Comprehensive Exerc

Quijonez operates a dry goods stall located in the public market of Mariveles, Bataan. Shown below is a summ
On Jan. 1, invested P120,000 cash for her business under the trade name Quijonez Fashionables.
On Feb. 2, borrowed from BPI a 36-months loan amounting to P50,000 carrying a 9% interest payable annually.
On Feb. 3, bought office computer equipment for P36,000 in cash.
On Feb. 4, rented a building paying annual rent of P28,800; recorded the same to a permanent account.
On Feb. 25, purchased P2,000 worth of supplies for cash and recorded the same in the Supplies account.
On Mar. 1, bought various consumer products for resale. List price of supplier was P50,000 and she was grante
shipping point.
On Mar. 8, paid freight charges related to Mar. 1 purchase, P1,000.
On Mar. 9, returned goods to supplier related to Mar. 1 purchase, P500.
On Mar. 11, paid the Mar. 1 purchase less returns made on Mar. 9 and any applicable discount.
On Apr. 30, received additional investment from owner, P3,000.
On May 25, sold merchandise for P8,000, terms to customer are 1/15, n30, free on board, destination.
Paid delivery cost on May 26 related to May 25 sale, P200.
On May. 31, purchased a 1-year business insurance for the store and charged the P3,600 premium paid to an e
On Jun. 7, customers returned P300 worth of merchandise related to May. 25 sales.
On Jun. 8, collected the amount due on May 25 sale less applicable discounts and returns made last Jun. 7.
On Jun. 30, subleased a small portion of the store space receiving a P1,200 rent payment for 8 months which w
On Jul. 9, received advance payment from a major customer for goods to be delivered, P2,500 amount of cash
On Aug. 20, sold merchandise for P35,000 and received a 25% cash payment, the balance recorded in an open
On Oct. 14, Quijonez withdrew P1,500 cash.
On Oct. 29, sold P90,000 merchandise for cash.
On Nov. 30 Quijonez paid utilities amounting to P5,000.
On Dec. 15, Quijonez hired bookkeeper assistant for monthly salary of P12,000.
On Dec. 31, Quijonez paid miscellaneous operating expenses worth P350.
Additional information
the adjustments are computed on the nearest month basis. Round off any amounts to the nearest peso.

Interest on loan contracted on Feb. 2 should be accrued.

Computer equipment has useful life of 3 years with P6,000 disposal value.
Rent paid last Feb 4 should be adjusted by end of the year.
Supplies counted at the end of the year amounted to P550.
Insurance contracted last May 31 should be adjusted by Dec. 31.
Income received from subleasing portion last Jun. 30 of store space should be adjusted by Dec. 31.
Out of the advance payment received last Jul. 9, 40% have already been delivered by Quijonez by Dec. 31.
Salaries for the half-month of December should be accrued.
On Dec. 31, received bills for utilities, P200.
Doubtful accounts expense is recognized as 1.5% of net credit sales.
Physical inventory counted at period end amounted to P12,000.

Requirements:
Journalize transactions for the year. (refer to Chart of Accounts Below)
Income received from subleasing portion last Jun. 30 of store space should be adjusted by Dec. 31.
Out of the advance payment received last Jul. 9, 40% have already been delivered by Quijonez by Dec. 31.
Salaries for the half-month of December should be accrued.
On Dec. 31, received bills for utilities, P200.
Doubtful accounts expense is recognized as 1.5% of net credit sales.
Physical inventory counted at period end amounted to P12,000.

Requirements:
Journalize transactions for the year. (refer to Chart of Accounts Below)
Post the journal entries to T-accounts.
Prepare unadjusted trial balance on a work sheet.
Prepare adjusting entries as of December 31.
Post adjusting entries to T-accounts.
Cost of goods sold method
Direct extension method
Prepare adjusted trial balance on the work sheet.
Prepare financial statements.
Prepare closing entries using Cost of goods sold method
Post closing entries to T-accounts
Prepare post-closing trial balance.
Identify which adjusting entries are qualified for reversing entries.
Prepare and post reversing entries.
 "Quijonez Fashionables"
Comprehensive Exercise on Accounting for Merchandise Operations
Owned and Operated by Marie S. Quijonez

Comprehensive Exercise on Accounting for Retail Operations

(AccountingCycle,Retail/Merchandising,SoleProprietorship)

taan. Shown below is a summary of her transactions for the year 20x1:
nez Fashionables.
a 9% interest payable annually.

o a permanent account.
in the Supplies account.
as P50,000 and she was granted 20% and 25% trade discount, respectively. Terms were 2/10, n60, fob

cable discount.

on board, destination.

e P3,600 premium paid to an expense account.

les.
d returns made last Jun. 7.
payment for 8 months which was recorded as income upon receipt.
vered, P2,500 amount of cash received and recorded it as a liability.
e balance recorded in an open account.

nts to the nearest peso.

djusted by Dec. 31.

d by Quijonez by Dec. 31.
djusted by Dec. 31.
d by Quijonez by Dec. 31.
Quijonez Fashionables Chart of Accounts

Account No. Account Title

101 Cash
102 Accounts receivable
103 Allowance for doubtful accounts
104 Supplies
105 Prepaid rent
106 Merchandise inventory
107 Computer equipment
108 AD - Computer equipment
201 Accounts payable
202 Unearned sales revenue
203 Unearned rent revenue
204 Salaries payable
205 Utilities payable
206 Interest payable
207 Loans payable
301 Quijonez, Capital
302 Quijonez, Drawings
401 Sales revenue
402 Sales discount
403 Sales return and allowances
404 Rent income
501 Purchases
502 Purchase discount
503 Purchase return and allowances
504 Freight in
505 Cost of goods sold
601 Salaries expense
602 Insurance expense
603 Utilities expense
604 Miscellaneous expense
605 Interest expense
606 Freight out
607 Prepaid insurance
608 Rent expense
609 Supplies expense
610 Depreciation expense
611 Doubtful accounts expense
Quijonez Fashionables
General Journal
2014

NO. DATE Account Title

1 Jan 1 Cash

2 Feb 2 Cash

3 Feb 3 Computer equipment

4 Feb 4 Prepaid rent

5 Feb 25 Supplies

6 Mar 1 Purchases

(P50,000 x 80% x 75% = P30,000)

7 Mar 8 Freight in

8 Mar 9 Accounts payable

9 Mar 11 Accounts payable

P30,000 - P500 returns = P29,500 balance x 0.98

10 Apr 30 Cash

11 May 25 Accounts receivable

12 May 26 Freight out

13 May 31 Insurance expense

14 Jun 7 Sales return and allow.

15 Jun 8 Cash
Sales discount

P8,000 - P300 returns = P7,700 balance x 0.99 =

16 Jun 30 Cash
17 Jul 9 Cash

18 Aug 20 Cash
Accounts receivable

P35,000 selling price x 25% = P8,750 cash porti

19 Oct 14 Quijonez, Drawing

20 Oct 29 Cash

21 Nov 30 Utilities expense

22 Dec. 15 No entry

23 Dec 31 Miscellaneous expense

 Account Title PR DR
120,000
Quijonez, Capital

50,000
Loans payable

Computer equipment 36,000

Cash

Prepaid rent 28,800

Cash

Supplies 2,000
Cash

Purchases 30,000
Accounts payable
(P50,000 x 80% x 75% = P30,000)

Freight in 1,000
Cash

Accounts payable 500

 Purch. returns and allow

Accounts payable 29,500

Purchase discount
Cash
P30,000 - P500 returns = P29,500 balance x 0.98 = P28,910

3,000
Quijonez, Capital

Accounts receivable 8,000

Sales Revenue

Freight out 200

Cash

Insurance expense 3,600

Cash

Sales return and allow. 300

Accounts receivable

7,623
Sales discount 77
Accounts receivable
P8,000 - P300 returns = P7,700 balance x 0.99 = P7,623

1,200
Rent income
 2,500
Unearned sales revenue

8,750
Accounts receivable 26,250
Sales revenue
P35,000 selling price x 25% = P8,750 cash portion

Quijonez, Drawing 1,500

Cash

90,000
Sales revenue

Utilities expense 5,000

Cash

No entry

Miscellaneous expense 350

Cash
 CR

120,000

50,000

36,000

28,800

2,000

30,000

1,000
 500

590
28,910

3,000

8,000

200

3,600

300

7,700

1,200
 2,500

35,000

1,500

90,000

5,000

350

-
Quijonez Fashionables
ADJUSTING ENTRIES
December 31, 2016

Dec 31 Interest expense

P50,000 x 9% x 11/12 = P4,125

Dec 31 Depreciation expense

(P36,000 - P6000)/3 years = P10,000/year x 11/12 = P9,167

Dec 31 Rent expense

P28,800/12 mos. = P2,400/mo. x 11 mos. = P13,200

Dec 31 Supplies expense

P2,000 per record - P550 remaining = P1,450 used

Dec 31 Prepaid insurance

P3,600/12 = P300/per mo. X 7 mos. = P2,100 required expen

P3,600 expense per record - P2,100 = P1,500 adjustment
P300/mo. x 5 mos. remaining life = P1,500 asset portion

Dec 31 Rent income

P1,200/8 mos. = P150/mo. x 6 mos. = P900 required income

 P1,200 income per record - P900 = P300 adjustment
P150/mo. x 2 mos. remaining life = P300 liability portion

Dec 31 Unearned sales revenue

P2,500 x 40% = P1,000 income earned

Dec 31 Salaries expense

P12,000/ salary per month/ 2 = P6,000 half month

Dec 31 Utilities expense

Dec 31 Doubtful accounts expense

May 25 sales
Aug 20 sales (portion)
Jun 7 sales return (5/25 sale)
Jun 8 sales discount (5/25 sale)

Percentage experience
Doubtful accounts expense

Dec 31 Cost of goods sold

Purchase discount
Purchase returns and allow.
Merchandise inventory
Beginning inventory
Net purchases

Total goods available for sale

Less: Ending inventory
Cost of goods sold
shionables
G ENTRIES
31, 2016

Interest expense
Interest payable
P50,000 x 9% x 11/12 = P4,125

Depreciation expense
AD - Computer equipment
(P36,000 - P6000)/3 years = P10,000/year x 11/12 = P9,167 this year

Rent expense
Prepaid rent
P28,800/12 mos. = P2,400/mo. x 11 mos. = P13,200

Supplies expense
Supplies
P2,000 per record - P550 remaining = P1,450 used

Prepaid insurance
Insurance expense
P3,600/12 = P300/per mo. X 7 mos. = P2,100 required expense
P3,600 expense per record - P2,100 = P1,500 adjustment
P300/mo. x 5 mos. remaining life = P1,500 asset portion

Rent income
Unearned rent income
P1,200/8 mos. = P150/mo. x 6 mos. = P900 required income
P1,200 income per record - P900 = P300 adjustment
P150/mo. x 2 mos. remaining life = P300 liability portion

Unearned sales revenue

Sales revenue
P2,500 x 40% = P1,000 income earned

Salaries expense
Salaries payable
P12,000/ salary per month/ 2 = P6,000 half month

Utilities expense
Utilities payable

Doubtful accounts expense

Allow. for doubtful accounts
May 25 sales
Aug 20 sales (portion)
Jun 7 sales return (5/25 sale)
Jun 8 sales discount (5/25 sale)

Percentage experience
Doubtful accounts expense

Cost of goods sold

Purchase discount
Purchase returns and allow.
Merchandise inventory
 Freight in
Purchases
Beginning inventory
Net purchases
Purchases
Freight in
Purch. discount
Purch. returns and allow
Total goods available for sale
Less: Ending inventory
Cost of goods sold
 Quijonez Fashionables
CLOSING ENTRIES
December 31, 2016

4,125 Dec. 31
4,125

9,167
9,167
this year Dec. 31

26,400
26,400

1,450
1,450

1,500
1,500

Dec. 31

300 Dec. 31
300
 1,000
1,000

6,000
6,000

200
200

508
508
8,000
26,250
(300)
(77)
33,873
1.5%
508.00

17,910
590
500
12,000
 1,000
30,000
P -

30,000
1,000
(590)
(500) 29,910
29,910
(12,000)
P 17,910
Sales revenue 134,000
Rent income 900
Sales return and allow
Sales discount
Income summary

Income summary 73,410

Cost of goods sold
Salaries expense
Insurance expense
Utilities expense
Rent expense
Supplies expense
Depreciation expense
Doubtful account expense
Miscellaneous expense
Freight out
interest expense

Income summary 61,113

Quijonez, Capital

Quijonez, Capital 1,500

Quizonez, Drawing
 300
77
134,523

17,910
6,000
2,100
5,200
26,400
1,450
9,167
508
350
200
4,125

61,113

1,500
Quijonez Fashionables
General Ledger (T-Accounts)
2016
Assets

Cash Prepaid insurance

1/1 120,000 36,000 2/3 12/31 1,500
2/2 50,000 28,800 2/4
4/30 3,000 2,000 2/25 1,500
6/8 7,623 1,000 3/8
6/30 1,200 28,910 3/11 Prepaid rent
7/9 2,500 200 5/26 2/4 28,800
8/20 8,750 3,600 5/31
10/29 90,000 1,500 10/14 28,800 26,400 12/31
5,000 11/30 2,400
350 12/31
175,713 Merchadise inventory
12/31 12,000
Accounts receivable
5/25 8,000 300 6/7 12,000
8/20 26,250 7,700 6/8
26,250 Computer equipment
2/3 36,000
Allowance for doubtful accounts
508 12/31 36,000

508 AD - Computer equipment

9,167 12/31
Supplies
2/25 2,000 9,167
2,000 1,450 12/31
550

Income

Sales revenue Purchases

8,000 5/25 3/1 30,000
35,000 8/20 30,000 12/31
 90,000 10/29 -
133,000
1,000 12/31 Purchase discount
134,000 590 3/11
3/11 590
Sales discount -
6/8 77
Purchase return and allowances
77 500 3/9
3/9 500
Sales return and allowances -
6/7 300
Freight in
300 3/8 1,000
1,000 12/31
Rent income -
1,200 6/30
12/31 300 Cost of goods sold
900 12/31 17,910

17,910
 Liabilities Equ

Accounts payable Utilities payable Quijonez

3/9 500 30,000 3/1 200 12/31
3/11 29,500
- 200

Unearned sales revenue Interest payable Quijonez,

2,500 7/9 4,125 12/31 10/14
12/31 1,000
1,500 4,125

Unearned rent revenue Loans payable

300 12/31 50,000 2/2

300 50,000

Salaries payable
6,000 12/31

6,000

Expenses

Salaries expense Depreciation expense

12/31 6,000 12/31 9,167
 6,000 9,167

Rent expense Doubtful account expense

12/31 26,400 12/31 508

26,400 508

Insurance expense Miscellaneous expense

5/31 3,600 12/31 350
1,500 12/31
2,100 350

Supplies expense Interest expense

12/31 1,450 12/31 4,125

1,450 4,125

Utilities expense Freight out

11/30 5,000 5/26 200
12/31 200
5,200 200
 Equity

Quijonez, Capital
120,000 1/1
3,000 4/30
123,000

Quijonez, Drawings
1,500

1,500
Quijonez Fashionables
General Ledger (T-Accounts) - Closed
2016
Assets

Cash Prepaid insurance

1/1 120,000 36,000 2/3 12/31 1,500
2/2 50,000 28,800 2/4
4/30 3,000 2,000 2/25 1,500
6/8 7,623 1,000 3/8
6/30 1,200 28,910 3/11 Prepaid rent
7/9 2,500 200 5/26 2/4 28,800
8/20 8,750 3,600 5/31
10/29 90,000 1,500 10/14 28,800 26,400 12/31
5,000 11/30 2,400
350 12/31
175,713 Merchadise inventory
12/31 12,000
Accounts receivable
5/25 8,000 300 6/7 12,000
8/20 26,250 7,700 6/8
26,250 Computer equipment
2/3 36,000
Allowance for doubtful accounts
508 12/31 36,000

508 AD - Computer equipment

9,167 12/31
Supplies
2/25 2,000 9,167
2,000 1,450 12/31
550

Income

Sales revenue Purchases

8,000 5/25 3/1 30,000
35,000 8/20 30,000 12/31
 90,000 10/29 -

133,000
1,000 12/31
134,000
12/31 134,000 Purchase discount
- 590 3/11
3/11 590
Sales discount -
6/8 77

77
77 12/31 Purchase return and allowances
- 500 3/9
3/9 500
Sales return and allowances -
6/7 300

300
300 12/31 Freight in
- 3/8 1,000
1,000 12/31
Rent income -
1,200 6/30
12/31 300
900
12/31 900 Cost of goods sold
- 12/31 17,910

17,910
17,910 12/31
-
 Liabilities Equ

Accounts payable Utilities payable Quijonez

3/9 500 30,000 3/1 200 12/31
3/11 29,500
- 200

Unearned sales revenue Interest payable 12/31

2,500 7/9 4,125 12/31
12/31 1,000
1,500 4,125 Quijonez,
10/14
Unearned rent revenue Loans payable
300 12/31 50,000 2/2

300 50,000

Salaries payable
6,000 12/31

6,000

Expenses Clea

Salaries expense Depreciation expense Income S

12/31 6,000 12/31 9,167
12/31
 6,000 9,167

6,000 12/31 9,167 12/31 12/31

- -

Rent expense Doubtful account expense

12/31 26,400 12/31 508

26,400 508
26,400 12/31 508 12/31
- -

Insurance expense Miscellaneous expense

5/31 3,600 12/31 350
1,500 12/31
2,100 350
2,100 12/31 350 12/31
- -

Supplies expense Interest expense

12/31 1,450 12/31 4,125

1,450 4,125
1,450 12/31 4,125 12/31
- -

Utilities expense Freight out

11/30 5,000 5/26 200
12/31 200
5,200 200
5,200 12/31 200 12/31
- -
 Equity

Quijonez, Capital
120,000 1/1
3,000 4/30
123,000
61,113 12/31
1,500
182,613

Quijonez, Drawings
1,500

1,500
1,500 12/31
-

Clearing

Income Summary
134,523 12/31
73,410
 61,113

61,113
-
QUIJONEZ FASHIONABLES
DECEMBER 31, 2016

WORKSHEET

Account Name Unadjusted Trial Balance Adjustments Adjusted Trial Balance

DR CR DR CR DR CR
Cash P 175,713 P 175,713
Accounts receivable 26,250 26,250
Supplies 2,000 P 1,450 550
Prepaid rent 28,800 26,400 2,400
Computer equipment 36,000 36,000
Unearned sales revenue P 2,500 P 1,000 P 1,500
Loans payable 50,000 50,000
Quijonez, Capital 123,000 123,000
Quijonez, Drawings 1,500 1,500
Sales revenue 133,000 1,000 134,000
Sales discount 77 77
Sales return and allowances 300 300
Rent income 1,200 300 900
Purchases 30,000 30,000 -
Purchase discount 590 590 -
Purchase return and allowances 500 500 -
Freight in 1,000 1,000 -
Insurance expense 3,600 1,500 2,100
Utilities expense 5,000 200 5,200
Miscellaneous expense 350 350
Freight out 200 200
Allowance for doubtful accounts 508 508
Merchandise inventory 12,000 12,000
Prepaid insurance 1,500 1,500
AD - Computer equipment 9,167 9,167
Unearned rent revenue 300 300
Salaries payable 6,000 6,000
Utilities payable 200 200
Interest payable 4,125 4,125
Cost of goods sold 17,910 17,910
Salaries expense 6,000 6,000
Rent expense 26,400 26,400
Supplies expense 1,450 1,450
Depreciation expense 9,167 9,167
Interest expense 4,125 4,125
Doubtful account expense 508 508
Totals P 310,790 P 310,790 P 81,650 P 81,650 P 329,700 P 329,700
Profit or loss - -
Totals
 Statement of Statement of Financial
Account Titles
Comprehensive Income Position

DR CR DR CR Cash
P 175,713 Accounts receivable
26,250 Allowance for doubtful accounts
550 Merchandise inventory
2,400 Supplies
36,000 Prepaid rent
P 1,500 Prepaid insurance
50,000 Computer equipment
123,000 AD - Computer equipment
1,500 Unearned rent revenue
P 134,000 Salaries payable
P 77 Utilities payable
300 Interest payable
900 Unearned sales revenue
Loans payable
Quijonez, Capital
Totals
-
2,100
5,200
350
200
508
12,000
1,500
9,167
300
6,000
200
4,125
17,910
6,000
26,400
1450
9167
4,125
508
P 73,787 P 134,900 P 255,913 P 194,800
61,113 61,113
P 134,900 P 134,900 P 255,913 P 255,913
 DR CR

P 175,713
26,250
P 508
12,000
550
2,400
1,500
36,000
9,167
300
6,000
200
4,125
1,500
50,000
182,613
P 254,413 P 254,413
-
 REPORT FORM

Quijonez Fashionables
Statement of Financial Position
As of December 31, 20x1
ASSETS ASSETS
Current assets Current assets
Cash P 175,713
Accounts receivables, net 25,742
Merchandise inventory 12,000
Supplies 550
Prepaid rent 2,400
Prepaid insurance 1,500
Total current assets 217,905
Noncurrent assets Noncurrent asset
Computer equipment, net 26,833
Total noncurrent assets 26,833
Total Assets P 244,738 Total Assets
LIABILITIES AND EQUITY
LIABILITIES
Current liabilities
Unearned sales revenue P 1,500
Unearned rent revenue 300
Salaries payable 6,000
Utilities payable 200
Interest payable 4,125
Total current liabilities 12,125
Noncurrent liabilities
Loans payable 50,000
Total Liabilities 62,125
EQUITY
Quijonez, Capital 182,613
Total liabilities and equity P 244,738

-
 ACCOUNT FORM

Quijonez Fashionables
Statement of Financial Position
As of December 31, 20x1
ASSETS LIABILITIES AND EQUITY
Current assets LIABILITIES
Cash P 175,713 Current liabilities
Accounts receivables, net 25,742 Unearned sales revenue P
Merchandise inventory 12,000 Unearned rent revenue
Supplies 550 Salaries payable
Prepaid rent 2,400 Utilities payable
Prepaid insurance 1,500 Interest payable
Total current assets 217,905 Total current liabilities
Noncurrent assets Noncurrent liabilities
Computer equipment, net 26,833 Loans payable
Total noncurrent assets 26,833 Total Liabilities
Total Assets P 244,738
EQUITY
Quijonez, Capital
Total liabilities and equity P
 1,500
300
6,000
200
4,125
12,125

50,000
62,125

182,613
244,738
 Function of Expense Method

Quijonez Fashionables
Statement of Comprehensive income
For the year ended December 31, 20x1
SALES REVENUE
Gross sales revenue P 134,000
Less:
Sales returns and allowances (300)
Sales discounts (77)
Net Sales 133,623

COST OF GOODS SOLD (17,910)

GROSS PROFIT 115,713

OTHER INCOME
Rent income 900

GENERAL AND ADMINISTRATIVE EXPENSES

Salaries expense P 6,000
Insurance expense 2,100
Utilities expense 5,200
Rent expense 26,400
Supplies expense 1,450
Depreciation expense 9,167
Doubtful account expense 508
Miscellaneous expense 350 (51,175)

SELLING EXPENSES
Freight out 200 (200)

INTEREST EXPENSE (4,125)

PROFIT P 61,113

OTHER COMPREHENSIVE INCOME -

TOTAL COMPREHENSIVE INCOME P 61,113
 Nature of Expense Method

Quijonez Fashionables
Statement of Comprehensive income
For the year ended December 31, 20x1
SALES REVENUE
Gross sales revenue P 134,000
Less:
Sales returns and allowances (300)
Sales discounts (77)
Net Sales 133,623

OTHER INCOME
Rent income 900

OPERATING EXPENSES
Cost of goods sold P 17,910
Salaries expense 6,000
Insurance expense 2,100
Utilities expense 5,200
Rent expense 26,400
Supplies expense 1,450
Depreciation expense 9,167
Doubtful account expense 508
Miscellaneous expense 350
Freight out 200
Interest expense 4,125 (73,410)
PROFIT P 61,113

OTHER COMPREHENSIVE INCOME -

TOTAL COMPREHENSIVE INCOME P 61,113
 Quijonez Fashionables
Statement of Changes in Equity
For the year ended December 31, 20x1

BEGINNING EQUITY P -
ADD:
Additional investments 123,000
Profit for the year 61,113
184,113
LESS:
Drawings (1,500)
ENDING EQUITY P 182,613