Fill in the Blanks (page 361)

1. Two separate
2. Not
3. Selling
4. Administrative Expense
5. Operating Expense
6. Ending
7. Current asset
8. Property and equipment
9. Current liabilities
10. Noncurrent liabilities
11. Permanent account
12. Income summary
13. Nominal/temporary
14. Adjusting

True or false (page 362)

1. T
2. T
3. T
4. T
5. T
6. F
7. F
8. T
9. T
10. F
11. F
12. T
13. T
14. T
15. F

True or false (page 363)

1. T
2. T
3. T
4. F
5. F
6. F
7. F
8. T
9. F
10. F
11. T
12. T
13. F
14. T

Multiple choice (page 364-365)

 1. A
2. C
3. C
4. A
5. B
6. D
7. B

Multiple choice (page 366- 368)

1. C
2. B
3. A
4. B
5. A
6. A
7. D
8. C
9. C
10. C
11. B
12. C
13. D

Problem 1 Merchandising inventory at the end of the period (page 369)

Dec 31 Income summary 300,000

Merchandise inventory, beginning 300,000
To remove beginning inventory

31 Merchandise inventory, End 230,000

Income Summary 230,000
To remove ending inventory

Problem 2 Adjusting entry for merchandising entry ( page 369)

No.1
Income summary 161,000
Merchandise inventory, beginning 80,000
Purchase 60,000
Transportation-In 1,000
Sales return and allowances 20,000
To remove beginning inventory

Merchandise inventory, End 74,000

Sales 190,000
Purchases Discounts 3,000
Income Summary 267,000
To remove ending inventory

No.2
Charito Guillermo Retailers
Partial Income Statement
For the year ended, December 31,2024
 Sales P 190,000
Less: Sales Returns and allowances 20,000
Net Sales P 170,000
Less: cost of sales
Merchandise inventory P 80k
Add: Purchase P 60k
Transportation In 1k
Total P 61k
Less: Purchase Discounts 3k 58k
Total goods available for sale P 138k
Less: Merchandise Inventory, End 74k 64k
Gross profit P 106,00

Problem 3 Missing elements- Reconstruction ( page- 370)

Gross sales= p 1,610,000
Sales r&a plus sales D. = 60,000
Net sales= 1,550,000
Purchase R&A plus Purchase D. = 51,000
Net purchase= 934,000
Net cost of purchases= 970,000
Cost of available for sale= 1,190,000
Cost of good sold= 930,000
Operating expenses= 465,000
Profit= 155,000

Problem 4 worksheet procedure (page-370)

Income statement Balance sheet
Debit credit Debit credit
Merchandise inventory, beggining /
Sales /
Sales R&A /
Purchases /
Purchase R&A /
Purchase Discounts /
Transportation In /
Salaries payable /
Merchandise Inventory, Ending / /

Problem 5 Preparing the worksheet (Page 371)

Dores Marie Pateno Hobby Shop
Worksheet
December 31, 2024
Unadj. Trial Adjustments Adjusted Trial Income statement Balance sheet
Balance balance

Debit credit Debit credit Debit credit Debit credit Debit credit
cash P 100k P 100k P 100k
Accounts 500k 500k 500k
Receivable
Merchandise 700k 700k P 700k P 500k 500k
inventory
Prepaid Rent 300k p100k 200k 200k
 Shop equipment 1.600m 1.600m 1.600m
Accumulated P 200k 200k P 400k P 400k
Depreciation
Accounts payable 400k 400k 400k
Pateno, capital 1.300m 1.300m 1.300m
Pateno, withdrawal 100k 100k 100k
sales 2.900m 2.900m 2.900m
Sales D 100k 100k 100k
purchases 800k 800k 800k
Purchase r&a 200k 200k 200k
Transportations In 100k 100k 100k
Salaries Expense 400k p30k 430k 430k
Advertising 150k 150k 150k
Expense
Utilities Exp 100k 100k 100k
Supplies Exp 50k 50k 50k
Totals P 5m P 5m
Adjustments:
a) Salaries payable 30k 30k 30k
b) Rent exp 100k 100k 100k
c) Dep. Expense 200k 200k 200k
totals P 330k P330k P 5.230m P 5.230m P 2.730m P 3.600m P 3m P 2.130m
870k 870k
Net income(loss) P 3.600m P 3.600m P 3m P 3m

Problem No.6 preparing the worksheet (page – 372)

Jhon Bala Maps
Worksheet
December 31, 2024
Unadj. Trial Adjustments Adjusted Trial Income statement Balance sheet
Balance balance

Debit credit Debit credit Debit credit Debit credit Debit credit
cash 31k 31k 31k
Accounts 83k 83k 83k
Receivable
Merchandise 627k 627k 627k 532k 627k
inventory
Prepaid insurance 54k b) 18k 36k 36k
Office supplies 68k d) 53k 15k 15k
Office equipment 370k 370k 370k
Accumulated 50k c) 25k 75k 75k
Depreciation
Accounts payable 58k 58k 58k
Bala, capital 517k 517k 517k
Bala, withdrawal 87k 87k 87k
sales 2.675m 2.675m 2.675m
Sales R&A 26k 26k 26k
Sales D 23k 23k 23k
purchases 1.512m 1.512m 1.512m
Purchase r&a 14k 14k 14k
Purchase Discounts 19k 19k 19k
Transportations In 38k 38k 38k
Salaries Expense 327k e) 9k 336k 336k
Advertising 61k 61k 61k
Expense
 Rent Expense 26k 26k 26k
Totals 3.333m 3.333m
Adjustments:
b) Insu. Expense b) 18k 18k 18k
c) Dep. Expense c) 25k 25k 25k
D) Office Supp. Exp. d) 53k 53k 53k
e) Salaries payable E) 9k 9k 9k
totals P 105k P 105k P 3.367m P 3.367m P 2.745m P 3.240m P 1.154m. P 659k
495k 495k
Net income(loss) P 3.240m P 3.240m P 1.154m. P 1.154m.

Problem 7 Preparing the worksheet, adjusting and closing entries, and Financial statements (page – 373)
Christine Sousa Bags
Worksheet
December 31, 2024
Unadj. Trial Balance Adjustments Adjusted Trial balance Income statement Balance sheet
Debit credit Debit credit Debit credit Debit credit Debit credit
cash P 72k P 72k P 72k
Accounts 136k 136k 136k
Receivable
Merchandise 598k 598k 598k 723k 723k
inventory
Prepaid Advertising 75k b) P 25k 50k 50k
Office supplies 42k a) 17k 25k 25k
Land 400k 400k 400k
Office building 1.600m 1.600m 1.600m
Acc. Depreciation- 100k d) 15k 115k 115k
off bldg
Office equipment 570k 570k 570k
Acc. Dep- Off. 150k d) 20k 170k 170k
Equipt.
Accounts payable 74k 74k 74k
Mortgage Pay. 1.100m 1.100m 1.100m
Note pay. Due in 2yrs
200k 200k 200k
Sousa, capital 1,510k 1,510k 1,510k
Sousa, withdrawal 200k 200k 200k
sales 4.600m 4.600m 4.600m
Sales R&A 187k 187k 187k
Sales D 161k 161k 161k
purchases 2.643m 2.643m 2.643m
Purchase r&a 133k 133k 133k
Purchase Discounts 172k 172k 172k
Transportations In 72k 72k 72k
Insurance Exp. 25k 25k 25k
Interest Exp. 208k 208k 208k
Salaries Expense 862k c)21k 883k 883k
Travel Expense 188k 188k 188k
Totals P8.039m P8.039m
Adjustments:
a) Office Supp. Exp. a) 17k 17k 17k
b) Advertising Expense b)25k 25k 25k
c)Salaries payable c) 21k 21k 21k
d) Dep. Expense d) 15k 15k 15k
off. - building
d) Dep. Expense- d) 20k 20k 20k
off. Equipment
totals P 98k P 98k P 8.095m P 8.095m P 5.042m P 5.628m P 3.776m P 3.190m
586k 586k
Net income(loss) P 5.628m P 5.628m P 3.776m P 3.776m

Christine Sousa Bags

Statement of Income
December 31, 2024
Sales P 4.600m
Less: Sales Returns and allowances P 187k
Sales D 161k 348k
Net Sales P 4,252m
Less: cost of sales
Merchandise inventory, Beg. P 598k
Add: Purchases P 2.643m
Transportation In 72k
total P 2.715
Less: Purchase R&A P 133k
Purchase Discounts 172k 305k 2.410m
Total goods available for sale P 3.008m
Less: Merchandise Inventory, End 723k 2.285m
Gross profit P 1.967m
Less: Operating exp
Dep. Exp- off. Bldg P 15k
Dep. Exp- off. Equip 20k
Adver. Exp 25k
Insu exp. 25k
Salaries exp 883k
Travel exp 188k
Off sup exp 17k 1.173m
Operating profit P 794k
Finance cost 208k
profit P 586

Christine Sousa Bags

State of changes in equity
December 31, 2024
Sousa, Capital, 1/1/2024 P 1.510m
Add: Profit 586k
Total P 2.096m
Less: Sousa, Withdrawal 200k
Sousa, Capital, 12/31/2024 P 1.896m

Christine Sousa Bags

Balance Sheet
December 31, 2024
ASSET
Current Asset
cash P 72k
Accounts Receivable 136k
Merchandise inventory 723k
Prepaid Advertising 75k
Office supplies 42k P 1.006m
 Noncurrent Asset
Land P 400k
Office building P 1.600m
Less: Acc. Depreciation- off bldg 115k 1.485m
Office equipment P 570k
Less: Acc. Dep- Off. Equipt. 170k 400k 2.285m
TOTAL ASSET P 3.291m
LIBILITIES AND OWNER’S EQUITY
Current Liabilities:
Accounts payable P 74k
Salaries payable 21k P 95k
Noncurrent Liabilities:
Mortgage Pay. P 1.100m
Note pay. Due in 2yrs
200k 1.300m
Owner’s Equity
Sousa, Capital, 12/31/2024 1.896m
TOTAL LIBILITIES AND OWNER’S EQUITY P 3.291m

Adjusting entries
a. Office supp exp P 17k
Office Supp 17k
To recognize expired portion of Office supp

b Advertising Expense 25k

Prepaid Advertising 25k
To recognize expired portion of Prepaid Advertising

c Salaries Exp 21k

Salaries payable 21k
To recognize accrued salaries

d Dep. Exp- off. Bldg 15k

Dep. Exp- off. Equip 20k
Acc. Depreciation- off. bldg 15k
Acc. Depreciation- off. quipment 20k
To record depreciation

Closing entries
Date Particulars Debit Credit
Dec. 31 Merchandise Inventory, End P 723k
Sales 4.600m
Purchase r&a 133k
Purchase Discounts 172k
Income and expense summary P 5.628m
To close revenue, contra-Purchase account and Merchandise Inventory, End

31 Income and expense summary 5.042m

Merchandise Inventory, beg. 598k
Sales R&A 187k
Sales D 161k
Purchases 2.643m
Transportation In 72k
Dep. Exp- Bldg 15k
 Dep. Exp- Equip 20k
Adver. Exp 25k
Insu exp. 25k
Salaries exp 883k
Travel exp 188k
Off sup exp 17k
Interest Exp 208k
To close expenses, contra-sales account and Merchandise Inventory, beg.

31 Income and expense summary 586k

Sousa, capital 586k
To close income

31 Sousa, capital 200k

Sousa, withdrawal 200k
To close withdrawal account

Problem 8- Preparing the income statement- Function of expense method (page 374)
Victoriano Navarrete Traders
Statement of Income
December 31, 2024
Sales P 9.630m
Less: Sales Returns and allowances P 280k
Sales D 210k 490k
Net Sales P 9.140m
Less: cost of sales
Merchandise inventory, 1/1/2024 P 2.170m
Add: Purchases P 4.720m
Transportation In 50k
total P4.770m
Less: Purchase R&A P 110k
Purchase Discounts 70k 180k 4.590m
Total goods available for sale P 6.760m
Less: Merchandise Inventory, 12/31/2024 1.430m 5.330m
Gross profit P 3.810m
Operating exp
Selling Exp
Dep. Exp- store. equp P 160k
Salaries exp- selling 1.140m
Transportation out 170k
Selling supp exp 80k
Total Selling Exp 1.550m
Administrative exp
Dep. Exp- off. Equip 320k
Salaries exp- General 920k
Off sup exp 460k
Insurance exp 55k
Miscellaneous exp 30k
Total Administrative exp 1.785m
Total Operating exp P3335m
profit P475k
Problem 9 (page 375)
Marissa Babilonia Health Store
Statement of Income
December 31, 2024
Sales P 9.810m
Less: Sales Returns and allowances P 260k
Sales D 140k 400k
Net Sales P 9.410m
Less: cost of sales
Merchandise inventory, 1/1/2024 P 1.160m
Add: Purchases P 6.710m
Transportation In 100k
total P6.810m
Less: Purchase R&A P 250k
Purchase Discounts 180k 430k 6.380m
Total goods available for sale P 7.540m
Less: Merchandise Inventory, 12/31/2024 1.040m 6.500m
Gross profit P 2.910m
Operating exp
Selling Exp
Dep. Exp- store. equp P 140k
Salaries exp- selling 960k
Transportation out 260k
Selling supp exp 70k
Advertising expense 150k
Total Selling Exp 1.580m
Administrative exp
Dep. Exp- off. Equip 110k
Salaries exp- General 1.130m
Off sup exp 430k
Miscellaneous exp 90k
Total Administrative exp 1.760m
Total Operating exp P3.340m
Net profit (loss) P430k

Problem 10 (page 375)

Ramon Woo milk Products
Statement of Income
June 30, 2024
Sales P 731k
Less: Sales Returns and allowances P 18,030
Sales D 10,400 28, 430
Net Sales P 702,570
Less: cost of sales
Merchandise inventory, 1/1/2024 P 69,350
Add: Purchases P 364,000
Less: Purchase R&A P 3,400
Purchase Discounts 1,990 5,390 358,610
Total goods available for sale P 427,960
Less: Merchandise Inventory, 6/30/2024 65,520 362,440
Gross profit P 340,130
Operating exp
Selling exp 132,900
 Administrative exp
General Exp 116,700
Interest exp 5,400
Total Administrative exp 122,100
Total Operating exp P255,000
Net profit (loss) P85,130

Cost of good sold

Merchandise inventory, 1/1/2024 P 69,350
Purchases P 364,000
Less: Purchase R&A P 3,400
Purchase Discounts 1,990 5,390 358,610
Total goods available for sale P 427,960
Less: Merchandise Inventory, 6/30/2024 65,520
Cost of good sold 362,440

Problem 11 preparing closing entries (page 376)

Closing entries for Jun Torres Distributors
Date Particular Debit credit
Dec 31 Merchandise Inventory, End P 118k
Sales 1m
Purchase r&a 6k
Purchase Discounts 13,200
Income and expense summary P 1,137,200
To close revenue, contra-Purchase account and Merchandise Inventory, End

31 Income and expense summary 1.066m

Merchandise Inventory, beg. 128k
Sales R&A 3k
Sales D 9k
Purchases 660k
Transportation In 16k
Operating expenses 250k
To close expenses, contra-sales account and Merchandise Inventory, beg.

31 Income and expense summary 280k

Torres, capital 280k
To close income

Torres, capital 24k

Torres, withdrawal 24k
To close withdrawal account