Republic of the Philippines

BATANGAS STATE UNIVERSITY

The National Engineering University
Pablo Borbon Campus
Rizal Avenue Ext., Batangas City, Batangas, Philippines 4200

COLLEGE OF ACCOUNTANCY, BUSINESS, ECONOMICS AND

INTERNATIONAL HOSPITALITY MANAGEMENT

PRACTICE SET ON FINANCIAL

ACCOUNTING

ACCOUNTING PROCESS OF
SHIRT “R” US MERCHANDISING

IN PARTIAL FULFILLMENT OF THE COURSE SUBJECT

ACC101: FINANCIAL ACCOUNTING AND REPORTING 1

FIRST SEMESTER, AY 2023-2024

SUBMITTED TO:

WENNIE F. MEDINA, CPA MBA

INSTRUCTOR

BACHELOR OF SCIENCE IN ACCOUNTANCY

GROUP LEADER: (Name)
MEMBERS: (Names)

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 Republic of the Philippines
BATANGAS STATE UNIVERSITY
COLLEGE OF ACCOUNTANCY, BUSINESS, ECONOMICS AND
INTERNATIONAL HOSPITALITY MANAGEMENT

THE COMPANY

Shirt “R” Us Merchandising, a VAT-registered entity owned and managed by Han King, was
established on January 1, 2020. Mr. King is an accomplished businessman, who wanted to venture in a
ready-to wear and fashionable products. It caters to majority of students . The business adopts the
expense method of prepayments and income method on pre-collection. Below is the initial Chart of
Accounts of the business:

CODE ACCOUNT TITLE CODE ACCOUNT TITLE

Assets Revenues
101 Cash 401 Sales
102 Accounts receivable 402 Sales discount
103 Allowance for uncollectible accounts 403 Sales returns and allowances
104 Notes Receivable 404 Interest Income
105 Interest Receivable
106 Merchandise inventory
107 Office supplies
108 Store supplies Cost of Sales
109 Prepaid insurance 501 Purchases
110 Prepaid rent 502 Freight-in
111 Input tax 503 Purchases discount
112 Furniture and fixtures 504 Purchase returns and allowances
113 Accumulated depreciation – Furniture &
Fixtures Expenses
114 Equipment 601 Salaries expense
115 Accumulated depreciation- Equipment 602 Rent expense
116 Service Vehicle 603 Office supplies expense
117 Accumulated Depreciation-Service Vehicle 604 Advertising Expense
Liabilities 605 Insurance expense
201 Accounts payable 606 Store supplies expense
202 Notes payable 607 Utilities expense
203 Salaries payable 608 Depreciation expense-Store Furniture & Fixt.
204 Utilities payable 609 Depreciation expense-Store equipment
205 Interest payable 610 Taxes and licenses
206 SSS premium payable 611 Uncollectible accounts
207 Pag-ibig premium payable 612 Freight-out
208 Philhealth payable 613 SSS contribution
209 Withholding tax payable 614 Pag-ibig contribution
210 Output tax payable 615 Philhealth Contribution
211 VAT payable 616 Interest Expense

Equity
301 King, Capital
302 King, Withdrawals
303 Income Summary

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The transactions for the month of December were as follows:

Dec .
1  Mr. KING invested the following to the business:
 Cash P450,000
 Merchandise Inventory 500,000
 Store furniture and fixtures 120,000
 Store equipment 90,000

2  Issued checks for the following:

 Rent for three (3) months P15,000 starting December 2020, Voucher No. 001, Check
No.120001 paid to Diamond Commercial.
 Office supplies, P10,000 and store supplies, P8,000; Voucher No. 002 Check No.
120002 issued to Quality Supplies.
 Insurance coverage for five (5) months effective December 1, 2018, P15,000;
Voucher No.003 , Check No. 120003 issued to Phil-Am Plans Co.
 Taxes and Licenses P8,000; Voucher No. 004, Check No. 120004 issued to City
Treasurer.

3  Sold merchandise on account to Gel Trading , P90,000, exclusive of VAT. Terms 2/10,
n/30. FOB destination, Invoice No.1001, Voucher No. 005 and issued Check No. 120005
as payment of freight P2,000 to Hook Forwarders.
 Received Check No. 89102 from Prince Trading for merchandise sold on cash basis
amounting to P28,000. Selling price of merchandise is P25,000 plus VAT of P3,000.
Issued OR No. 0001, Voucher No. 006 for the freight , Check No. 120006, P1,000 issued
to Hook Forwarders.
5  Bought assorted merchandise on account from Zel Trading , P60,000, exclusive of VAT,
terms 2/10;n/30, FOB shipping point. RR No. 1204 , Voucher No. 007 for freight, check
issued No. 120007 for P1,800 to Hook Forwarders.
8  Sold merchandise on account to ONE Merchandising , P120,000 exclusive of VAT, terms
10, 2/10; n/30 FOB shipping point , Invoice No. 1002.
10
 Received debit memo (DM) number 2003 from Gel Trading due to returned merchandise,
P2,000.

 Received Check No. 20036 from Gel Trading as full payment of the account. Issued OR
12
No. 0002.
 Purchased merchandise on account from Nica Merchandising P60,000, exclusive of VAT,
RR No. 1205, terms 2/10; n/30 FOB shipping point. Voucher No. 008 for payment of
freight, P1,500 and issued check No. 120008 to Hook Forwarders.

13  Issued debit memo No. 10001 to Zel Trading for damaged merchandise P3,000
15  Issued Check No. 120009 to Josen Trading for the cash purchase of merchandise P40,000
exclusive of VAT per RR No. 1206. Voucher No. 009 for the freight , P1,000. Issued
Check No. 120010 to Hook Forwarders.
 Issue Check No. 120011 to Zel Trading as full payment of the account, Voucher No.010.
 Paid salaries of the staff P25,000, Voucher No. 011 and issued Check No. 120012.
 Issued credit memo (CM) #1001 to ONE Merchandising for returned merchandise,
P3,000.

17  Sold merchandise on account to Gel Trading P80,000 exclusive of VAT, terms 2/10;n/30,
FOB destination per Invoice No. 1003, issued Voucher No. 012, Check No.120013 as
payment of freight for P1,000 to Hook Forwarders.
 Received check number 35012 from ONE Merchandising as full payment of the account
and issued OR#003.
19  Acquired additional display equipment from RAM‘s Steel Parts, Inc., VAT inclusive,
P65,000 on 30 days term as per RR. No. 1207.
20  Issued DM #2001 to Nica Merchandising for damaged merchandise, P1,000.
22  Issued check No. 120014 to Nica Merchandising as full payment of the account , Voucher
No. 013 was prepared for the payment.
23  Issued CM No. 1002 to Gel Trading for damaged merchandise, P2000.
25  Bought merchandise on account from Zel Trading, P50,000 exclusive of VAT, terms
2/10;n/30,FOB destination, RR No. 1208.
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 27
 Received check No. 89601 from Gel Trading as full payment of the account. Issued
OR#004.
28
 Sold merchandise on account to Jen Trading , P60,000 exclusive of VAT, terms 2/10;n/30
FOB shipping point, Invoice No. 1004.
30
 Paid semi-monthly salary per Voucher No.014 and issued Check No. 120015 in the name
of the cashier :
 Cash in Bank P450,000
 Salaries 40,000
Less: SSS 1,000
Pag-ibig 500
Philhealth 500
Withholding tax 4,000 6,000

Net Cash paid 34,000

 Employer’s share per voucher No. 015 : SSS 1,000; Pag-ibig P500 and Philhealth P500.

Additional data for adjustments:

1. Adjust prepayments for the expired portion.
2. Accruals: Utilities P3,500 and Salaries P4,000.
3. Store furniture and Fixtures depreciated at 10 years ; Store equipment at 6 years and both will no
longer have scrap value.
4. Expired supplies-Office supplies P6,000 and store supplies P5,000.
5. Estimated doubtful accounts is 5% of the outstanding accounts receivable.
6. Merchandise Inventory, December 31, P540,000

REQUIRED:
1. Record the transactions using special journals.
2. Post to the General and Subsidiary Ledgers.
3. Prepare the Trial Balance (in the worksheet)
4. Prepare the necessary adjusting entries.
5. Complete the Worksheet. (Landscape, font size 10, remove Adjusted Trial balance column to fit
in the page.)
6. Prepare closing entries and post to the general ledger.
7. Prepare the primary financial statement in good form: Statement of Changes in Financial
Position, Income Statement, Statement of Changes in Owner’s Equity and the Statement of Cash
Flows.
8. Prepare Post Closing Trial Balance.

Records to be maintained:
1. Cover page
2. Special Journals-Sales Journal, Purchase Journal, Cash Receipts Journal and Cash
Disbursement Journal.
3. General Journal – two (2) columns journal (with sample format) for entries that
cannot be accommodated in the special journals; for recording of Adjusting Entries, and
Closing Entries.
4. General Ledger and subsidiary ledgers (with sample format)
5. Statement of Financial Position must be in account format.
6. Narrative about SHIRT “R” US Merchandising business.
7. Evaluation of members

PLEASE DO NOT SUBMIT COPY OF GENERAL INSTRUCTION AND THE RUBRICS.

General instructions:
1.The problem must be typed neatly and included in the completed practice set. Use LONG bond
for each page, Times Roman font 11.

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2. The members of the group and leader must be clearly indicated in the cover page . (sample is
provided).

3. The Rubrics for grading will be based on:

Category Description Percentage

Accuracy Figures derived as a result of 50%
the accounting process are all
correct and in balance.
Presentation The project is presented neatly 25%
, arranged in order of the
accounting cycle and financial
statements are all presented in
good form or in accordance
with what they have learned in
class.
Organization Division of labor is evident in 10%
the project and data are well
checked in terms of sentence
construction, grammar, proper
use of accounts, spelling, etc
Timeliness Submitted on time 10%
Member’s output evaluation Each member of the group will be 5%
graded by the leader because the output
must be the result of coordinated effort
of the members and must not be the
sole responsibility of the leader.
TOTAL 100%

SAMPLE SPECIAL JOURNALS

SALES JOURNAL

DATE CUSTOMER PR INV. Terms Accounts Sales Output Tax

2018 No. Receivable (CR) (CR)
(DR)
Dec 3

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 PURCHASE JOURNAL

CREDITS DEBITS
DATE RR SUPPLIER PR Accounts Purchases Input Other Accounts
No. Payable VAT
Account PR Amt
2018 Title
Dec 5

ACCOUNTS RECEIVABLE -Subsidiary Ledger

(Customer’s Name)

DATE PARTICULARS PR DEBIT CREDIT BALANCE

2018
Dec 3

ACCOUNTS PAYABLE -Subsidiary Ledger

(Supplier’s Name)

DATE PARTICULARS PR DEBIT CREDIT BALANCE

2018
Dec 5

NOTE:
The number of Subsidiary Ledgers depend on the number of customers and suppliers the
company has. One SL per customer or supplier/creditor and the total balances of all SL must
equal the amount of the Controlling Account-Accounts Receivable or Accounts Payable.

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 Summary of Accounts Receivable Subsidiary Ledgers

DATE Customer’s Name Balance

Dec. 31 Customer A P
B
C
D
E Summary
TOTAL of
Accounts
Payable Subsidiary Ledgers

DATE Customer’s Name Balance

Dec. 31 Supplier 1 P
2
3
4
5 ***Total
TOTAL must tally
with your
control Accounts- A/R and A/P.

CASH RECEIPTS JOURNAL

Page 1

Date OR Description/Customer PR Accounts Output Sundry/Other Dr Cr

No. Cash Sales Receivable VAT Accounts
2020 (Cr) (Cr)

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 CASH DISBURSEMENT JOURNAL Page 1

Date Check Description /Supplier Credits Debits Sundry/Other Dr Cr

No. Accounts
2020 Cash Purchase Accounts Input
Discounts Payable Purchases VAT

Note: Entries in the Sundry account column are those receipts or disbursements other than those
with specific columns.

SAMPLE GENERAL JOURNAL

Page 1
DATE Account Titles and Explanation PR DEBIT CREDIT
Dec 1 Sales Returns
Accounts Receivable-Customer A

SAMPLE GENERAL LEDGER

Provide a columnar ledger notebook that will serve as the General ledger
with contents as shown in the given sample. One account title per page
and account codes.

Account Name: Cash Code No. 101

Date Explanation PR Debit Credit Balance

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Account Name: Accounts Receivable Code No. 102
Date Explanation PR Debit Credit Balance

SAMPLE EVALUATION FORM

Name of Member Rating

1.
2.
3.
4.
5.

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