Problem # 1

ML ENTERPRISES a newly open grocery store . It was owned and operated by Melo
Lagingmasaya , a sole proprietor The following selected transactions for June 2018 are provided
hereunder.

June 1 Melo Lagingmasaya invested P500,000 to operate a grocery store.

2 Bought a complete set of computer for P27,000 cash.
2 Bought merchandise from XYZ Trading Co. P 150,900 TERMS : 2/10,n/30.
3 Bought office supplies on cash basis P1,700.
4 Sold merchandise on account P75,200, FOB Destination, terms:2/10,n/30. The
cost of merchandise sold was P55,000.
5 Paid freight on the above sale for P1,500.
6 Received credit memo from XYZ Trading Co. for defective merchandise returned P2,500.
8 Paid XYZ Trading in full of account
12 Received payment from June 4 customer.
14 Bought merchandise from CK Enterprise for P97,000 terms : COD
16 Paid salaries of employee P2,500 less SSS P100, Philheath 150, Pagibig P100.
18 Borrowed money from Metro Bank P50,000 with promissory note given to the bank.
19 A cash refund was received from CK Enterprise for defective merchandise returned
P1,000.
20 Purchased merchandise from Happy Five Co. P140,200 FOB Shipping point , terms 2/10,
n/30.
21 Paid freight on the above purchased P2,200.
22 Sold merchandise for P10,500 . The cost of merchandise sold was P6,900.
23 Bought merchandise for cash P22,850.
24 Made a partial payment to Happy Five Co. P 50,000.
26 Melo Lagingmasaya withdraw cash for personal use, P 5,000.
27 Give a cash refund to customer for defective merchandise returned P800.
29 Sold merchandise on account P15,900 n/60. Cost of merchandise sold was P10,000
30 Paid operating expenses incurred for the operation of the business,Utilities P1,200,
Advertising P2,000, Rent P 3,000 and Salaries P2,500
30 Paid Happy Five in full
Requirements:
1. Prepare journal entries for June 2018 selected transactions.
2. Post the transactions in the General Ledger , observe running balance.
3. Prepare Trial Balance
4. Prepare financial statements
5. Prepare closing enries
6. Prepare Post closing Trial Balance
7. Make an Adjusting entries
8. Use Perpetual Inventory Method
Problem #2 Adjusting Entries

1. GLOWING STAR CO. borrowed money to P250,000 on December 31, 2018 and signed a semi-
annual note that specifies interest of twelve percent (12%) per annum. No interest is due until
the notes matures on June 1. GLOWING STAR CO. prepares financial statements at the end of
each calendar month .Give the adjusting entries for the month of January only.

2. On December 1, BILL WEALTHY CO. paid its insurance agent P4,800 for annual insurance
premium covering the one year period beginning December 1 with a debit to the Current Asset
– Prepaid Insurance and credit to Current Asset –Cash BILL WEALTHY CO. prepares monthly
financial statements at the end of each calendar month .Provide the answer for the month of
March only.

3. On December 1, DRAGON CO. began operations. On December 5. The business purchased

P3,000 supplies and recorded the transaction with a debit to the income statement account ,
Supplies expense and a credit to the current liability account- Account Payable. DRAGON CO.
prepares monthly financial statements at the end of each calendar month. At the end of the
December 31 the company estimated that P500 worth of supplies were still unused in the
supply room.

1 2 3
Date of the Adjusting
Entry
Debit account title
Credit account title
Dr. and Cr. Amount
 CHART OF ACCOUNTS
FOR JOURNAL, GENERAL LEDGER AND TRIAL BALANCE
ASSETS
101 CASH
102 ACCOUNTS RECEIVABLE
103 MERCHANDISE INVENTORY
104 SUPPLIES
105 EQUIPMENT

LIABILITIES

201 ACCOUNTS PAYABLE 204 PAG-IBIG PAYABLE

202 SSS PREMIUM PAYABLE 205 NOTES PAYABLE
203 PHILHEALTH PAYABLE
EQUITY
301 M. LAGINGMASAYA,CAPITAL
302 M. LAGINGMASAYA, DRAWING

INCOME
401 SALES
402 SALES RETURNS AND ALLOWANCES
403 SALES DISCOUNTS

EXPENSES

501 COST OF GOODS SOLD

502 ADVERTISING EXPENSE
503 FREIGHT OUT
504 RENT EXPENSE
505 SALARIES EXPENSE
506 UTILITIES EXPENSE
600 INCOME AND EXPENSE SUMMARY

CHART OF ACCOUNTS
FOR FINANCIAL STATEMENTS

ASSETS

101 CASH AND CASH EQUIVALENTS

102 RECEIVABLES
103 INVENTORIES
104 PREPAID EXPENSE
105 PLANT ,PROPERTY AND EQUIPMENT

LIABILITIES

201 ACCOUNTS PAYABLE 204 PAG-IBIG PAYABLE

202 SSS PREMUIM PAYABLE 205 NOTES PAYABLE
203 PHILHEALTH PAYABLE

EQUITY
301 M. LAGINGMASAYA,CAPITAL
302 M. LAGINGMASAYA, DRAWING
 GENERAL JOURNAL PAGE __1__

Date Account Titles and Explanations Ref. Debit Credit

2018
June 1 Cash 101 500,000.00
M. Lagingmasaya, capital 301 500,000.00
To record initial investment
2 Equipment 105 27,000.00
Cash 101 27,000.00
To record cash purchase of computer
2 Merchandise Inventory 103 150,900.00
Accounts Payable 201 150,900.00
To record purchase of merchandise, terms: 2/10, n/30
3 Supplies 104 1,700.00
Cash 101 1,700.00
To record cash purchase of supplies
4 Accounts Receivable 102 75,200.00
Sales 401 75,200.00
To record sale of merchandise, terms: 2/10, n/30
Cost of Goods Sold 501 55,000.00
Merchandise Inventory 103 55,000.00
To record cost of goods sold
5 Freight Out 503 1,500.00
Cash 101 1,500.00
To record freight charges
6 Accounts Payable 201 2,500.00
Merchandise inventory 103 2,500.00
To record purchase return from XYZ Trading Co.
8 Accounts Payable 201 148,400.00
Merchandise Inventory 103 2,968.00
Cash 101 145,432.00
To record payment of accounts payable on June 2
1 Cash 101 73,696.00
2
Sales Discounts 403 1,504.00
Accounts Receivable 102 75,200.00
To record collection of accounts receivable on June 4
1 Merchandise Inventory 103 97,000.00
4
Cash 101 97,000.00
To record cash purchase of merchandise
1 Salaries Expense 505 2,500.00
6
SSS Premium Payable 202 100.00
Philhealth Payable 203 150.00
Pag-ibig Payable 204 100.00
Cash 101 2,150.00
To record payment of salaries
1 Cash 50,000.00
8
Notes Payable 50,000.00
To record notes payable to Metro Bank
1 Cash 1,000.00
9
 Merchandise Inventory 1,000.00
To record refund from supplier
2 Merchandise Inventory 140,200.00
0
Accounts Payable 140,200.00
To record purchase of merchandise on account
1,328,100.00 1,328,100.00

GENERAL JOURNAL PAGE __2__

Date Account Titles and Explanations Ref. Debit Credit

2018 Balance forwarded 1,328,100.0 1,328,100.00
0
June 21 Merchandise Inventory 103 2,200.00
Cash 101 2,200.00
To record freight charges
22 Cash 101 10,500.00
Sales 401 10,500.00
To record cash sales
Cost of goods sold 501 6,900.00
Merchandise Inventory 103 6,900.00
To record cost of goods sold
23 Merchandise Inventory 103 22,850.00
Cash 101 22,850.00
To record cash purchase of merchandise
24 Accounts Payable 201 50,000.00
Cash 101 50,000.00
To record partial payment to Happy Five Co.
26 M. Lagingmasaya, Drawing 302 5,000.00
Cash 101 5,000.00
To record withdrawals for personal use
27 Sales returns and allowances 402 800.00
Cash 101 800.00
To record sales returns to customer
29 Accounts Receivable 102 15,900.00
Sales 401 15,900.00
To record sale to customer on account
Cost of Goods Sold 501 10,000.00
Merchandise Inventory 103 10,000.00
To record cost of goods sold
30 Utilities expense 506 1,200.00
Advertising expense 502 2,000.00
Rent expense 504 3,000.00
Salaries expense 505 2,500.00
Cash 101 8,700.00
To record payment of operating expenses
30 Accounts Payable 201 90,200.00
Cash 101 90,200.00
To record payment of accounts payable to Happy
Five

1,551,150.0 1,551,150.00
0
GENERAL LEDGER
Account number :101 Post CASH
Date Explanation -ing DEBIT CREDIT BALANCE
Ref. DEBIT CREDIT
June 1 Initial Investment GJ-1 500,000.00 500,000.00 -
2 Purchase of equipment GJ-1 27,000.00 500,000.00 27,000.00
3 Purchase of Supplies GJ-1 1,700.00 500,000.00 28,700.00
5 Payment of Freight GJ-1 1,500.00 500,000.00 30,200.00
charge
8 Payment of Accounts GJ-1 145,432.00 500,000.00 175,632.00
Payable
12 Collection of Accounts GJ-1 73,696.00 573,696.00 175,632.00
Receivable
14 Purchase of Merchandise GJ-1 97,000.00 573,696.00 272,632.00
16 Payment of Salaries GJ-1 2,150.00 573,696.00 274,782.00
18 Acquisition of Notes GJ-1 50,000.00 623,696.00 274,782.00
Payable
19 Refund from supplier GJ-1 1,000.00 624,696.00 274,782.00
21 Payment of Freight GJ-2 2,200.00 624,696.00 276,982.00
Charge
22 Cash Sales GJ-2 10,500.00 635,196.00 276,982.00
23 Purchase of Merchandise GJ-2 22,850.00 635,196.00 299,832.00
24 Partial Payment of GJ-2 50,000.00 635,196.00 349,832.00
Accounts Payable
26 Personal Withdrawals GJ-2 5,000.00 635,196.00 354,832.00
27 Sales Return GJ-2 800.00 635,196.00 355,632.00
30 Operating expenses GJ-2 8,700.00 635,196.00 364,332.00
30 Payment of Accounts GJ-2 90,200.00 635,196.00 454,532.00
Payable
180,664.00

Account number :102 Post ACCOUNTS RECEIVABLE

Date Explanation -ing DEBIT CREDIT DEBIT CREDIT
Ref. BALANCE BALANCE
June 4 Sale of Merchandise GJ-1 75,200.00 75,200.00 -
12 Collection GJ-1 75,200.00 75,200.00 75,200.00
29 Sale on account GJ-2 15,900.00 91,100.00 75,200.00
15,900.00

Account number :103 Post MERCHANDISE INVENTORY

Date Explanation -ing DEBIT CREDIT DEBIT CREDIT
Ref. BALANCE BALANCE
June 2 Purchase on Account GJ-1 150,900.00 150,900.00 -
4 Sales of merchandise GJ-1 55,000.00 150,900.00 55,000.00
6 Purchase Return GJ-1 2,500.00 150,900.00 57,500.00
 8 Purchase Discount GJ-1 2,968.00 150,900.00 60,468.00
14 Cash Purchase GJ-1 97,000.00 247,900.00 60,468.00
19 Refund from supplier GJ-1 1,000.00 247,900.00 61,468.00
20 Purchase on Account GJ-1 140,200.00 388,100.00 61,468.00
21 Payment of Freight GJ-2 2,200.00 390,300.00 61,468.00
charge
22 Sales of merchandise GJ-2 6,900.00 390,300.00 68,368.00
23 Cash Purchase GJ-2 22,850.00 413,150.00 68,368.00
29 Sales on account GJ-2 10,000.00 413,150.00 78,368.00
334,782.00

GENERAL LEDGER
Account number :104 Post SUPPLIES
Date Explanation -ing DEBIT CREDIT DEBIT CREDIT
Ref BALANCE BALANCE
June 3 Purchase of supplies GJ-1 1,700.00 1,700.00 -
1,700.00

Account number :105 Post EQUIPMENT

Date Explanation -ing DEBIT CREDIT DEBIT CREDIT
Ref BALANCE BALANCE
June 2 Purchase of computer GJ-1 27,000.00 27,000.00 -
27,000.00

Account number :201 Post ACCOUNTS PAYABLE

Date Explanation -ing DEBIT CREDIT DEBIT CREDIT
Ref BALANCE BALANCE
June

Account number :202 Post SSS PREMIUM PAYABLE

Date Explanation -ing DEBIT CREDIT DEBIT CREDIT
Ref BALANCE BALANCE
June

Account number :203 Post PHILHEALTH PAYABLE

Date Explanation -ing DEBIT CREDIT DEBIT CREDIT
Ref BALANCE BALANCE
June

Account number :204 Post PAG-IBIG

Date Explanation -ing DEBIT CREDIT DEBIT CREDIT
Ref BALANCE BALANCE
June

Account number :205 Post NOTES PAYABLE

Date Explanation -ing DEBIT CREDIT DEBIT CREDIT
Ref BALANCE BALANCE
June
Account number:301 Post [Link] ,CAPITAL
Date Explanation -ing DEBIT CREDIT DEBIT CREDIT
Ref BALANCE BALANCE
June

Account number:302 Post- [Link], DRAWING

ing
Date Explanation DEBIT CREDIT DEBIT CREDIT
Ref
BALANCE BALANCE
June

Account number:401 Post- SALES

Date Explanation ing DEBIT CREDIT DEBIT CREDIT
Ref BALANCE BALANCE
June

GENERAL LEDGER

Post- SALES RETURNS AND ALLOWANCES

Account number:401 ing
Date Explanation Ref DEBIT CREDIT DEBIT CREDIT
BALANCE BALANCE
June 27 Cash refund to GJ-2 800 800
customer
30 Closing GJ-3 800 0

Account number:402 Post- SALES DISCOUNT

Date Explanation ing DEBIT CREDIT DEBIT CREDIT
Ref BALANCE BALANCE
June

Account number:501 Post- COST OF GOODS SOLD

Date Explanation ing DEBIT CREDIT DEBIT CREDIT
Ref BALANCE BALANCE
June
Account number:502 Post- ADVERTISING EXPENSE
Date Explanation ing DEBIT CREDIT DEBIT CREDIT
Ref BALANCE BALANCE
June

Account number:503 Post- FREIGHT OUT

Date Explanation ing DEBIT CREDIT DEBIT CREDIT
Ref BALANCE BALANCE
June

Account number:504 Post- RENT EXPENSE

Date Explanation ing DEBIT CREDIT DEBIT CREDIT
Ref BALANCE BALANCE
June

Account number:505 Post- SALARIES EXPENSES

Date Explanation ing DEBIT CREDIT DEBIT CREDIT
Ref BALANCE BALANCE
June

Account number:506 Post- UTILITIES EXPENSES

Date Explanation ing DEBIT CREDIT DEBIT CREDIT
Ref BALANCE BALANCE
June

Account number:600 Post- INCOME AND EXPENSE SUMMARY

Date Explanation ing DEBIT CREDIT DEBIT CREDIT
Ref BALANCE BALANCE
June
 ML ENTERPRISE
TRIAL BALANCE
June 30,2018
DR. CR.
101 CASH
102 ACCOUNTS RECEIVABLE
103 MERCHANDISE INVENTORY
104 SUPPLIES
105 EQUIPMENT
202 SSS PREMIUM PAYABLE
203 PHILHEALTH PAYABLE
204 PAG-IBIG
205 NOTES PAYABLE
301 [Link] ,CAPITAL
302 [Link], DRAWING
401 SALES
402 SALES RETURN AND ALLOWANCES
403 SALES DISCOUNTS
501 COST OF GOODS SOLD
502 ADVERTISING EXPENSE
503 FREIGHT OUT
504 RENT EXPENSE
505 SALARIES EXPENSE
506 UTILITIES EXPENSE
TOTALS

ML ENTERPRISE
STATEMENT OF PERFORMANCE
FOR THE PERIOD ENDED JUNE 30,2018
NET SALES
LESS: COST OF SALES
GROSS PROFIT
LESS: OPERATING EXPENSES
ADVERTISING EXPENSE
FREIGHT OUT
RENT EXPENSE
SALARIES EXPENSE
UTILITIES EXPENSE
TOTAL EXPENSES
NET PROFIT
 ML ENTERPRISE
STATEMENT OF EQUITY
FOR THE PERIOD ENDED JUNE 30,2018

M,LAGINGMASAYA, CAPITAL
INITIAL INVESTMENT
LESS:DRAWINGS
NET CAPITAL
ADD:NET PROFIT
M,LAGINGMASAYA,ENDING CAPITAL ,JUNE 30

ML ENTERPRISE
STATEMENT OF FINANCIAL POSITION
JUNE 30,2018
ASSETS
CURRENT ASSETS
CASH and CASH EQUIVALENTS
RECEIVABLES
INVENTORIES
PREPAID EXPENSES
TOTAL CURRENT ASSETS

NON CURRENT ASSETS

PROPERTY,PLANT and EQUIPMENT
TOTAL ASSETS

LIABILITIES and EQUITY

CURRENT LIABILITIES
SSS PREMIUM PAYABLE
PHILHEALTH
PAG-IBIG
TOTAL CURRENT LIABITIES

NON CURRENT LIABILITIES

NOTES PAYABLE
TOTAL LIABILITIES
OWNER’S EQUITY
[Link] ,CAPITAL
TOTAL LIABILITIES and EQUITY

ML ENTERPRISE
STATEMENT OF CASH FLOW
FOR THE PERIOD ENDED JUNE 30,2018

CASH FROM OPERATING ACTIVITIES

CASH RECEIVED FROM :
SALES
RECEIVABLES
REFUND FROM PURCHASES
PAYMENT FOR:
OFFICE SUPPLIES
FREIGHT ON GOODS SOLD
GOODS BOUGHT
OPERATING EXPENSES
REFUND TO CUSTOMERS
FREIGHT ON PURCHASES
NET CASH FLOW FROM OPERATING ACTIVITIES

CASH FLOW FROM INVESTING ACTIVITIES

COMPUTER EQUIPMENT BOUGHT

CASH FLOW FROM FINANCING ACTIVITIES

INITIAL INVESTMENT
BORROWINGS
DRAWINGS
NET CASH FLOW FROM FINANCING ACTIVITIES
INCREASE ON CASH AND CASH EQUIVALENTS
ADD: CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS,JUNE 30
Page number GJ-3
GENERAL JOURNAL
CLOSING JOURNAL ENTRIES
DATE DESCRIPTION REF DR. CR.
JUN 30
E

30

30

30

ML ENTERPRISE
POST CLOSING TRIAL BALANCE
JUNE 30,2018
CASH
ACCOUNTS RECEIVABLE
MERCHANDISE INVENTORY
SUPPLIES
EQUIPMENT
SSS PREMUIM PAYABLE
PHILHEALTH PAYABLE
PAG-IBIG PAYABLE
NOTES PAYABLE
[Link], CAPITAL
TOTAL