ISCool Merchandise owner Janine Aquino

Date Transactions
January 1,2020 Julian invested P500,000 in the business and named it ISCool Merchandise during
the day he purchased merchandise to Jack trading worth P240,000 Terms: 2/10,
n/30 ; Freight charges: P2,400 FOB Shipping point, Freight Collect.

January 10,2020 Returned defective merchandise amounting to P40,000

Made a full payment on purchase in January 1 to Jack Trading

March 1, 2020 Paid 2-year rent amounting P50,000

April 9,2020 Sold Merchandise amounting P105,000 to High Trading Terms: 2/10, n/30;
Freight charges: P1,040, FOB Destination, Freight Prepaid

April 19, 2020 Received defective merchandise from High trading amounting to P20,000
Received a half partial payment from High Trading. Discount is allowed on partial
payments
May 8, 2020 Brought computer equipment for P18,000 issuing a promissory note and office
supplies for P5,000 using cash

September 29, 2020 Purchase merchandise amounting P100,500 to K-Trading Terms: 2/10, n/30;
Freight charges: P2,000 FOB Shipping Points, Freight collect

October 4, 2020 Janine Aquino withdraw P20,000 for personal use.

December 15, 2020 Paid the following expense: Utilities- P3,000; Advertising-P5,000
Miscellaneous- P8,000
 ISCool Merchandise
Sole Proprietorship
New Business

Chart of Accounts
Asset Revenue
Current Asset Sales
Cash Sales Discount
Accounts Receivable Sales Returns and Allowances
Allowance for Doubtful Account
Prepaid Rent
Merchandise Inventory
Office Supplies
Purchases
Purchases
Purchase Discount
Purchase Returns and Allowances
Non-Current Asset Expenses
Equipment Freight In
Accumulated Depreciation-Equipment Freight out
Liabilities Utilities Expense
Accounts Payable Rent Expense
Notes Payable Depreciation Expense
Salaries Payable Advertising Expense
Owner’s Equity Office supplies Expense
ISCool, Capital Bad debt Expense
ISCool, Drawing Salaries Expense
Income Summary Miscellaneous Expense

Journal Entries

Date Account Title Debit Credit

1/1/2020 Cash P500,000
ISCool,Capital P500,000
To record initial investment made by Janine Aquino

Purchases P240,000
Accounts Payable P240,000
Purchase merchandise on account

Freight-in P2,400
Cash 2,400
Paid freight charges

1/10/2020 Accounts Payable P40,000

 Purchase Returns and Allowances P40,000
Returned defective merchandise

P200,000
Accounts Payable
Purchase discount P4,000
Cash 196,000
Purchase merchandise on account

3/1/2020 Rent Expense P4,167

Prepaid Rent 45,833
Cash P50,000
Paid 2-year rent

4/9/2020 Accounts Receivable P105,000

Sales P105,000
Sold merchandise on account

Freight-out P1,040
Cash P1,040
Paid Freight charges

4/19/2020 Sales Returns and Allowances P20,000

Accounts Receivable P20,000
Received defective merchandise sold on account

Cash P41,650
Sales Discount 850
Accounts Receivable P42,500
Collection from customers sold on account

5/8/2020 Equipment P18,000

Notes Payable P18,000
Bought Equipment issuing a promissory note

Office Supplies P5,000

Cash P5,000
Bought Office Supplies using cash

9/29/2020 Purchases P100,500

Accounts Payable P100,500
Purchase merchandise on account

Freight-in P2,000
Cash P2,000
Paid Freight charges

10/4/2020 ISCool, Drawing P20,000

Cash P20,000
 Withdraw cash for personal use

12/15/2020 Utilities Expense P3,000

Advertising Expense 5,000
Miscellaneous Expense 8,000
Cash P16,000
Paid expenses for the year

Cash
Debit Credit
1/1 P500,000 1/10 P196,000
4/9 P41,650 1/1 P2,400
3/1 P50,000
3/1 P1,040
5/8 P5,000
9/29 P2,000
10/4 P20,000
12/1 P16,000
5
P541,650 P292,440
P249,210

Accounts Receivable
Debit Credit
4/9 P105,000 4/19 P20,000
4/19 P42,500
P105,000 P62,500
P42,500

Allowance for Doubtful Accounts

Debit Credit
13/3 P6,000
1
P6,000
 Prepaid Rent
Debit Credit
3/1 P45,833 12/3 P20,833
1
P25,000

Merchandise Inventory
Debit Credit
12/3 P250,000
1
P250,000

Office Supplies
Debit Credit
5/8 P5,000 12/3 P2,000
1
P3,000

Equipment
Debit Credit
5/8 P18,000
P18,000

Accumulated Depreciation- Equipment

Debit Credit
12/31 P7,500
P7,500

Accounts Payable
Debit Credit
1/1 P40,000 1/1 P240,000
0
1/1 P200,000 9/2 P100,500
0 9
P240,000 P340,500
P100,500

Notes Payable
Debit Credit
5/8 P18,000
 P18,000

Salaries Payable
Debit Credit
12/31 P10,000
P10,000

ISCool, Capital
Debit Credit
12/3 P34,290 1/1 P500,000
1
12/3 20,000
1
P445,710

ISCool, Drawing
Debit Credit
10/ P20,000 12/31 P20,000
4
0

Income Summary
Debit Credit
12/3 P433,290 12/3 P399,000
1 1
12/3 P34,290
1
0

Sales
Debit Credit
12/3 P105,000 4/9 P105,000
1
0

Sales Discount
 Debit Credit
4/1 P850 12/31 P850
9
0

Sales Returns and Allowances

Debit Credit
4/1 P20,000 12/31 P20,000
9
0

Purchases
Debit Credit
1/1 P240,000 12/31 P340,500
9/2 P100,500
9
0

Purchase Discount
Debit Credit
12/3 P4,000 1/10 P4,000
1
0

Purchase Returns and Allowances

Debit Credit
12/3 P40,000 1/10 P40,000
1
0

Freight-in
Debit Credit
1/1 P2,400 21/31 P4,400
9/2 P2,000
9
0
 Freight-out
Debit Credit
1/1 P1,040 12/31 P1,040
0

Utilities Expense
Debit Credit
12/1 P3,000 12/3 P3,000
5 1
0

Rent Expense
Debit Credit
3/1 P4,167 12/31 P25,000
12/3 20,833
1
0

Depreciation Expense
Debit Credit
12/3 P7,500 12/3 P7,500
1 1
0

Office Supplies Expense

Debit Credit
12/3 P2,000 12/3 P2,000
1 1
0

Bad Debt Expense

Debit Credit
12/3 P6,000 12/3 P6,000
1 1
0

Advertising Expense
 Debit Credit
12/1 P5,000 12/3 P5,000
5 1
0

Salaries Expense
Debit Credit
12/3 P10,000 12/3 P10,000
1 1
0

Miscellaneous Expense
Debit Credit
12/1 P8,000 12/3 P8,000
5 1
0

ISCcool Merchandise
Trial Balance
December 31,2018

Account Title Debit Credit

Cash 249,210
Accounts receivable 42,500
Prepaid Rent 45,833
Office supplies 5,000
Computer equipment 18,000
Accounts payable 100,500
Notes payable 18,000
ISCool, capital 500,000
ISCool, Drawing 20,000
Freight out 1,040
Sales 105,000
Sales discount 850
Sales return and allowances 20,000
 Freight in 4,400
Purchases 340,500
Purchase discount 4,000
Purchases return and allowances 40,000
Utilities expense 3,000
Rent expense 4,167
Advertising Expense 5,000
Miscellaneous Expense 8,000
Total 767,500 767,500

Adjustments :
a) Unpaid salaries at the end of the month P10,000
b) Depreciation of furniture is P7,500
c) Unused office supplies for the year, P3,000
d) Doubtful account at the of the month estimated to be P6,000
e) Adjustment to prepaid rent used for the year.
f) A physical count of the merchandise inventory at year-end showed unsold merchandise
costing P30,000

No. ACCOUNT TITLE DEBIT CREDIT

1) Salaries expense 10,000

Salaries payable 10,000

2) Depreciation expense 7,500

Accumulated depreciation- computer equipment 7,500

3) Office Supplies expense 2,000

Office Supplies 2,000

4) Bad debts expense 6,000

 Allowance for Doubtful Account 6,000

5) Rent Expense 20,833

Prepaid Rent 20,833

ISCcool Merchandise
Adjusted Trial Balance
December 31,2018

Account Title Debit Credit

Cash 249,210
Accounts receivable 42,500
Allowance for Doubtful Account 6,000
Prepaid Rent 25,000
Office supplies 3,000
Computer equipment 18,000
Accumulated Depreciation- Equipment 7,500
Accounts payable 100,500
Notes payable 18,000
Salaries Payable 10,000
ISCool, capital 500,000
ISCool, Drawing 20,000
Freight out 1,040
 Sales 105,000
Sales discount 850
Sales return and allowances 20,000
Freight in 4,400
Purchases 340,500
Purchase discount 4,000
Purchases return and allowances 40,000
Utilities expense 3,000
Rent expense 25,000
Depreciation Expense 7,500
Office Supplies Expense 2,000
Bad Debt Expense 6,000
Advertising Expense 5,000
Salaries Expense 10,000
Miscellaneous Expense 8,000
Total 791,000 791,000

ISCool Merchandise
Statement of comprehensive income
For the month ended December 31,2018

Net Sales P84,150

LESS: Cost of goods Sold (50,900)
Gross profit 33,250

Distribution Cost (27,540)

Administrative Expense (40,000)
Finance cost -
Net loss (34,290)

Net sales

Net sales
Sales P105,000
LESS: Sales return and allowance (20,000)
 Sales discount (850)
Net Sales 84,150

Cost of good solve

Cost of goods Sold

Purchases 340,500
ADD: Freight in 4,400
LESS: Purchase return allowances (40,000)
Purchase discount (4,000)
Net purchases 300,900
LESS: Ending Inventory (250,000)
Cost of goods sold 50,900

*One-half of rent and utilities expense were used by non-sales department. One-fourth of the
salaries were allocated to non-department
Distribution cost

Distribution cost
Utilities Expense 1,500
Rent Expense 12,500
Salaries Expense 7,500
Advertising Expense 5,000
Freight-out 1,040
Distribution cost 27,540

Administrative expense

Administrative Expense
Utilities Expense 1,500
Rent Expense 12,500
Salaries Expense 2,500
Depreciation Expense 7,500
Bad Debt Expense 6,000
Office Supplies Expense 2,000
Miscellaneous Expense 8,000
Administrative Expense 40,000
 ISCool Merchandise
Statement of Changes in Equity
For the month ended December 31,2018

Beginning Balance, December 1,2018 P-0-

ADD: Initial contribution 500,000
LESS: Net Lost (34,290)
Drawing (20,000)
Ending balance, December 21,2018 P445,710
 ISCool Merchandise
Statement of Cash Flow
For the month ended December 31,2018

Cash flow from the operating activities

Net loss (P34,290)
ADD: depreciation expense 7,500
(P26,790)
Checking in working capital
Increase in Accounts receivable-net (P36,500)
Increase in Prepaid Rents (25,000)
Increase In Inventory (250,000)
Increase in Office supplies (3,000)
Increase in Account payable 100,500
Increase in Note payable 18,000
Increase in Salaries payable 10,000
Net cash flow used in operating activities (P212,790)
Cash flow from investing activities
Acquisition of computer equipment (P18,000)
Net cash flow used in investing activities (P18,000)

Cash flow from financing activities

Additional contribution of the owner P500,000
Owner’s Drawings (20,000)
Net cash flow provided by financing activities P480,000

Net change in cash P249,210

Cash and Cash equivalent, December 1, 2018 P-0-
Cash and Cash equivalent, December 31, 2018 P249,210

ISCool Merchandise
Statement of Financial Position
As of the month ended December 31, 2018

Account Title
ASSET
Current Asset
Cash P249,210
Accounts receivable 42,500
Allowance for Doubtful Account (6,000)
Prepaid Rent 25,000
Merchandise Inventory 250,000
Office supplies 3,000
Total current assets P557,710

Non-current asset
Computer Equipment 18,000
Accumulated depreciation- computer equipment (7,500)
 Total non-current asset P10,500

Total Asset P574,210

LIABILITIES AND EQUITY

Current liabilities
Accounts payable P100,500
Notes payable 18,000
Salaries Payable 10,000
Total Liabilities P128,500

Owner’s equity
ISCool, capital 445,710

Total liabilities and equity P574,210

CLOSING ENTRIES
2018
December
31 DEBIT CREDIT
Merchandise Inventory-ending 250,000
Sales 105,000
Purchase return and allowances 40,000
Purchase discount 4,000
Income summary 399,000
To close nominal accounts with credit balances

Income summary 433,290

Freight out 1,040
Sales return and allowance 20,000
Sales discount 850
Purchases 340,500
Freight in 4,400
Utilities expense 3,000
Rent expense 25,000
Salaries expense 10,000
Depreciation expense-equipment 7,500
 Office supplies expense 2,000
Bad debt expense 6,000
Advertising Expense 5,000
Miscellaneous Expense 8,000
To close nominal accounts with debit balances

ISCool, Capital 34,290

Income Summary 34,290
To close income summary to capital

ISCool, Capital 20,000

ISCool, Drawings 20,000
To close drawing account to capital

ISCool merchandise
Post-closing trial balance
December 31,2018

Account Title Debit Credit

Cash 249,210
Accounts receivable 42,500
Allowance for Doubtful Account 6,000
Prepaid Rent 25,000
Merchandise inventory 250,000
Office supplies 3,000
Computer equipment 18,000
Accumulated Depreciation- Equipment 7,500
Accounts payable 100,500
Notes payable 18,000
Salaries Payable 10,000
ISCool, capital 445,710
Total 587,710 587,710