PERPETUAL INVENTORY SYSTEM

1. Journalizing Transactions

Sanchez General Merchandise

General Journal

DATE PARTICULARS REF DEBIT CREDIT

2018
Dec. 1 Cash 101 590,000
Sanchez, Capital 301
590,000 to record initial investment

2 NO ENTRY

Office Equipment 106 30,000

Accounts Payable 201 30,000
to record purchase of office
equipment on account

3 Prepaid Insurance 103 12,000

Cash 101 12,000
to record acquisition of
insurance w/ 1 year coverage

Merchandise Inventory 105 205,000

Accounts Payable 201
205,000 to record inventory purchase

4 Accounts Payable 201 1,800

Cash 101 1,800
to record payment of freight

5 Cash 101 88,000

Sales 401 88,000
to record each sales
Cost of Sales 601 50,000
Merchandise Inventory 105
50,000 to record cost of
merchandise sold
Supplies
104 3,500 Accounts Payable
201 3,500 to
record purchase of
supplies on account
6 Accounts Payable 201 30,000
Cash 101 30,000
to record payment to
Xcel Computer Inc

8 Accounts Payable 201 1,100

Merchandise Inventory 105 1,100
to record credit memo from
TY Traders

9 Sales Returns and Allowances 402 900

Cash 101 900
to record costumer refund
Merchandise Inventory 105 500
Cost of Sales 601
500 to record cost of
merchandise returned

11 Accounts Receivable 102 108,000

Sales 401
108,000 to record sales on account
Cost of Sales 601
61,400 Merchandise Inventory 105
61,400 to record cost of
merchandise sold

12 Accounts Receivable 102 900

Cash 101 900
to record freight for
merchandise sold
Cash 101
50,000 Notes Payable 203
50,000 to record loan proceeds
from RCBC

13 Accounts Payable 201 202,100

Merchandise Inventory 105 4,078
Cash 101
108,022 to record full payment to
TY Traders

15 Sales Returns and Allowances 402 11,330

Accounts Receivable 102 11,330
to record sales returns

Merchandise Inventory 105 6,400

Cost of Sales 601 6,400
 to record the cost of
merchandised returned

Salaries 609 9,000

Cash 101 9,000
to record assistant salaries

17 Merchandise Inventory 105 79,000

Accounts Payable 201 79,000
to record purchase
merchandise on account

20 Cash 101 95,636.6

Sales Discount 403 1,933.4
Account Receivable 102
97,570 to record costumer payments

24 Accounts Payable 201 3,500

Cash 101 3,500
to record full payment to
MCS Marketing

25 Sanchez, Drawings 302 120,000

Cash 101
120,000 to record owner’s withdrawals

26 Cash 101 99,000

Sales 401 99,000
to record cash sales

Cost of Sales 601 56,500

Merchandise Inventory 105 56,500

27 Telephone 611 5,700

Cash 101 5,700
to record payment of
telephone bill

29 Repairs and Maintenance 608 990

Cash 101 990
to record repair and
maintenance

30 Salaries 609 9,000

Cash 101 9,000
to record assistant salaries

Advertising 602 3,300

Utilities 612 2,900
 Rental 607 15,000
Cash 101
21,700 to record payment of
several expenses
PERIODIC INVENTORY SYSTEM

1. Journalizing Transactions

Sanchez General Merchandise

General Journal

DATE PARTICULARS REF DEBIT CREDIT

2018
Dec. 1 Cash 101 590,000
Sanchez, Capital 301
590,000 to record initial investment

2 NO ENTRY

Office Equipment 106 30,000

Accounts Payable 201 30,000
to record purchase of office
equipment on account

3 Prepaid Insurance 103 12,000

Cash 101 12,000
to record acquisition of
Insurance w/ 1 year coverage

Purchases 501 205,000

Accounts Payable 201
205,000 to record inventory purchase

4 Accounts Payable 201 1,800

Cash 101 1,800
to record payment of freight

5 Cash 101 88,000

Sales 401 88,000
to record each sales

Supplies 104
3,500 Accounts Payable 201
3,500 to record purchase of
supplies on account

6 Accounts Payable 201 30,000

Cash 101 30,000
to record payment to
Xcel Computer Inc
8 Accounts Payable 201 1,100
Purchase Returns and Allowances 105 1,100
to record credit memo from
TY Traders

9 Sales Returns and Allowances 402 900

Cash 101 900
to record costumer refund

11 Accounts Receivable 102 108,000

Sales 401
108,000 to record sales on account

12 Accounts Receivable 102 900

Cash 101 900
to record freight for
merchandise sold
Cash 101
50,000 Notes Payable 203
50,000 to record loan proceeds
from RCBC

13 Accounts Payable 201 202,100

Purchase Discount 105 4,078
Cash 101
108,022 to record full payment to
TY Traders

15 Sales Returns and Allowances 402 11,330

Accounts Receivable 102 11,330
to record sales returns

Salaries 609 9,000

Cash 101 9,000
to record assistant salaries

17 Purchases 105 79,000

Accounts Payable 201 79,000
to record purchase
merchandise on account

20 Cash 101 95,636.6

Sales Discount 403 1,933.4
Account Receivable 102
97,570 to record costumer payments

24 Accounts Payable 201 3,500

Cash 101 3,500
to record full payment to
MCS Marketing

25 Sanchez, Drawings 302 120,000

Cash 101
120,000 to record owner’s withdrawals

26 Cash 101 99,000

Sales 401 99,000
to record cash sales

Cost of Sales 601 56,500

Merchandise Inventory 105 56,500

27 Telephone 611 5,700

Cash 101 5,700
to record payment of
telephone bill

29 Repairs and Maintenance 608 990

Cash 101 990
to record repair and
maintenance

30 Salaries 609 9,000

Cash 101 9,000
to record assistant salaries

Advertising 602 3,300

Utilities 612 2,900
Rental 607 15,000
Cash 101
21,700 to record payment of
several expenses
 Balance
Date Explanation Ref. Debit Credit
Debit Credit
Dec 1 Initial Investment   590,000   590,000  
  3 Acquisition of Insurance with 1-year coverage     12,000 578,000  
  4 Payment of freight     1,800 576,200  
  5 Cash Sales   88,000   664,200  
  6 Payment to Xcel Computers, Inc     30,000 634,200  
  9 Customer refund     900 633,300  
  12 Freight for mechandise sold     900 632,400  
  12 Borrowing from RCBC   50,000   682,400  
  13 Full payment to TY Traders     198,022 484,378  
  15 Assistant's salaries     9,000 475,378  
95,636.6
  20 Customer payments   0   571,014.60  
  24 Full payment to MCS Marketing     3,500 567,514.60  
  25 Owner's withdrawals     120,000 447,514.60  
  26 Cash Sales   99,000   546,514.60  
  27 Payment to telephone bill     5,700 540,814.60  
  29 Repairs and maintenance     990 539,824.60  
  30 Assistant's salary     9,000 530,824.60  
  30 Payment of several expenses     21,700 509,124.60  
2. POSTING

Cash
Account No. 101

Accounts Recievable
Balance
Date Explanation Ref. Debit Credit
Debit Credit
Dec 11 Sales on account   108,000   108,000  
  12 Freight for merchandise sold   900   108,900  
  15 Sales returns     11,330 97,570  
  20 customer payments     97,570 0  
Account No. 102

Prepaid Insurance
Date Explanation Ref. Debit Credit Balance
 Debit Credit
Dec 3 Acquisition of insurance with 1-year coverage   12,000   12,000  
Account No. 103

1. Journalize Transactions (using Chart Accounts)

2. Post Transactions to the Ledger
3. Prepare the Trial Balance
4. Financial Statements:
a. Balance Sheet
b. Income Statement
c. Statement of Cash flow
d. Statement of Changes in Owner’s Equity
5. Journalize and Post Closing Entries
6. Prepare Post-Closing Trial Balance
BOOKKEEPING
(PROBLEM)

On December 2018, Dereck Sanchez a budding entrepreneur registered his business in the Department of Trade and
Industry (DTI) as a sole proprietor-merchandising nature/form of business under the business name Sanchez General
Merchandising.

The following transactions occurred during the month:

1 Dereck put in 590,000 cash in the business.

2 Hired an office assistant with monthly salary of 18,000.
2 Purchased computer equipment on account for 30,000 from Xcel Computers, Inc.
3 Bought fire insurance with 1-year coverage, 12,000.
3 Bought merchandise from TY Traders 205,000 2/10, n/30, FOB Destination.
4 Paid freight for the Dec transactions, 1,800
5 Sold merchandise for cash, 88,000, costing 50,000
5 Bought office supplies on account, 3,500 from MCS Marketing.
6 Paid in full Xcel Computers, Inc. accounts.
8 Received credit from TY Traders for wrongly delivered merchandise, 1,100
9 Refunded customers for merchandise sold for 900 costing 500 due to minor defects
11 Sold merchandise to customers, 108,000, 2/10, n/30. FOB Shipping Point, costing 6,400
12 Paid freight for Dec 11 transactions, 900
12 Availed 50,000 SME Loan from RCBC by signing a 180-day note.
13 Paid TY Traders account in full.
15 Paid assistant’s salary 9,000
17 Bought merchandise from AC Merchandisers amounting to 79,000 2/10, n/30
20 Received payment from customers.
24 Paid account for supplies purchased.
25 Sanchez take out cash from the business, 120,000
26 Sold merchandise for cash, 99,000 costing 56,500
27 Paid telephone bill, 5,700
29 Made repairs to office electrical wirings and connections, 990.
30 Paid assistant’s salary.
30 Paid the following expenses: Advertising 3,800, Utilities 2,000, and Rental 15,000
30 Physical count at the end of the year indicates that Ending Inventory amounted to 117,822
 3. Trial Balance
PERIODIC
Dr Cr
Cash 101 509,214.60
Prepaid Insurance 103 12,000.00
Supplies 104 3,500.00
Office Equipment 106 30,000.00
Accounts Payable 201 79,000
Notes Payable 203 50,000
Sanchez, Capital 301 590,000
Sanchez, drawings 302 120,000
Sales 401 295,000
Sales Returns & Allow 40 2 12,230.00
Sales Discount 403 1933.4
Purchases 501 284,000.00
Purchase Return & Allow 502 1,100
Purchase Discount 503 4,078
A.E 602 3,800
Rental 607 15,000
R&M 608 990
Salaries 609 18,000
Telephone 611 5,700
Utilities 612 2,900    
 
1,019,17
TOTAL 1,019,178 8
TRIAL BALANCE
PERPETUAL
Dr Cr
Cash 101 509,214.60
Prepaid Insurance 103 12,000.00
Supplies 104 3,500.00
Office Equipment 106 30,000.00
Accounts Payable 201 79,000
Notes Payable 203 50,000
Sanchez, Capital 301 590,000
Sanchez, drawings 302 120,000
Sales 401 295,000
Sales Returns & Allow 40 2 12,230.00
Sales Discount 403 1933.4
COST OF SALES 601 161,000.00
A.E 602 3,800
Rental 607 15,000
R&M 608 990
Salaries 609 18,000
Telephone 611 5,700
Utilities 612 2,900
 
         
 
1,014,00
TOTAL 1,014,000 0