Excellent Trading is the newly jeans store in town.

It was built and operated by EVERR

GREENE , its sole proprietor. The following selected transactions for December 2017 are
provided hereunder to do the requirements below:
Dec.1 Everr Greene invested P100,000 cash to operate a jeans store.
2 Bought office supplies for cash , P2,500
2 Bought merchandise from Laginmaganda Store worth P15,000 and paid cash.

3 Borrowed money from BDO Bank , P20,000 and signed a promissory note.
4 Bought store equipment from All Star Marketing for P8,000 cash.
5 Bought merchandise from Lucky Five Store P75,000 FOB Shipping point, terms
2/10,n/30.
6 Paid freight on December 5 purchases , P500.
8 Bought merchandise from Lady Masipag Store P22,000, terms 2/10,n/30
10 Sold merchandise on account P15,000 ,FOB Destination terms 2/10,n/30. The
cost of merchandise sold was 12,000.
11 Paid freight on December 10 sales ,P500.
14 Received credit memo from Lady Masipag for merchandise returned P500.
15 Paid salaries of the employees, P5,000.
16 Bought merchandise from Tweeny ‘s Store ,P25,000 cash
18 Paid Lady Masipag Store
19 Received refund from supplier on cash to Tweeny’Store on December 16
transaction P1,000
20 Collected the full amount from Dec 10 customer.
21 Paid partial payment on December 5, transaction P 8,000.
22 Sold merchandise for P55,000 cash ,costing P42,000.
23 Made refund to customer on cash purchased made in December 22 for defective
merchandise P2,000.
29 Paid operating expenses incurred for the operation : Salaries P5,000 ,
Advertising P1,000 Rent P3,000 and Utilities P2,000.
30 Sold merchandise on account P27,000 terms: 2/10, 1/15,n/30 .Cost of
merchandise sold was P 9,000.
31 Everr Greene the owner get cash from the business for personal use P5,000

Requirements:
1. Prepare Journal entries for the December 2017 transactions
2. Post the transations in the ledger (Observe running balance
3. Prepare Trial balance
4. Prepare Financial Statements
5. Prepare closing Entries
6. Prepare Post Closing Trial Balance
7. Make an adjusting Entries
8. Use Perpetual Method
 CHART OF ACCOUNTS
FOR JOURNAL,POSTING AND TRIAL BALANCE
ASSETS
101 CASH
102 ACCOUNTS RECEIVABLE
103 MERCHANDISE INVENTORY
104 SUPPLIES
105 EQUIPMENT

LIABILITIES
201 ACCOUNTS PAYABLE
202 NOTES PAYABLE

EQUITY
301 EVERR GREENE , CAPITAL
302 EVERR GREENE , 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 SUMMARY

CHART OF ACCOUNTS
FOR FINANCIAL STATEMENTS
ASSETS
101 CASH AND CASH EQUIVALENTS
102 RECEIVABLES
103 INVENTORIES
104 PREPAID EXPENSES
105 PROPERTY,PLANT AND EQUIPMENT

LIABILITIES
201 ACCOUNTS PAYABLE
202 NOTES PAYABLE

EQUITY
301 EVERR GREENE , CAPITAL
302 EVERR GREENE , DRAWING
GENERAL JOURNAL PAGE 1____
DATE ACCOUNT TITLES AND EXPLANATIONS PR DR. CR.
DEC. 1 Cash 101 100,000
EVERR GREENE Capital 301 100,000
Initial Investment

2 Office Supplies 104 2,500

Cash 101 2,500
Purchased office supplies on cash
Merchandise inventory 103 15000
Cash 101 15000
Purchased merchandize from Laginmaganda on cash
3 Cash 101 20000
Notes Payable 202 20000
Loan 20000 from BDO Bank using promissory note
4 Equipment 105 8000
Cash 101 8000
Purchased equipment from All Star Marketing on cash
5 Merchandise Inventory 103 75,000
Accounts Payable 201 75,000
Purchased merchandise from Lucky Five Store on
account Terms 2/10,n/30
6 Merchandise Inventory 103 500
Cash 101 500
Paid the freight on the above purchases.
8 Merchandise Inventory 103 22,000
Accounts Payable 201 22,000
Purchased merchandise from Lady Masipag Store
Terms 2/10,n/30
10 Accounts Receivable 102 15,000
Sales 401 15000
Sold merchandise on account Terms 2/10, n/30
Cost of Good Sold 501 12000
Merchandise Inventory 103 12,000
Cost of Sales
11 Freight Out 503 500
Cash 101 500
Paid the freight on the above Sales
14 Accounts Payable 201 500
Merchandise Inventory 500
Received Credit memo for merchandise returned
15 Salary Expense 505 5000
Cash 101 5000
Paid salaries of the employees
16 Merchandise Inventory 103 25,000
Cash 101 25,000
Purchased Merchandise on cash
18 Accounts Payable 201 21500
Merchandise Inventory 103 430
Cash 101 21,070
Paid Lady Masipag Store in full
19 Cash 101 1000
Merchandise Inventory 103 1000
Received Cash Refund from Tweeny’s Store
20 Sales Discount 403 300
Cash 101 14,700
Accounts Receivable 102 15,000
Collected the account in full
21 Accounts Payable 201 8000
Cash 101 8000
Partial payment on December 5 Transaction
GENERAL JOURNAL PAGE 2
DATE ACCOUNT TITLES AND EXPLANATIONS PR DR. CR.
DEC 22 Cash 101 55,000
.
Sales 401 55,000
Sold merchandise for cash
Cost of Good Sold 501 42,000
Merchandise Inventory 103 42,000
Cost of Sales
23 Sales Return and Allowances 402 2000
Cash 101 2,000
Cash Refund to Customer for defective
merchandise
29 Salary Expense 505 5,000
Advertising Expense 502 1,000
Rent Expense 504 3,000
Utilities Expense 506 2,000
Cash 101 11,000
Paid operating expenses
30 Accounts Receivable 102 27,000
Sales 401 27,000
Sold Merchandise on account Terms: 2/10,
1/15,n/30
Cost of Good Sold 501 9,000
Merchandise Inventory 103 9,000
Cost of Sales
31 Ever Greene, Drawing 302 5,000
Cash 101 5,000
Withdraw cash for personal use
GENERAL LEDGER
ACCOUNT NUMBER 101 ACCOUNT TITLE:CASH

DATE EXPLANATION PR BALANCE BALANCE

DEBIT CREDIT DEBIT CREDIT
DEC. I Initial Investment GJ1 100,000 100,000
2 Purchased Office Supplies GJ1 2,500 97,500
2 Purchased Merchandise GJ1 15,000 82,500
3 Loan from BDO Bank GJ1 20,000 102,500
4 Purchased Equipment from All Star GJ1 8,000 94,500
Marketing on cash
6 Paid the freight on the above GJ1 500 94,000
purchases.
11 Paid the freight on above purchases GJ1 500 93,500
15 Paid salaries of the employees GJ1 5,000 88,500
16 Purchased mdse on cash GJ1 25,000 63,500
18 Paid Lady Masipag Store in full GJ1 21,070 42,430
19 Received Cash Refund from GJ1 1000 43,430
Tweeny’s Store
20 Collected the account in full GJ1 14700 58,130
21 Partial payment on December 5 GJ1 8,000 50,130
Transaction
22 Sold merchandise for cash GJ2 55,000 105,130
29 Paid operating expenses GJ2 11,000 94,130
31 Withdraw cash for personal use GJ2 5,000 89130

ACCOUNT NUMBER 102 PR. ACCOUNT TITLE :ACCOUNTS RECEIVABLE

BALANCE BALANCE
DATE EXPLANATION DEBIT CREDIT DEBIT CREDIT
DEC. 10 Sold merchandise on account GJ 15,000 15,000
Terms 2/10, n/30 1
20 Collected the account in full GJ 15,000 0
1
30 Sold Merchandise on account GJ 27,000 27,000
Terms: 2/10, 1/15,n/30 2

ACCOUNT NUMBER 103 ACCOUNT TITLE :MERCHANDISE INVENTORY

BALANCE BALANCE
DATE EXPLANATION PR. DEBIT CREDIT DEBIT CREDIT
DEC. 2 Purchased Merchandise GJ 15,000 15,000
Inventory on cash 1
5 Purchase merchandise from Luck GJ 75,000 90,000
Five Store on account Terms 1
2/10, n/30
6 Paid the freight on the above GJ 500 95,000
purchases. 1
8 Purchased merchandise from GJ 22,000 117,000
Lady Masipag Store Terms 1
2/10,n/30
10 Cost of Sales GJ 12,000 105,000
1
14 Received Credit memo for GJ 500,00 100,000
merchandise returned 1
16 Purchased mdse on cash GJ 25,000 125,000
1
18 Paid Lady Masipag Store in full GJ 430 124,570
1
19 Received Cash Refund from GJ 1000 123,570
 Tweeny’s Store 1
22 Cost of Sales GJ 42,000 81,570
2
23 Cash Refund to Customer for GJ 2,000 79,570
defective merchandise 2
30 Cost of Sales GJ 9,000 70,570
2
ACCOUNT NUMBER 104 ACCOUNT TITLE :SUPPLIES
DEBIT CREDIT BALANCE
DATE EXPLANATION PR. DEBIT CREDIT
DEC 2 Purchased office supply on cash GJ1 2,500 2,500

ACCOUNT NUMBER 105 ACCOUNT TITLE :EQUIPMENT

DEBIT CREDIT BALANCE
DATE EXPLANATION PR. DEBIT CREDIT
DEC 4 Purchased Equipment from All GJ1 8,000 8,000
Star Marketing on cash

ACCOUNT NUMBER 201 ACCOUNT TITLE: ACCOUNTS PAYABLE

DATE EXPLANATION DEBIT CREDIT BALANCE
PR DEBIT CREDIT
DEC 5 Purchase merchandise from Luck GJ1 75,000 75,000
Five Store on account Terms
2/10, n/30
8 Purchased mdse from Lady GJ1 22,000 97,000
Masipag Store Terms 2/10,n/30
14 Received Credit memo for GJ1 500 96,500
merchandise returned
18 Paid Lady Masipag Store in full GJ1 21500 75,000
21 Partial payment on Dec. 5 GJ1 8000 67,000
Transaction

ACCOUNT NUMBER 202 ACCOUNT TITLE: NOTES PAYABLE

DATE EXPLANATION DEBIT CREDIT BALANCE
PR. DEBIT CREDIT
DEC 3 Loan from BDO Bank GJ1 20,000 20,000

ACCOUNT NUMBER 301 ACCOUNT TITLE: EVERR GREENE, CAPITAL

DATE EXPLANATION DEBIT CREDIT BALANCE
PR DEBIT CREDIT
DEC 1 Initial Investment GJ1 100,000 100,000
31 Closing GJ3 15,200 115,200
31 Closing GJ3 5,000 110,200

ACCOUNT NUMBER 302 ACCOUNT TITLE: EVERR GREENE, DRAWING

DATE EXPLANATION BALANCE
PR DEBIT CREDIT DEBIT CREDIT
DEC 31 Withdraw cash for personal use GJ2 5,000 5,000
31 Closing GJ3 5,000 0

ACCOUNT NUMBER 401 ACCOUNT TITLE: SALES

DATE EXPLANATION BALANCE
PR DEBIT CREDIT DEBIT CREDIT
DEC 10 Sold merchandise on account GJ1 15,000 15,000
Terms 2/10, n/30
22 Sold merchandise for cash GJ2 55,000 70,000
30 Sold Merchandise on account GJ2 27,000 97,000
Terms: 2/10, 1/15,n/30
31 Closing GJ3 97,000 0

ACCOUNT NUMBER 402 ACCOUNT TITLE: SALES RET.AND ALLOWANCES

DATE EXPLANATION BALANCE
PR DEBIT CREDIT DEBIT CREDIT
DEC 23 Cash refund for defective mdse GJ2 2,000 2,000
31 Closing GJ3 2,000 0

ACCOUNT NUMBER 403 ACCOUNT TITLE: SALES DISCOUNTS

DATE EXPLANATION BALANCE
PR DEBIT CREDIT DEBIT CREDIT
DEC 20 Collected the account in full GJ1 300 300
31 Closing 300 0

ACCOUNT NUMBER 501 PR ACCOUNT TITLE: COST OF GOODS SOLD

DATE EXPLANATION DEBIT CREDIT BALANCE
DEBIT CREDIT
DEC 10 Cost of Sales GJ1 12,000 12,000
22 Cost of Sales GJ2 42000 54,000
30 Cost of Sales GJ2 9000 63,000
31 Closing GJ3 63,000 0

ACCOUNT NUMBER 502 PR ACCOUNT TITLE: ADVERTISING EXPENSE

DATE EXPLANATION DEBIT CREDIT BALANCE
DEBIT CREDIT
DEC 29 Paid operating expenses GJ 1000 1000
2
31 Closing GJ 1000 0
3

ACCOUNT NUMBER 503 PR ACCOUNT TITLE: FREIGHT OUT

DATE EXPLANATION DEBIT CREDIT BALANCE
DEBIT CREDIT
DEC 11 Paid the freight on above GJ 500 500
purchases 1
31 Closing GJ 500 0
3

ACCOUNT NUMBER 504 PR ACCOUNT TITLE: RENT EXPENSE

DATE EXPLANATION DEBIT CREDIT BALANCE
DEBIT CREDIT
DEC 29 Paid operating expenses GJ 3,000 3,000
2
31 Closing GJ 3000 0
3

ACCOUNT NUMBER 505 PR ACCOUNT TITLE: SALARIES EXPENSE

DATE EXPLANATION DEBIT CREDIT BALANCE
 DEBIT CREDIT
DEC 15 Paid salaries of the employees GJ 5,000 5,000
1
29 Paid operating expenses GJ 5,000 10,000
2
31 Closing GJ 5000 0
3

ACCOUNT NUMBER 506 PR ACCOUNT TITLE: UTILITIES EXPENSE

EXPLANATION DEBIT CREDIT BALANCE
DEBIT CREDIT
DEC 29 Paid operating expenses GJ 2000 2000
2
31 Closing GJ 2000 0
3

ACCOUNT NUMBER 600 PR ACCOUNT TITLE: INCOME SUMMARY

DATE EXPLANATION DEBIT CREDIT BALANCE
DEBIT CREDIT
DEC 31 Closing GJ 97,000 97,000
3
31 Closing GJ 79,500 15,200
3
31 Closing GJ 15,200 0
3

EXCELLENT TRADING
TRIAL BALANCE
DECEMBER 31,2017

ACCOUNT TITLE DEBIT CREDIT

101 CASH 89,130
102 ACCOUNTS RECEIVABLE 27,000
103 MERCHANDISE INVENTORY 70,570
104 SUPPLIES 2,500
105 EQUIPMENT 8,000
201 ACCOUNTS PAYABLE 67,000
202 NOTES PAYABLE 20,000
301 EVERR GREENE ,CAPITAL 100,000
302 EVERR GREENE , DRAWING 5,000
401 SALES 97,000
402 SALES RETURNS AND ALLOWANCES 2,000
403 SALES DISCOUNT 300
501 COST OF GOODS SOLD 63,000
502 ADVERTISING EXPENSES 1,000
503 FREIGHT OUT 500
504 RENT EXPENSES 3,000
505 SALARIES EXPENSE 10,000
506 UTILITIES EXPENSE 2,000
TOTAL 284,000 284,000
 EXCELLENT TRADING
STATEMENT OF PERFORMANCE
FOR THE PERIOD ENDED DECEMBER 31,2017
SALES 97,000
Less: SALES RETURN AND ALLOWANCES (2,000)
SALES DISCOUNTS (300)
NET SALES 94,700
Less: COST OF GOOD SOLD (63,000)
GROSS PROFIT 31,700
Less: Operating Expenses
ADVERTISING EXPENSE (1,000)
FREIGHT OUT (500)
RENT EXPENSE (3,000)
SALARIES EXPENSE (10,000)
UTILITIES EXPENSE (2,000)
Total OPEX 16,500
Net 15,200
EXCELLENT TRADING
STATEMENT OF EQUITY
FOR THE PERIOD ENDED DECEMBER 31,2017

EVERR GREENE Initial Investment 100,000

Net Income 15,200
Total 115,200
Less: EVER GREENE DRAWING 5,000
EVERR GREENE, ENDING CAPITAL 110,200

EXCELLENT TRADING
STATEMENT OF FINANCIAL POSITION
DECEMBER 31,2017

ASSETS
CURRENT ASSETS
CASH 89,130
ACCOUNTS RECEIVABLE 27,000
MERCHANDISE INVENTORY 70,570
SUPPLIES 2,500 189,200
NON-CURRENT ASSETS
EQUIPMENT 8,000 8,000
TOTAL ASSETS 197,200

LIABILITIES
CURRENT LIABILITIES
ACCOUNTS PAYABLE 67,000 67,000
NON-CURRENT LIABILITIES
NOTES PAYABLE 20,0000 20,000
TOTAL LIABILITIES 87,000

OWNER’S EQUITY
EVERR GREEN, CAPITAL (END) 110,200 110,200
TOTAL LIABILITIES AND OWNERS EQUITY 197,200
 EXCELLENT TRADING
STATEMENT OF CASH FLOW
FOR THE PERIOD ENDED DECEMBER 31,2017
CASH FLOW FROM OPERATING ACTIVITIES
CASH RECEIVED FROM:
SALES 55,000
RECEIVABLES 14,700
REFUND FROM PURCHASES 1000 70700
PAYMENT FOR:
SUPPLIES (2,500)
FREIGHT ON GOOD SOLD (500)
GOODS BOUGHT (66,570)
OPERATING EXPENSES (16,500)
REFUND TO CUSTOMERS (2000)
FREIGHT ON PURCHASES (500)
NET CASH FLOW FOR OPERATING ACTIVITIES (88570)

CASH FLOW FROM INVESTING ACTIVITIES

ACQUISITION OF EQUIPMENT (8,000) (8000)
CASH FLOW FROM FINANCING ACTIVITIES
BORROWINGS 20,000
DRAWINGS (5,000)
NET CASH FLOW FROM FINANCING ACTIVITIES 115,000

NET INCREASE (DECREASE) IN CASH 10,870

CASH AT THE BEGINNING 100,000
CASH AT THE END 89,130

CLOSING JOURNAL ENTRIES

PAGE NUMBER GJ-3
DATE DESCRIPTIONS REF. DEBIT CREDIT
DEC .31 SALES 97000
INCOME SUMMARY 94700
SALES RETURNS AND ALLOWANCES 2000
SALES DISCOUNT 300
To close sales
 31 INCOME SUMMARY 79500
COST OF GOODS SOLD 63000
ADVERTISING EXPENSES 1,000
FREIGHT OUT 500
RENT EXPENSE 3000
SALARIES EXPENSE 10000
UTILITIES EXPENSES 2000
31 TO CLOSE OPEX AND OTHER EXPENSES
INCOME SUMMARY 15200
EVERR GREENE CAPITAL 15200
31 TO CLOSE INCOME
EVERR GREENECAPITAL 5,000
EVERR GREENE DRAWING 5,000

EXCELLENT TRADING
POST CLOSING TRIAL BALANCE
AS OF DECEMBER 31,2017
CASH AND CASH EQUIVALENTS 89,130
RECEIVABLES 27,000
INVENTORIES 70,570
SUPPLIES 2,500
PROPERTY ,PLANT AND EQUPMENT 8,000
EVERR GREENE, CAPITAL END 197,200
197,200 197,200

Problem #3 Adjusting Entries

1. EGC CO. borrowed P300,000 on December 1 with a sixth month promissory note that specifies
an interest at an annual percentage rate of 12%. No interest on principal payment is due until
the note matures on May 31. EGC CO. prepares financial statements at the end of each calendar
month. Provide an answer for the month of February only.

2. On December 31, CKL Enterprise began operations. On December 4, it purchased P1,500 of

supplies and recorded the transaction with a debit to income statement account Supplies
expense and a credit to the liability account Accounts payable. CKL Enterprise prepares monthly
financial statements at the end of each calendar month. At the end of the day on December 31 ,
CKL estimated that P800 of the supplies were still on hand at the supply room.
 3. On December 1, ZYL CO. paid its insurance agent P24,000 for the annual insurance premium
covering the 12 month period beginning. December 1. The P24,000 was recorded in December 1
with a debit to the current asset Prepaid insurance and a credit to the current asset Cash. ZYL
prepares monthly financial statement at the end of each calendar month . Give the answer for
the month of April only.

1 2 3
Date of the adjusting entry
Debit account title
Credit account title
Dr. and Cr. Amount