FINAL OUTPUT - AIS ELECT 1

PAULA YUMUL
ROCHELLE NEGOY
IVY MAE CALMA

ILLUSTRATION: Mabola Merchandising was established in 2010 and sells all kinds of
colored plastic balls. Credit terms for all customers is 2/10, n/30. A trial balance on
November 30, 2010 appears below representing the company operation for eleven
months.

Below is the list of customers’ accounts and suppliers’ accounts:

Customers’ Accounts:
Isaac Toy Store (Invoice No. 205 dated Nov. 25) ₱10,700
Dan Santos (Invoice No. 225 dated Nov. 30) 5,000
Suppliers’ Accounts:
Fides Trading (Invoice No. 448 dated Nov. 27) ₱ 3,850
Terms: 2/10, 1/15, n/30
Del Rosario Ramos (Invoice No. 123 dated Nov. 15) 7,000
Terms: 3/EOM, n/60
 MABOLA MERCHANDISING
TRIAL BALANCE
NOVEMBER 30, 2010

Accounts Dr Cr
Cash ₱40,500.00
Accounts Receivable 15,700.00
Merchandise Inventory 25,250.00
Prepaid Supplies 750.00
Furniture & Fixtures 27,000.00
Accumulated Depreciation ₱2,700.00
Notes Payable 15,000.00
Accounts Payable 10,850.00
Withholding Taxes Payable 1,000.00
SSS& PH Payable 420.00
Isaac, Capital 66,190.00
Isaac, Drawings 1,200.00
Sales 120,800.00
Sales Returns and Allowances 2,500.00
Sales Discounts 1,500.00
Purchases 70,000.00
Freight In 1,700.00
Purchase Returns and Allowances 4,200.00
Purchase Discounts 3,000.00
Advertising Expense 3,000.00
Freight Out 3,960.00
Rent Expense 22,000.00
Salaries Expense 4,500.00
Utilities Expense 6,600.00
Rent Income 2,000.00
Totals ₱226,160.00 ₱226,160.00
The following transactions took place during December:
1 Purchase merchandise from Santos Toy Store, ₱5,200. Terms: 5％ trade
discounts, 30-day 12％ note for the balance. (Purchase Invoice 675)
2 Paid freight on the above shipment, ₱120 to Deliverate Company (Voucher No.
101)
5 Bought goods from Arroyo Store Center, ₱3,000. Terms: 2/10, n/30. (Purchase
Invoice No. 963)
6 Sold goods to Castro Store, ₱3,000. Terms: ₱1,000 down, balance on account.
(Sales Invoice No. 235 and Official Receipt No. 176)
7 Collected in full from Isaac Toy Store.
9 Paid Fides Trading ₱1,850 to apply on account.
10 Cash purchases from Joy Mart ₱2,500. (Purchase Invoice 35)
13 Paid Arroyo Sports Center in full of account.
14 Received a credit memo from Del Rosario Ramos for ₱200. (Credit Memo 17)
15 Paid for salaries ₱2,000 less ₱250 withholding tax.
16 Received a cash refund from Joy Mart, ₱200.
17 Cash Sales, ₱5,500. (Cash Register Tape)
20 Paid Fides Trading in full of account.
22 Dan Santos paid ₱3,000 to apply on account.
23 Sold goods on account to Franco Mart, ₱2,500.
24 Castro Store paid ₱1,500.
25 Paid Kulot Realty for rent, ₱2,000 and utilities, ₱200.
28 Paid for salaries ₱2,000 less withholding tax of ₱250, SSS of ₱180 and PH of ₱30.
30 Cash Sales, ₱4,500.
31 Paid for the note due to Santos.
31 Franco Mart paid in full of account.

Additional information was identified on November 30, 2010:

1. Allowance for doubtful accounts should be increased to 10％ of the accounts
receivable.
2. Supplies on hand, ₱250. (ASSET METHOD)
3. Furniture and Fixtures were acquired January 1, 2009 with an estimated useful
life of 10 years, no scrap value.
4. Notes payable is for 30 days. 6％ dated November 10, 2010.
5. Advertising was paid on November 1, 2010 to Cordero Journal for 6 consecutive
Sundays starting November 2.
6. Accrue 3％ percentage tax on November net sales of ₱10,000
7. A lessee, who is food and drink stall owner, occupying a corner of the store gave
an advance rental for four months amounting to ₱1,500 on September 1, 2010.
8. Physical inventory count showed unsold merchandise on November 30, 2010
amounting to ₱47,755.
CHART OF ACCOUNTS
MABOLA MERCHANDISING
CHART OF ACCOUNTS
Account No. Account Title
110 Cash
120 Accounts Receivable
125 Allowance for Bad Debts
130 Notes Receivable
131 Interest Receivable
140 Merchandise Inventory
150 Prepaid Supplies
161 Prepaid Advertising
190 Furniture & Fixture
195 Accumulated Depreciation - F&F
210 Accounts Payable
220 Notes Payable
230 Interest Payable
240 Salaries Payable
250 Utilities Payable
260 Rent Payable
270 Taxes Payable
271 Withholding Taxes Payable
272 SSS and PH Premiums Payable
280 Unearned Rent Income
310 Isaac, Capital
320 Isaac, Drawings
410 Income & Expense Summary
420 Sales
421 Sales Returns and Allowances
422 Sales Discounts
430 Rent Income
510 Purchases
511 Freight In
512 Purchase Returns and Allowances
513 Purchase Discounts
515 Freight Out
520 Salaries Expense
525 Rent Expense
530 Utilities Expense
535 Supplies Expense
540 Doubtful Accounts Expense
545 Depreciation Expense - Furniture & Fixture
550 Advertising Expense
570 Interest Expense
JOURNALIZING

SALES JOURNAL
Date Sold to Invoice No. Account Cash Sales Sales Credit
Receivable Debit
 Debit
Dec. 6, 2010 Castro Store 235 3,000 3,000
Dec. 17, 2010 Cash Sales CRT 5,500 5,500
Dec. 23, 2010 Franco Mart 236 2,500 2,500
Dec. 30, 2010 Cash Sales CRT 4,500 4,500
5,500 15,500
Totals 10,000
(120) (420)

PURCHASE JOURNAL
Accounts Cash
Purchase Purchases
Date Invoice No. Payable Purchases
from Debit
Credit Credit
Santos Toy
Dec. 1, 2010 675 4.940 4,940
Store
Arroyo Sport
Dec. 5, 2010 963 3,000 3,000
Center
Dec. 10, 2010 Joy Mart 35 2,500 2,500
10,440 7,940
Totals 2,500
(510) (210)

CASH RECEIPTS JOURNAL

Sales Account Cash Sundry
Received OR Cash
Date Description Discount Receivable Sales
from # Debit Account F Debit Credit
Debit Debit Credit
Castro Down
Dec. 6 176 1,000 1,000
Store payment
Isaac Toy Full
Dec. 7 177 10,700 10,700
Store collection
Dec. 16 Joy Mart Cash refund 178 200
Dec. 17 Various Cash sales CRT 5,500 5,500
Purchase
Dan Partial 512 200
Dec. 22 179 3,000 3,000 Returns
Santos collection
Castro Partial
Dec. 24 180 1,500 1,500
Store collection
Dec. 30 Various Cash sales CRT 4,500 4,500
Franco Full
Dec. 31 181 2,450 50 2,500
Mart collection
28,850 50 18,700
Totals 10,000 200
(110) (420) (120)

CASH DISBURSEMENT JOURNAL

Cash Sundry
Purchase Accounts
VO Cash Purch
Date Paid to Description Discount Payable
# Credit ases Account F Debit Credit
Credit Debit
Debit
 Deliverate
Dec. 2 Freight 101 120 Freight In 511 120
Co.
Fides Partial
Dec. 9 102 1,850 1,850
Trading payment
Cash
Dec. 10 Joy Mart 103 2,500 2,500
purchase
Arroyo
Payment in
Dec. 13 Sport 104 2,940 60 3,000
full
Center
Salaries 240 2,000
Employee
Dec. 15 Salaries 105 1,750 W/Tax 271
s 250
Payable
Fides Paid
Dec.20 106 2,000 2,000 4,500
Trading balance
Kulot Paid rent 107 2,000 Rent 260 2,000
Dec. 25 Realty
PLDT Telephone 108 200 Utilities 250 200
Salaries 240 2,000
W/Tax 271 250
Employee Payable
Dec. 28 Salaries 109 1,540 210
s SSS & PH 272
Premiums
Payable
Notes 220 4,940
Santos Payment of 4,898. Payable
Dec.31 110
Toy Store note 40 Interest 570 49.40
Expense
19,889
60 6,850 11,30
Totals .40 2,500 710
(513) (210) 9.40
(110)

GENERAL JOURNAL
Date Particulars F Debit Credit
Dec. 1, 2010 Accounts Payable 510 4,940
Notes Payable 220 4,940
30-day, 12% note to Santos
Dec. 14, 2010 Accounts Payable 511 200
Purchase Returns & 110 200
Allowances
Credit memo for returns to Del
Rosario.

LEDGERS

ACCOUNTS RECEIVABLE GENERAL LEDGER & SUBSIDIARY LEDGER

Name: Isaac Toy Store
Address: Harrizon Plaza
 Date Items F Debit Credit Balance
Sales invoice
Nov. 25 SJ 10,700 10,700
205
Full
Dec. 7 CRJ 10,700 -
collection

Name: Dan Santos

Address:1921 Pasay City
Date Items F Debit Credit Balance
Sales invoice
Nov. 30 SJ 5,000 5,000
225
Partial
Dec. 22 CRJ 3,000 2,000
collection

Name: Castro Store

Address: 2123 Taft Ave. Manila
Date Items F Debit Credit Balance
Sales invoice SJ 3,000 3,000
235
Dec. 6
Down CRJ 1,000 2,000
payment
Partial
Dec. 24 CRJ 1,500 500
collection

Name: Franco Mart

Address: 1234 Paz. St., Paco Manila
Date Items F Debit Credit Balance
Sales invoice SJ
Dec. 23 2,500 2,500
235
Full
Dec. 31 CRJ 2,500 -
collection

Accounts Receivable Account No. 120

Date Item F Debit Credit Balance
Nov. 25 Sales invoice SJ 10,700 10,700
205
Nov. 30 Sales invoice SJ 5,000 15,700
225
Dec. 6 Sales invoice SJ 3,000 18,700
235
Down CRJ 1,000 17,700
payment
Dec. 7 Full CRJ 10,700 7,000
collection
Dec. 22 Partial CRJ 3,000 4,000
collection
Dec. 23 Sales invoice SJ 2,500 6,500
235
 Dec. 24 Partial CRJ 1,500 5,000
collection
Dec. 31 Full 2,500 2,500
collection

GENERAL LEDGERS
CASH
Date Item F Debit Date Item F Credit
Nov. 30 Beg. balance 40,500 Dec. 31 CDJ 19,899.40
Dec. 31 CRJ 28,850
69,350 19,899.40
49,460.60

ACCOUNTS RECEIVABLE
Date Item F Debit Date Item F Credit
Collection
Nov. 30 Beg. balance 15,700 Dec. 31 from CRJ 18,700
customers
Sales on
Dec. 31 SJ 5,500
account

End. balance 2,500

MERCHANDISE INVENTORY
Date Item F Debit Date Item F Credit
Nov. 30 Balance 26,450

PREPAID SUPPLIES
Date Item F Debit Date Item F Credit
Nov. 30 Balance 750

FURNITURE & FIXTURE

Date Item F Debit Date Item F Credit
Nov. 30 Balance 27,000

ACCUMULATED DEPRECIATION
Date Item F Debit Date Item F Credit
Nov. 30 Balance 2,700

NOTES PAYABLE
Date Item F Debit Date Item F Credit
Nov. 30 Balance 15,000
Notes payable to
Dec. 31 GJ 4,940
Santos
End. balance 19,940

ACCOUNTS PAYABLE
Date Item F Debit Date Item F Credit
Dec. 1 30-day, 12% GJ 4,940 Nov. 30 Balance 10,850
 note
Dec. 14 Credit memo GJ 200 Dec. 31 PJ 7,940
Dec. 31 CDJ 6,850
11,990 18,790
End. balance 6,800
WITHHOLDING TAXES PAYABLE
Date Item F Debit Date Item F Credit
Nov. 30 Balance 1,000
Dec. 15 Employees CDJ 250
Dec. 28 Employees CDJ 250
End. balance 1,500

SSS AND PH PAYABLE

Date Item F Debit Date Item F Credit
Nov. 30 Balance 420
Dec. 31 CDJ 210
End. balance 630

ISAAC, CAPITAL
Date Item F Debit Date Item F Credit
Nov. 30 Balance 66,190

ISAAC, DRAWINGS
Date Item F Debit Date Item F Credit
Nov. 30 Balance 1,200

SALES
Date Item F Debit Date Item F Credit
Nov. 30 Balance 120,800
Dec. 31 SJ 15,500
End. balance 136,300

SALES RETURN & ALLOWANCES

Date Item F Debit Date Item F Credit
Nov. 30 Balance 2,500

SALES DISCOUNT
Date Item F Debit Date Item F Credit
Nov. 30 Balance 1,500
Dec. 31 CRJ 50
End. balance 1,550

PURCHASES
Date Item F Debit Date Item F Credit
Nov. 30 Balance 70,000
Dec. 31 PJ 10,440
End. Balance 80,440
 FREIGHT IN
Date Item F Debit Date Item F Credit
Nov. 30 Balance 1,700
Dec. 31 CDJ 120
End. Balance 1,820

PURCHASE RETURNS & ALLOWANCES

Date Item F Debit Date Item F Credit
70,000 Nov. 30 Balance 4,200
PJ 10,440 Dec. 14 GJ 200
Dec. 16 CRJ 200
End. Balance 4,600

PURCHASE DISCOUNTS
Date Item F Debit Date Item F Credit
Nov. 30 Balance 3,000
Dec. 31 CDJ 60
End. Balance 3,060

ADVERTISING EXPENSE
Date Item F Debit Date Item F Credit
Nov. 30 Balance 3,000

FREIGHT OUT
Date Item F Debit Date Item F Credit
Nov. 30 Balance 3,960

RENT EXPENSE
Date Item F Debit Date Item F Credit
Nov. 30 Balance 22,000
Dec. 25 CDJ 2,000
24,000

SALARIES EXPENSE
Date Item F Debit Date Item F Credit
Nov. 30 Balance 4.500
Dec. 15 CDJ 2,000
Dec. 28 CDJ 2,000
End. Balance 8,500

UTILITIES EXPENSE
Date Item F Debit Date Item F Credit
Nov. 30 Balance 6,600
Dec. 25 CDJ 200
End. Balance 6,800
 RENT INCOME
Date Item F Debit Date Item F Credit
Nov. 30 Balance 2,000

INTEREST EXPENSE
Date Item F Debit Date Item F Credit
Nov. 30 Balance CDJ 49.40

TRIAL BALANCE
MABOLA MERCHANDISING
TRIAL BALANCE
FOR THE MONTH ENDED DECEMBER 31, 2010
Accounts Dr. Cr.
Cash ₱49,460.60
 Accounts Receivable 2,500
Merchandise Inventory 25,250
Prepaid Supplies 750
Furniture & Fixture 27,000
Accumulated Depreciation - F&F 2,700
Notes Payable 15,000
Accounts Payable 6,800
Withholding Taxes Payable 1,500
SSS & PH Payable 630
Isaac, Capital 66,190
Isaac, Drawings 1,200
Sales 136,300
Sales Returns & Allowances 2,500
Sales Discounts 1,550
Purchases 80,440
Freight In 1,820
Purchase Returns & Allowances 4,600
Purchase Discounts 3,060
Advertising Expense 3,000
Freight Out 3,960
Rent Expense 24,000
Salaries Expense 8,500
Utilities Expense 6,800
Rent Income 2,000
Interest Expense 49.40
Totals 238,780 238,780

ADJUSTING ENTRIES

Supporting computations for the adjustments.

1. Solution: Req. Allowance (15,700 x 10%) 1,570
Allowance for bad debts ₱ 1,200
Provision for doubtful accounts ₱ 370
Dec. 31, 2010 Bad debt expense ₱370
AJE #1 Allowance for doubtful accounts ₱370
 To adjust for uncollectible account.

2. Solution: Unused supplies ₱ 750

Supplies on hand 250
Supplies Expense ₱ 500
Supplies expense ₱500
3. Dec. 31, 2010
Prepaid supplies ₱500
AJE #2
To adjust for the used up supplies.
Solution: Cost of F&F ₱ 27,000
Useful life 10
Depreciation Expense ₱ 2,700
Depreciation expense - F&F ₱2,700
4. Dec. 31, 2010 Accumulated depreciation - F&F ₱2,700
AJE #3 To take up depreciation of
furniture and fixture.
Solution: Accrued Interest ₱ 15,000 x 6% x 21/360days = ₱ 70.00
5. Interest expense ₱70
Dec. 31, 2010
Interest payable ₱70
AJE #4
To record accrued interest.
Solution: Prepaid advertising 3,000 / 6 Sundays = ₱ 500
Prepaid advertising ₱500
6. Dec. 31, 2010 Advertising expense ₱500
AJE #5 To adjust for unexpired
advertising.
Solution: Taxes Payable ₱ 10,000 x 3% = ₱ 300
Taxes expense ₱300
Dec. 31, 2010
Taxes payable ₱300
AJE #6
To adjust for accrued taxes.

7. Solution: Unearned rent income ₱ 1,500 / 4 months = ₱ 375

Rent income ₱375
Dec. 31, 2010
Unearned rent income ₱375
8. AJE #7
To adjust for unearned rent.
Solution: The company is using periodic inventory method. The ending inventory is
₱47,755.
Merchandise Inventory, November 30 ₱47,755
Dec. 31, 2010
Income summary ₱47,755
AJE #8
To set up merchandise on hand.
WORKSHEET
CLOSING ENTRIES

Sales ₱136,300
Purchase Returns & Allowances 4,600
Purchase Discounts 3,060
Dec. 31, 2010
Rent Income 1,625
CE #1 145,585
Income & Expense Summary
To close credit balances of nominal
accounts.

Income & Expense Summary ₱161,309.40

Merchandise Inventory, beg. 25,250
Sales Return & Allowances 2,500
Sales Discounts 1,550
Purchases 80,440
Freight In 1,820
Advertising Expense 2,500
Freight Out 3,960
Dec. 31, 2010 Rent Expense 24,000
CE #2 Salaries Expense 8,500
Utilities Expense 6,800
Interest Expense 119.40
Bad Debt Expense 370
Supplies Expense 500
Depreciation Expense 2,700
Tax Expense 300
To close debit balances of nominal
accounts.

Income & Expense Summary 32,030.60

Dec. 31, 2010
Isaac, Capital 32,030.60
CE #3
To close net income to capital.

Isaac, Capital 1,200

Dec. 31, 2010
Isaac, Drawing 1,200
CE #4
To close drawings to capital.
FINANCIAL STATEMENTS

MABOLA MERCHANDISING
INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 2010

Sales ₱136,300.00
Less: Sales Returns & Allowances 2,500.00
Sales Discount 1,550.00 ₱4,050.00
Net Sales ₱132,250.00
Cost of Sales:
Merchandise Inventory, beg. ₱25,250.00
Purchases 80,440.00
Freight In 1,820.00
Purchase Returns & Allowances -4,600.00
Purchase Discounts -3,060.00
Total Goods Available for Sale 99,850.00
Merchandise Inventory, end. -47,755.00 -52,095.00
Gross Profit 80,155.00
Rent Income 1,625.00
Advertising Expense -2,500.00
Freight Out -3,960.00
Rent Expense -24,000.00
Salaries Expense -8,500.00
Utilities Expense -6,800.00
Interest Expense -119.40
Bad Debts Expense -370.00
Supplies Expense -500.00
Depreciation Expense -2,700.00
Taxes Expense -300
PROFIT FOR THE YEAR ₱32,030.60

MABOLA MERCHANDISING
CAPITAL STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 2010
Isaac, Capital Jan. 1 ₱66,190.00
Add: Net Income 32,030.60
Total ₱98,220.60
Less: Isaac, Drawings -1,200.00
Isaac, Capital Dec. 31 ₱97,020.60
 MABOLA MERCHANDISING
BALANCE SHEET
AS OF DECEMBER 31, 2010

ASSETS
CURRENT ASSETS
Cash ₱49,460.60
Accounts Receivable 2,500.00
Less: Allowance for Doubtful Accounts -370.00
Merchandise Inventory 47,755.00
Prepaid Supplies 250.00
Prepaid Advertising 500.00
Total ₱100,095.60
NON-CURRENT ASSETS
Furniture & Fixtures 27,000.00
Less: Accum. Depreciation -5,400.00
Total 21,600.00
TOTAL ASSETS ₱121,695.60
LIABILITIES & OWNER'S EQUITY
CURRENT LIABILITIES
Accounts Payable 6,800.00
Notes Payable 15,000.00
Taxes Payable 300.00
Interest Payable 70.00
Withholding Taxes Payable 1,500.00
SSS & PH Payable 630.00
Unearned Rent Income 375.00
Total ₱24,675.00
OWNER'S EQUITY
Isaac, Capital 97,020.60
TOTAL LIABILTIES & OWNER'S EQUITY ₱121,695.60
 MABOLA MERCHANDISING
POST CLOSING TRIAL BALANCE
DECMBER 31, 2010
ACCOUNTS DEBIT CREDIT
Cash ₱49,460.60
Accounts Receivable 2,500.00
Prepaid Supplies 250.00
Furniture & Fixture 27,000.00
Accumulated Depreciation - F&F 5,400.00
Notes Payable 15,000.00
Accounts Payable 6,800.00
Withholding Taxes Payable 1,500.00
SSS & PH Payable 630.00
Isaac, Capital 97,020.60
Allowance for Doubtful Accounts 370.00
Interest Payable 70.00
Prepaid Advertising 500.00
Taxes Payable 300.00
Unearned Rent 375.00
Merchandise Inventory, end. 47,755.00
₱127,465.60 ₱127,465.60