ASSIGNMENT ON MERCHANDISING BUSINESS

Answer only. TH 12:00-3:00 Due Sunday 10/2 6:00 pm

Matalino Dao Trading’s adjusted trial balance for the year ending December 31, 2020 is not in proper
order. After classifying all the accounts, prepare the Income Statement (Multi-Step), Statement of
Changes in Equity and Statement of Financial Position, then answer the needed information below.

The adjusted trial balance as of December 31, 2020, of Matalino Dao Trading, a sole proprietorship
owned by Mr. Dao, a buy and sale enterprise, is presented below. It is not in proper order.

Debit Credit
Dao, Capital 222,000
Unearned Interest Income 32,000
Office Utility Expense 12,000
Accounts Payable 280,000
Tax Payable ( payable in 4 months) 4,000
Dao, Withdrawal 30,000
Repair and maintenance - office 11,000
Purchase discount 10,000
Depreciation Expenses – HO Bldg. 20,000
Notes Receivable (trade) 60,000
Trading securities 20,000
Repair and maintenance – store 10,000
Insurance Expense 8,000
Accrued Interest Expense 56,000
Purchase returns 70,000
Allowance for Bad Debts 12,000
Interest expense 12,000
Purchases 340,000
Prepaid Interest Expense 8,000
Advertising expense 12,000
Office Salary Expense 92,000
Land 150,000
Interest Income 18,000
Building 400,000
Furniture and equipment 50,000
Acc. Depreciation – Bldg. 34,000
Acc. Depreciation – Furniture and Equipt. 6,000
Unused Office Supplies 4,000
Rent Receivable 12,000
Sales discount 10,000
Sales returns and allowances 40,000
Merchandise inventory, Jan 1 20,000
Freight in 2,000
Freight out 8,000
Office Supplies Expense 14,000
Loss on sale of trading securities 2,000
Tools 12,000
Cash 50,000
Rent Income 20,000
Gain on sale of used furniture 2,000
Accounts Receivable 310,000
Transportation Expense 5,000
 Salesmen commission 42,000
Bank loan payable (payable P25,000
every June 1 and December 1) 300,000
Sales 700,000
________ _________
Total 1,766,000 1,766,000
Additional information:
1. Merchandise inventory, December 31, 2020 – P50,000.

Task:
Prepare the Income Statement based on the Philippines Accounting Standard No. 1
Prepare the Statement of Changes in Equity; and
Prepare the Statement of Financial Position based on the Philippine Accounting Standard No. 1.

INSTRUCTIONS: On the blank indicate the correct answers.

1. - The net sales for 2018 is P __________________

2. - The cost of sales or cost of goods sold for 2018 is P __________________

3. The gross profit on sales is P __________________

4. The other income for 2018 is P _________________

5. The total income is P _______________________

6. The selling expense for 2018 is P __________________

7. The administrative expense for 2018 is P ___________________

8. The total other expenses for 2018 is P _________________

9. The finance cost for 2018 is P ____________________

10. the total expenses is P _____________________

11. The net income for 2018 is

12 – The total current assets as of December 31, 2018 is P _________________

13 - The total non-current assets as of December 31, 2018 is P ________________

14 - The total assets as of December 31, 2018 is P ____________________

15 - The total current liabilities as of December 31, 2018 is P _________________

16 - The total non-current liabilities as of December 31, 2018 is P _________________

17 - The total liabilities as of December 31, 2018 is P ___________________

18 - The total owner’s equity as of December 31, 2018 is P ___________________

THE END
ANSWER

Matalino Dao Trading (PAS No. 1)

Income Statement
For the Year Ended, December 31, 2018

Notes
Income:
Net sales 1 P 650,000
Cost of goods sold 2 ( 232,000)
Gross profit from sales 418,000
Other income 3 40,000
Total income P 458,000

Expenses:
Selling expenses 4 ( 72,000)
Administrative expenses 5 ( 162,000)
Other expenses 6 ( 2,000)
Financing costs 7 ( 12,000)
Total ( 248,000)

Net Income for the Year P 210,000

Statement of Changes in Equity

Dao, capital, beginning 222,000
Net income 210,000
Total 432,000
Dao, withdrawal ( 30,000)
Dao, capital, end 402,000

Matalino Dao Trading (PAS No. 1)

Statement of Financial Position
As at December 31, 2018

Assets Liabilities and Owners’ Equity

Note Note
Current assets 8 502,000 Current liabilities 10 422,000
Non-current assets 9 572,000 Non-current liabilities 11 250,000
Total assets 1,074,000 Total 672,000

Owner’s equity 402,000

Total liabilities and O. Equity 1,074,000

Notes to Financial Statements:

Note 1. Net Sales

Sales P 700,000
Sales returns and allowances ( 40,000)
 Sales discounts ( 10,000)
Net sales P 650,000
Note 2. Cost of Goods Sold
Purchases P 340,000
Purchase returns and allowances ( 70,000)
Purchase discounts ( 10,000)
Net purchases 260,000
Freight In 2,000
Net cost of purchases P 262,000
Merchandise inventory, Jan. 1 20,000
Total cost of goods available for sale 282,000
Merchandise inventory, December 31 ( 50,000)
Cost of goods sold P 232,000

Note 3. Other Income

Interest income 18,000
Rent income 20,000
Gain on sale of used furniture 2,000
Total P 40,000

Note 4. Selling Expenses

Repair and maintenance – store 10,000
Advertising Expense 12,000
Freight out 8,000
Salesmen commission 42,000
Total P 72,000

Note 5. Administrative Expenses

Office Utility expense 12,000
Depreciation expense – Bldg. 20,000
Insurance expense 8,000
Office Salary expense 92,000
Office supplies expense 14,000
Repair and maintenance expense – office 11,000
Transportation expense 5,000
Total P 162,000

Note 6. Other Expense

Loss on Sale of Trading Securities – P 2,000

Note 7. Finance costs

Interest expense P12,000

Note 8. Current Assets

Cash 50,000
Trading securities 20,000
Trade and Non-trade receivables:
Accounts receivable 310,000
Allowance for Bad Debts ( 12,000)
Notes receivable (trade) 60,000
Rent receivable 12,000
Total receivables 370,000
Merchandise inventory (end) 50,000
Prepaid Expenses:
Prepaid interest expense 8,000
Unused office supplies 4,000
 Total prepaid expenses 12,000
Total Current Assets 502,000

Note 9. Non-current assets

Tools 12,000
Land 150,000
Building 400,000
Acc. Depreciation – Bldg. ( 34,000)
Furniture and equipment 50,000
Acc. Depreciation – Furn. and Equipment ( 6,000)
Total 572,000

Note 10. Current Liabilities

Accounts payable 280,000
Tax payable 4,000
Accrued interest expense 56,000
Unearned interest Income 32,000
Bank loan – current portion 50,000
Total 422,000

Note 11. Non-current Liabilities

Bank Loan Payable – non-current portion 150,000 (P200,000 – P50,000)