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Accountancy, Business,
and Management

NCIII
Bookkeeping
(Merchandising Operations)
Presented by:
George M. Valeriano

© 2009 Cengage Learning

Sta. Magdalena National High School
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Service vs
Merchandising
Service Merchandising
Income Statement Income Statement
*Net Sales
Revenue Minus
Minus Cost of Sales
Expenses Equals
Equals Gross Profit
Profit add or minus
Income or Expense
Equals
Profit
© 2009 Cengage Learning
Sta. Magdalena National High School
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Service vs
Merchandising
Net Sales

Sales
Minus
Sales Return
Sales Discount

Net Sales

© 2009 Cengage Learning

Sta. Magdalena National High School
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Service vs
Merchandising
ALL Merchandise
Inventory account
Purchases

Freight in

Purchase Return
Purchase Discount

© 2009 Cengage Learning

Sta. Magdalena National High School
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Merchandising
• FREIGHT TERMS
» OWNERSHIP WHO PAYS
FREIGHT PREPAID SELLER SELLER
FOB DESTINATION
FREIGHT COLLECT SELLER BUYER

» OWNERSHIP WHO PAYS

FREIGHT PREPAID BUYER SELLER
FOB SHIPPING POINT
FREIGHT COLLECT BUYER BUYER

© 2009 Cengage Learning

Sta. Magdalena National High School
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Merchandising
THE CLOSING ENTRY METHOD
Dec. 31 Income Summary 000 xxx
Merchandise Inventory beg. Xxx
temporary accounts with Debit bal. xxx
To close temporary account with debit
balances and to remove beginning.
inventory

Dec. 31 Merchandise Inventory ending 000 xxx

temporary accounts with credit bal. Xxx
income summary xxx
To close temporary account with credit
balances and to established ending.
inventory

© 2009 Cengage Learning

Sta. Magdalena National High School
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Transactions

date Account Title and Explaination P.R. Debit Credit

Feb-01 cash 110 113,000.00
accounts receivable 120 113,000.00
to record collection sales on account
date
date Account
Account Title
Title and
and Explaination
Explaination P.R.
P.R. Debit
Debit Credit
Credit
Feb-02 accounts payable 210 64,000.00
Feb-02 accounts payable 210 64,000.00
cash 110 62,080.00
cash
purchase discounts 130
530 62,080.00
1,920.00
MERCHANDISE
to INVENTORY
record payment on account with 3% discount 530 1,920.00

64,000 x .97 = 62, 080

64,000 – 62,080 = 1920

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date Account Title and Explaination P.R. Debit Credit

Feb-04 MERCHANDISE INVENTORY 130 170,000.00
accounts payable 210 170,000.00
to record purchase on account term; fob shipping point 3/10, n/30

date Account Title and Explaination P.R. Debit Credit

Feb-05 accounts receivable 120 270,000.00
sales 410 270,000.00
to record sales on account term: fob shipping point 2/10, n/30
Cost of sales 202,500.00
merchandise inventory 130 202,500.00
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date Account Title and Explaination P.R. Debit Credit

Feb-07 advertising expense 670 6,000.00
cash 110 6,000.00
to record payment for advertising

date Account Title and Explaination P.R. Debit Credit

Feb-07 cash 110 250,000.00
sales 410 250,000.00
to record cash sales
Cost of sales 187,500.00
merchandise inventory 130 187,500.00
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date Account Title and Explaination P.R. Debit Credit

Feb-08 accounts payable 210 170,000.00
cash 110 164,900.00
merchandise inventory 130 5,100.00
to record payment purchase on account with 3% discount

date Account Title and Explaination P.R. Debit Credit

Feb-09 merchandise inventory 130 4,000.00
cash 110 4,000.00
to record transportation cost on feb 4 transactions
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date Account Title and Explaination P.R. Debit Credit

Feb-10 sales return and allowances 420 70,000.00
accounts receivable 120 70,000.00
to record returned goods
merchandise inventory 130 52,500.00
cost of sales 52,500.00
date Account Title and Explaination P.R. Debit Credit 12
Feb-05 accounts receivable 120 270,000.00
sales 410 270,000.00
to record sales on account term: fob shipping point 2/10, n/30

date Account Title and Explaination P.R. Debit Credit

Feb-12 cash 110 196,000.00
sales discounts 430 4,000.00
accounts receivable 120 200,000.00
to record collection sales on account

270,000 – 70,000 (SRA) = 200,000

200,000 x .02 (discount) = 4,000

200,000 – 4,000 = 196,000

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date Account Title and Explaination P.R. Debit Credit

Feb-14 interest expense 680 26,000.00
cash 110 26,000.00
to record interest payment on mortgage payable
date Account Title and Explaination P.R. Debit Credit
Feb-15 salaries expense 610 51,000.00
cash 110 51,000.00
to record payment for employee salaries
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date Account Title and Explaination P.R. Debit Credit

Feb-16 accounts receivable 120 392,000.00
sales 410 392,000.00
to record sales on account term: fob destination 2/10, n/30
Cost of sales 294,000.00
merchandise inventory 130 294,000.00
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date Account Title and Explaination P.R. Debit Credit

Feb-18 transportation-out 660 4,000.00
cash 110 4,000.00
to record transportation cost on sales
date Account Title and Explaination P.R. Debit Credit
Feb-19 supplies 140 21,000.00
cash 110 21,000.00
to record purchase of supplies on cash
date Account Title and Explaination P.R. Debit Credit
Feb-20 merchandise inventory 130 125,000.00
accouns payable 210 125,000.00
to record purchase on account term; fob distination 3/10, n/30
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date Account Title and Explaination P.R. Debit Credit

Feb-22 miscellaneous expense 690 7,000.00
cash 110 7,000.00
to record payment for miscellaneous expenses
date Account Title and Explaination P.R. Debit Credit
Feb-23 cash 110 384,160.00
sales discounts 430 7,840.00
accounts receivable 120 392,000.00
to record collection sales on account

date Account Title and Explaination P.R. Debit Credit

Feb-24 merchandise inventory 130 373,000.00
accounts payable 210 373,000.00
to record purchase on account term; fob shipping point 3/10, n/30
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date Account Title and Explaination P.R. Debit Credit

Feb-24 merchandise inventory 540 9,000.00
cash 110 9,000.00
to record transportation cost
Feb-25 accounts receivable 120 420,000.00
sales 410 420,000.00
to record sales on account term, fob shipping point; 2/10, n/30
Cost of sales 315,000.00
merchandise inventory 130 315,000.00
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date Account Title and Explaination P.R. Debit Credit

Feb-26 sales return and allowances 420 71,000.00
accounts receivable 120 71,000.00
to record returned goods
merchandise inventory 130 53,250.00
cost of sales 53,250.00
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date Account Title and Explaination P.R. Debit Credit

Feb-28Buenaflor withdrawals 320 400,000.00
cash 110 400,000.00
Feb-28 accounts payable 210 25,000.00
Feb-28accounts payable 210 25,000.00
merchandise inventory 139 25,000.00
purchase return and allowances 520 4,737,750.00 4,737,750.00
25,000.00
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CASH ACCOUNT NO. 110

DATE EXLANATION J.R. DEBIT CREDIT BALANCE
Feb-01 cash beginning 33,000.00 33,000.00
Feb-01 cash collection from costumer 113,000.00 146,000.00
Feb-02 cash paid to supplier 62,080.00 83,920.00
Feb-07 cash paid for advertising 6,000.00 77,920.00
Feb-07 cash collection from costumer 250,000.00 327,920.00
Feb-08 cash paid to supplier 164,900.00 163,020.00
Feb-09 cash paid for transportation-in 4,000.00 159,020.00
Feb-12 cash collection from costumer 196,000.00 355,020.00
Feb-14 cash paid for interest 26,000.00 329,020.00
Feb-15 cash paid for salaries 51,000.00 278,020.00
Feb-18 cash paid for transportation-out 4,000.00 274,020.00
Feb-19 cash paid for supplies 21,000.00 253,020.00
Feb-22 cash paid for miscellaneous expense 7,000.00 246,020.00
Feb-23 cash collection from costumer 384,160.00 630,180.00
Feb-24 cash paid for transportation-in 9,000.00 621,180.00
Feb-28 cash paid for buenaflor withdrawal 400,000.00 221,180.00

J-1

RUNNING
BALANCE
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ACCOUNTS RECEIVABLE ACCOUNT NO. 120

DATE EXLANATION J.R. DEBIT CREDIT BALANCE
Feb-01 beginning 192,000.00 192,000.00
Feb-01 sales on account paid 113,000.00 79,000.00
Feb-05 sales on account 270,000.00 349,000.00
Feb-10 sales return 70,000.00 279,000.00
Feb-12 sales on account paid 200,000.00 79,000.00
Feb-16 sales on account 392,000.00 471,000.00
Feb-23 sales on account paid 392,000.00 79,000.00
Feb-25 sales on account 420,000.00 499,000.00
Feb-26 71,000.00 428,000.00
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MERCHANDISE INVENTORY ACCOUNT NO. 130

DATE EXLANATION J.R. DEBIT CREDIT BALANCE
Feb-01 beginning 413,000.00 413,000.00
Feb-02 1,920.00 411,080.00
Feb-04 170,000.00 581,080.00
Feb-05 202,500.00 378,580.00
Feb-07 187,500.00 191,080.00
Feb-08 5,100.00 185,980.00
Feb-09 4,000.00 189,980.00
Feb-10 52,500.00 242,480.00
Feb-16 294,000.00 - 51,520.00
Feb-20 125,000.00 73,480.00
Feb-24 373,000.00 446,480.00
Feb-24 9,000.00 455,480.00
Feb-25 315,000.00 140,480.00
Feb-26 53,250.00 193,730.00
Feb-28 25,000.00 168,730.00
168,730.00
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SUPPLIES ACCOUNT NO. 140

DATE EXLANATION J.R. DEBIT CREDIT BALANCE
Feb-01 beginning 51,000.00 51,000.00
Feb-19 purchases 21,000.00 72,000.00
72,000.00

PREPAID INSURANCE ACCOUNT NO. 150

DATE EXLANATION J.R. DEBIT CREDIT BALANCE
Feb-01 beginning 48,000.00 48,000.00
48,000.00
48,000.00

LAND ACCOUNT NO. 160

DATE EXLANATION J.R. DEBIT CREDIT BALANCE
Feb-01 beginning 460,000.00 460,000.00
460,000.00
460,000.00
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BUILDING ACCOUNT NO. 170

DATE EXLANATION J.R. DEBIT CREDIT BALANCE
Feb-01 beginning 1,750,000.00 1,750,000.00
1,750,000.00
1,750,000.00

ACCUMULATED DEP-BUILDING ACCOUNT NO. 175

DATE EXLANATION J.R. DEBIT CREDIT BALANCE
Feb-01 beginning 350,000.00 350,000.00
350,000.00
350,000.00

EQUIPMENT ACCOUNT NO. 180

DATE EXLANATION J.R. DEBIT CREDIT BALANCE
Feb-01 beginning 2,310,000.00 2,310,000.00
2,310,000.00
2,310,000.00

ACCUMULATED DEP-EQUIPENT ACCOUNT NO. 185

DATE EXLANATION J.R. DEBIT CREDIT BALANCE
Feb-01 beginning 630,000.00 630,000.00
630,000.00
630,000.00
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ACCOUNTS PAYABLE ACCOUNT NO. 210

DATE EXLANATION J.R. DEBIT CREDIT BALANCE
Feb-01 108,000.00 108,000.00
Feb-02 64,000.00 44,000.00
Feb-04 170,000.00 214,000.00
Feb-08 170,000.00 44,000.00
Feb-20 125,000.00 169,000.00
Feb-24 373,000.00 542,000.00
Feb-28 25,000.00 517,000.00

MORTGAGE PAYABLE ACCOUNT NO. 230

DATE EXLANATION J.R. DEBIT CREDIT BALANCE
Feb-01 beginning 2,600,000.00 2,600,000.00
2,600,000.00
2,600,000.00

BUENAFLOR CAPITAL ACCOUNT NO. 310

DATE EXLANATION J.R. DEBIT CREDIT BALANCE
Feb-01 beginning 1,569,000.00 1,569,000.00
1,569,000.00
1,569,000.00

BUENAFLOR WITHDRAWAL ACCOUNT NO. 320

DATE EXLANATION J.R. DEBIT CREDIT BALANCE
Feb-01 beginning 400,000.00 400,000.00
400,000.00
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SALES ACCOUNT NO. 410

DATE EXLANATION J.R. DEBIT CREDIT BALANCE
Feb-05 270,000.00 270,000.00
Feb-07 250,000.00 520,000.00
Feb-16 392,000.00 912,000.00
Feb-25 420,000.00 1,332,000.00
1,332,000.00

SALES RETURN AND ALLOWANCES ACCOUNT NO. 420

DATE EXLANATION J.R. DEBIT CREDIT BALANCE
Feb-10 70,000.00 70,000.00
71,000.00 141,000.00
141,000.00

SALES DISCOUNTS ACCOUNT NO. 430

DATE EXLANATION J.R. DEBIT CREDIT BALANCE
Feb-04 4,000.00 4,000.00
Feb-28 7,840.00 11,840.00
11,840.00
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COST OF SALES ACCOUNT NO. 510

DATE EXLANATION J.R. DEBIT CREDIT BALANCE
Feb-05 202,500.00 202,500.00
Feb-07 187,500.00 390,000.00
Feb-10 52,500.00 337,500.00
Feb-16 294,000.00 631,500.00
Feb-25 315,000.00 946,500.00
Feb-26 53,250.00 893,250.00
893,250.00
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SALARIES EXPENSE ACCOUNT NO. 540

DATE EXLANATION J.R. DEBIT CREDIT BALANCE
Feb-15 51,000.00 51,000.00
51,000.00
51,000.00

TRANSPORTATION OUT ACCOUNT NO. 660

DATE EXLANATION J.R. DEBIT CREDIT BALANCE
Feb-18 4,000.00 4,000.00
4,000.00
4,000.00

ADVERTISING EXPENSE ACCOUNT NO. 670

DATE EXLANATION J.R. DEBIT CREDIT BALANCE
Feb-07 6,000.00 6,000.00
6,000.00
6,000.00
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INTEREST EXPENSE ACCOUNT NO. 680

DATE EXLANATION J.R. DEBIT CREDIT BALANCE
Feb-14 26,000.00 26,000.00
26,000.00
26,000.00

MISCELLANEOUS EXPENSE ACCOUNT NO. 690

DATE EXLANATION J.R. DEBIT CREDIT BALANCE
Feb-14 7,000.00 7,000.00
7,000.00
7,000.00
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Trial Balance

Trial Balance
Account Title Debit Credit
cash 221,180.00
accounts receivable 428,000.00
Merchandise inventory 168,730.00
prepaid insurance 48,000.00
supplies 72,000.00
Land 460,000.00
Buliding 1,750,000.00
accum. Depreciation-building 350,000.00
equipment 2,310,000.00
accum. Depreciation - equipment 630,000.00
accounts payable 517,000.00
Mortgage payable 2,600,000.00
BUENAFLOR, capital 1,569,000.00
BUENAFLOR, withdrawals 400,000.00
income summary
sales 1,332,000.00
sales return and allowances 141,000.00
Sales discount 11,840.00
COST OF SALE 893,250.00
salaries expense 51,000.00
transportation out 4,000.00
advertising expense 6,000.00
interest expense 26,000.00
miscellaneous espense 7,000.00
6,998,000.00 6,998,000.00
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Income statement

business name
Statement of Financial Performance
For the Month Ended February 28, 2017

Sales
Gross sale 1,332,000.00
less:
sales return and allowances 141,000.00
sales discounts 11,840.00 152,840.00
Net Sales 1,179,160.00
Cost of Sales 893,250.00
GROSS PROFIT 285,910.00
Operating expenses
salaries 51,000.00
transportation out 4,000.00
advertising expense 6,000.00
interest expense 26,000.00
miscellaneous expense 7,000.00
total operating expense 94,000.00
Profit 191,910.00
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Balance Sheet

business name
Statement of Financial Position
For the Month Ended February 28, 2017

ASSET
current asset
cash 221,180.00
accounts receivable 428,000.00
Merchandise inventory 168,730.00
Supplies 72,000.00
Prepaid insurance 48,000.00
total current asset 937,910.00
non-current asset
land 460,000.00
building 1,750,000.00
less: acc. Depreciation 350,000.00 1,400,000.00

office equipment 2,310,000.00

less: acc. Depreciation 630,000.00 1,680,000.00
total non current asset 3,540,000.00
TOTAL ASSET 4,477,910.00

LIABILITIES AND EQUITY

LIABILITIES
current liabilities
accounts payable 517,000.00
non-current liabilities
mortgage payable 2,600,000.00
total liabilities 3,117,000.00
EQUITY

Buenaflor capital 1,360,910.00

TOTAL LIABILITIES AND EQUITY 4,477,910.00
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Changes in Equity

business name
Change on Owners Equity
For the Month Ended February 28, 2017

Buenaflor, Capital 2/1/2017 1,569,000.00

add: profit 191,910.00
totals 1,760,910.00
less:
Buenaflor, Withdrawals 400,000.00
Buenaflor, Capital 2/28/2017 1,360,910.00
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business name
Statement of cash flow
For the Month Ended February 28, 2017

Cash flow form operating Activities

Cash collect from Cutomers 943,160.00
cash paid to supplier 226,980.00
cash paid to employee 51,000.00
cash paid for other operating activities 51,000.00
cash paid for interest 26,000.00 588,180.00

Cash flow form Investing Activities - -

Cash flow form financing Activities

buenaflor withdrawals 400,000.00 400,000.00
Net increase (decrease) in cash 188,180.00
Cash balance at the beginning of the period 33,000.00
Cash balance at the end of the period 221,180.00
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date Account Title and Explaination P.R. Debit Credit

CLOSING ENTRIES

Feb-28 merchandise inventory 2/28/2017 -

sales 410 1,332,000.00
income summary 1,332,000.00
to record closing of temporary account with
credit balances
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date Account Title and Explaination P.R. Debit Credit

CLOSING ENTRIES
Feb-28 income summary 1,140,090.00
cost of sales 893,250.00
sales return and allowances 141,000.00
Sales discount 11,840.00
salaries expense 51,000.00
transportation out 4,000.00
advertising expense 6,000.00
interest expense 26,000.00
miscellaneous espense 7,000.00
To close temporary account with debit balances

Feb-28 income summary 191,910.00

Buenaflor, Capital 191,910.00

Feb-28 Buenaflor, Capital 400,000.00

Buenaflor, withdrawal 400,000.00
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INCOME SUMMARY ACCOUNT NO. 310

DATE EXLANATION J.R. DEBIT CREDIT BALANCE
Feb-28 1,332,000.00 1,332,000.00
Feb-28 1,140,090.00 191,910.00
191,910.00
NOTE: RECORD ALL ADJUSTMENT TO ITS ACCOUNTS
ALL ACCOUNTS IN INCOME STATEMENT ARE NEED TO BE
CLOSED OR MUST BE ZERO (0)
(TEMPORARY ACCOUNTS)
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name of entity
Worksheet
For the ___________ Ended ________________

Post Closing Trial Balance

No. Account Title Debit Credit
cash 221,180.00
accounts receivable 428,000.00
Merchandise inventory 168,730.00
prepaid insurance 48,000.00
supplies 72,000.00
Land 460,000.00
Buliding 1,750,000.00
accum. Depreciation-building 350,000.00
equipment 2,310,000.00
accum. Depreciation - equipment 630,000.00
accounts payable 517,000.00
Mortgage payable 2,600,000.00
BUENAFLOR, capital 1,360,910.00
5,457,910.00 5,457,910.00
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• PART II – ADJUSTING ENTRY SEPARATE

PROBLEM 3 ITEMS EQUIVALENT TO 12
POINTS
• STUDY HARD AS IF EVERYTHING
DEPENDS ON YOU
• PRAY HARD AS IF EVERYTHING
DEPENDS ON HIM
THANK YOU AND GOD BLESS US ALL!!!