3 25,000 25,000 2 GJ1 10,000 10,000
Accumulated Depreciation Accounts Payable
Account 160 Accumulated Depreciation Account 210 Accounts Payable
Balance Balance
Date Description Post Debit Credit Debit Credit Date Description Post Debit Credit Debit Credit
31 GJ3 150 150 3 GJ1 - 15,900 15,900
6 GJ1 300 - 15,600
11 GJ1 15,600 - -
18 GJ2 - 14,200 14,200
27 GJ2 9,000 - 5,200
Notes Payable Lopez, Capital
Account 220 Notes Payable Account 310 Lopez, Capital
Balance Balance
Date Description Post Debit Credit Debit Credit Date Description Post Debit Credit Debit Credit
16 GJ2 - 12,000 12,000 1 GJ1 - 39,000 39,000
30 Closing EntrGJ2 - 4,058 43,058
30 Closing EntrGJ2 2,008 41,050
Lopez, Drawings Sales
Account 320 Lopez, Drawings Account 410 Sales
Balance Balance
Date Description Post Debit Credit Debit Credit Date Description Post Debit Credit Debit Credit
28 GJ2 2,008 2,008 4 GJ1 - 15,200 15,200
30 Closing EntrGJ2 2,008 - 23 GJ2 - 16,400 31,600
30 GJ2 - 13,700 45,300
30 Closing EntrGJ3 45,300 -
Sales Returns & Allowances Sales Discount
Account 420 Sales Returns & Allowances Account 430 Sales Discount
Balance Balance
Date Description Post Debit Credit Debit Credit Date Description Post Debit Credit Debit Credit
29 GJ2 900 - 900 13 GJ1 304 - 304
30 Closing EntrGJ3 900 - 30 Closing EntrGJ3 304 -
Purchases Purchase Returns & Allowances
Account 510 Purchases Account 520 Purchase Returns & Allowances
Balance Balance
Date Description Post Debit Credit Debit Credit Date Description Post Debit Credit Debit Credit
2 GJ1 15,900 - 15,900 6 GJ1 - 300 300
14 GJ1 14,400 - 30,300 17 GJ2 - 500 800
18 GJ2 14,200 - 44,500 30 Closing EntrGJ3 800 - -
26 GJ2 12,300 - 56,800
30 Closing EntrGJ3 - 56,800 -
Purchase Discount Freight In
Account 530 Purchase Discount Account 540 Freight In
Balance Balance
Date Description Post Debit Credit Debit Credit Date Description Post Debit Credit Debit Credit
11 GJ1 - 312 312 20 GJ2 700 - 700
30 Closing EntrGJ3 312 - - 30 Closing EntrGJ3 - 700 -
Freight Out Salaries Expense
Account 610 Freight Out Account 620 Salaries Expense
Balance Balance
Date Description Post Debit Credit Debit Credit Date Description Post Debit Credit Debit Credit
5 GJ1 200 - 200 15 GJ1 1,500 - 1,500
30 Closing EntrGJ3 200 - 31 GJ2 1,500 - 3,000
30 Closing EntrGJ3 3,000 -
Advertising Expense Rent Expense
Account 630 Advertising Expense Account 640 Rent Expense
Balance Balance
Date Description Post Debit Credit Debit Credit Date Description Post Debit Credit Debit Credit
31 GJ2 1,000 - 1,000 31 GJ2 3,500 - 3,500
30 Closing EntrGJ3 1,000 - 30 Closing EntrGJ3 3,500 -
Utilities Expense Supplies Expense
Account 650 Utilities Expense Account 660 Supplies Expense
Balance Balance
Date Description Post Debit Credit Debit Credit Date Description Post Debit Credit Debit Credit
31 GJ2 400 - 400 31 GJ3 400 - 400
30 Closing EntrGJ3 400 - 30 Closing EntrGJ3 400 -
Depreciation Expense Income Summary
Account 670 Depreciation Expense Account 700 Income Summary
Balance
Date Description Post Debit Credit Debit Credit Date Description Post Debit Credit
31 GJ3 150 - 150 CE Merchandise Inventory GJ3 - 25,000
30 Closing EntrGJ3 150 - CE To close income accounts GJ3 - 44,096
CE To close purchases accounts GJ3 56,388 -
CE To close expense accounts GJ3 8,650 -
CE To close NI to Capital accts GJ3 4,058 -
mmary
Balance
Debit Credit
25,000
69,096
12,708
4,058
-
LOPEZ FIESTA MART
Preliminary Trial Balance
December 31, 20XX
Acct No. Account Titles Debit Credit
110 Cash 9,400 -
120 Accounts Receivable 13,700 -
130 Supplies 700 -
140 Merchandise Inventory -
150 Equipment 10,000 -
160 Accumulated Depreciation - -
210 Accounts Payable - 5,200
220 Notes Payable - 12,000
310 Lopez, Capital - 39,000
320 Lopez, Drawings 2,008 -
410 Sales - 45,300
420 Sales Return & Allowances 900 -
430 Sales Discounts 304 -
510 Purchases 56,800 -
520 Purchase Returns & Allowances 800
530 Purchase Discount - 312
540 Freight In 700 -
610 Freight Out 200 -
620 Salaries Expense 3,000 -
630 Advertising Expense 1,000 -
640 Rent Expense 3,500 -
650 Utilities Expense 400
660 Supplies Expense -
670 Depreciation Expense - -
601 Income Summary -
TOTALS 102,612 102,612
ACCOUNTING FOR MERCHANDISING BUSINESS
GENERAL JOURNAL - PAGE 03
Date Account Title / Explanation PR Debit Credit
31 Depreciation Expense 670 150
Accumulated Depreciation 160 150
to record depreciation of equipment
31 Supplies Expense 660 400
Supplies 130 400
To record supplies used
LOPEZ FIESTA MART
Preliminary Trial Balance
December 31, 20XX
Acct No. Account Titles Debit Credit
110 Cash 9,400 -
120 Accounts Receivable 13,700 -
130 Supplies 300 -
140 Merchandise Inventory -
150 Equipment 10,000 -
160 Accumulated Depreciation - 150
210 Accounts Payable - 5,200
220 Notes Payable - 12,000
310 Lopez, Capital - 39,000
320 Lopez, Drawings 2,008 -
410 Sales - 45,300
420 Sales Return & Allowances 900 -
430 Sales Discounts 304 -
510 Purchases 56,800 -
520 Purchase Returns & Allowances 800
530 Purchase Discount - 312
540 Freight In 700 -
610 Freight Out 200 -
620 Salaries Expense 3,000 -
630 Advertising Expense 1,000 -
640 Rent Expense 3,500 -
650 Utilities Expense 400
660 Supplies Expense 400
670 Depreciation Expense 150 -
TOTALS 102,762 102,762
LOPEZ FIESTA MART
Statement of Cost of Goods Sold
December 31, 20XX
Beginning Inventory -
Add: Purchases 56,800
Freight In 700 57,500
Total 57,500
Less: Purcahse Returns & All 800
Purchase Discount 312 1,112
Total Goods Avalable for sale 56,388
Less: Ending Inventory 25,000
Cost of Goods Sold 31,388
LOPEZ FIESTA MART
STATEMENT OF FINANCIAL PERFORMANCE
for the month ended December 31, 20XX
Sales 45,300
Less: Sales Returns& Allowances 900
Sales Discount 304 1,204
Net Sales 44,096
Less: Cost of Goods Sold 31,388
Gross Profit 12,708
Less: Operating Expenses
Freight Out 200
Salaries Expense 3,000
Advertising Expense 1,000
Rent Expense 3,500
Utilities Expense 400
Supplies Expense 400
Depreciation Expense 150 8,650
Net Income / (Loss) 4,058
LOPEZ FIESTA MART
Statement of Changes in Equity
December 31, 20XX
Lopez, Capital, Beginning -
Add: Initial Investments 39,000
Net Income 4,058
Total 43,058
Less: Lopez, Drawings 2,008
Lopez, Capital, End - 41,050
LOPEZ FIESTA MART
STATEMENT OF FINANCIAL POSITION
December 31, 20XX
ASSETS
Current Assets
Cash 9,400
Accounts Receivable 13,700
Supplies 300
Merchandise Inventory 25,000
Non-Current Assets
Equipment 10,000
Accumulated Depreciation -150
TOTAL ASSETS 58,250

LIABILITIES AND OWNER'S EQUITY

Current Liabilities:
Accounts Payable 5,200
Non-Current Liabilities:
Notes Payable 12,000
TOTAL LIABILITIES 17,200

Owner's Equity
Lopez, Capital 41,050
TOTAL LIABILITIES A 58,250
LOPEZ FIESTA MART
STATEMENT OF CASH FLOW
December 31, 20XX
Cash flow from Operating Activities
Collection from cash customers 16,400 1 Initial Investment GJ1 39,000 39,000 F
Collection from credit customers 14,896 2 Purchase of Equipment GJ1 10,000 29,000 I
Refund from purchases 500 3 Purchase of supplies GJ1 700 28,300 O
Payment of goods bought -50,988 var exp 5 Payment of Freight on salesGJ1 200 28,100 O
Freight on Purchases -700 11 Payment of Merchandise GJ1 15,288 12,812 O
Payment of supplies -700 13 Collection of Accounts RecGJ1 14,896 27,708 O
Refund to customers -900 14 Purchase of Merchandise GJ1 14,400 13,308 O
Payment of Operating expenses -8,100 15 Payment of Salaries GJ1 1,500 11,808 O
Net Cash flow from Operating Activities -29,592 16 Borrowed money from banGJ2 12,000 23,808 F
17 Refund from supplier GJ2 500 24,308 O
Cash flow from Investing Activities 20 Payment if Freight in GJ2 700 23,608 O
Equipment bought -10,000 23 Cash Sales GJ2 16,400 40,008 O
Sale of Equipment 26 Purchase of Merchandise GJ2 12,300 27,708 O
Cash flow from Investing Activities -10,000 27 Payment of merchandise GJ2 9,000 18,708 O
28 Withdrawals GJ2 2,008 16,700 F
Cash flow from Financing Activities 29 Refund to Customer GJ2 900 15,800 O
Investment of Capital 39,000 31 Payment of various exp. GJ2 6,400 9,400 O
Withdrawal for personal use -2,008
Borrowing from Bank 12,000
Net Cash flow from Financing Activities 48,992
INCREASE / (DECREASE) IN CASH 9,400
GENERAL JOURNAL - PAGE 03
Date Account Title / Explanation PR Debit Credit
31 Merchandise Inventory 140 25,000
Income Summary 700 25,000
To recognize ending inventory
31 Sales 410 45,300
Sales Returns & Allowances 420 900
Sales Discount 430 304
Income Summary 700 44,096
To close sales accounts
31 Income Summary 700 56,388
Purchase Returns & Allowances 520 800
Purchase Discount 530 312
Purchases 510 56,800
Freight In 540 700
To close purchases accounts
31 Income Summary 700 8,650
Freight Out 610 200
Salaries Expense 620 3,000
Advertising Expense 630 1,000
Rent Expense 640 3,500
Utilities Expense 650 400
Supplies Expense 660 400
Depreciation Expense 670 150
To close expense accounts
31 Income Summary 700 4,058
Lopez, Capital 310 4,058
To close income to capital accounts
31 Lopez, Capital 310 2,008
Lopez, Drawings 320 2,008
To close drawings to capital account
LOPEZ FIESTA MART
POST CLOSING TRIAL BALANCE
December 31, 20XX
Code Account Titles Debit Credit
110 Cash 9,400
120 Accounts Receivable 13,700
120 Supplies 300
140 Merchandise Inventory 25,000
150 Equipment 10,000
160 Accumulated Depreciation 150
210 Accounts Payable 5,200
220 Notes Payable 12,000
310 Lopez, Capital 41,050
TOTAL 58,400 58,400