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CASE PROBLEM: HANIEVON MERCHANDISING

November 1 Ms. Hanie Joy started to put up a merchandising store and opening an account to
BDO Gensan worth Php 950,000. It registered the merchandising store with the
Department of Trade and Industry under the trade name “HANIEVON
MERCHANDISING”.

2 She bought an equipment worth Php 65,000 for cash.


3 She bought merchandise on account from DERICK Supply Company worth
Php 227,000 terms, 2/10, n/30.

4 She bought office supplies on cash basis worth Php 24,000.


5 Sold Merchandise on account Php 280,000, FOB Destination, terms 2/10, n/30.
The cost of merchandise sold was Php 196,000.

5 Paid Php 5,000 freight on the merchandise sold.


6 Received credit from DERICK Supply Company for merchandise returned,
Php 27,000.

11 Paid DERICK Supply Company.


13 Collected from November 5 customers.
14 Bought merchandise on cash basis worth Php 150,000.
15 Paid Salaries worth Php 20,000.
16 Borrowed money from De Peter Financing Company, signed a promissory note
worth Php 323,000 payable in six months.
17 Received refund from a supplier for Cash Purchase of November 14, Php 50,000.
18 Bought merchandise from SOPHIE, Php 78,000, FOB Shipping Point, terms 2/10,
n/30.
20 Paid freight on November 18 purchase, Php 2,000.
23 Sold merchandise for Php 220, 000. The merchandise sold had a cost of
Php 154,000.

26 Bought merchandise for cash worth Php 240,000.


27 Paid SOPHIE on the November 18 purchase, Php 28,000. No discount on partial
payment.
28 Hanie Joy withdraw cash from the business, Php 12,000.
29 Made refund to cash customers for defective merchandise, Php 20,000.
30 Sold merchandise on account for Php 360,000, n/30. Cost of the merchandise sold
is Php 252,000.
30 Paid the following advertising Php 5,000, utilities Php 15,000, rent Php 10,000,
salaries Php 20,000.
For Periodic Method, the Ending Inventory as per physical count is worth Php 35,000.
HANIEVON MERCHANDISING
CHART OF ACCOUNTS
USE FOR JOURNALIZATION AND POSTING TO THE LEDGER

Account Account Title Account Account Title


No. No.
100 ASSETS 400 INCOME
101 CASH 401 SALES
105 ACCOUNTS RECEIVABLE 405 SALES RETURNS & ALLOWANCES
115 MERCHANDISE INVENTORY 410 SALES DISCOUNT
120 SUPPLIES 500 EXPENSES
150 EQUIPMENT 501 COST OF GOODS SOLD
200 LIABILITIES 502 PURCHASES
201 ACCOUNTS PAYABLE 503 PURCHASE RETURNS &
ALLOWANCES
202 NOTES PAYABLE 504 PURCHASE DISCOUNT
300 EQUITY 505 FREIGHT IN
301 HANEI, CAPITAL 506 ADVERTISING EXPENSE
302 HANEI, DRAWING 507 FREIGHT OUT
510 RENT EXPENSE
530 SALARIES EXPENSE
540 UTILITIES EXPENSE
601 INCOME SUMMARY

HANIEVON MERCHANDISING
CHART OF ACCOUNTS
USE FOR FINANCIAL STATEMENTS PREPARATION

Account Account Title Account Account Title


No. No.
100 ASSETS 400 INCOME
101 CASH & CASH EQUIVALENTS 401 NET SALES
105 RECEIVABLES 500 EXPENSES
115 INVENTORIES 501 COST OF GOODS SOLD
120 PREPAID EXPENSES 502 NET PURCHASES
150 PROPERTY, PLANT AND EQUIPMENT 506 ADVERTISING EXPENSE
200 LIABILITIES 507 FREIGHT OUT
201 ACCOUNTS PAYABLE 510 RENT EXPENSE
202 NOTES PAYABLE 530 SALARIES EXPENSE
300 EQUITY 540 UTILITIES EXPENSE
301 HANEI, CAPITAL
302 HANEI, DRAWING
PERIODIC METHOD
HANIEVON MERCHANDISING
GENERAL JOURNAL
J1

DATE PARTICULARS F DEBIT CREDIT


Nov.
1 Cash 101 950,000
Hanie, Capital 301 950,000
To record investment of the owner.

2 Equipment 150 65,000


Cash 101 65,000
To record purchase of equipment.

3 Purchases 115 227,000


Accounts Payable 201 227,000
To record purchase of merchandise.

4 Supplies 120 24,000


Cash 101 24,000
To record purchase of supplies.

5 Accounts Receivable 105 280,000


Sales 401 280,000
To record sales on account.

Freight Out 507 5,000


Cash 101 5,000
To record payment of freight.

6 Accounts Payable 201 27,000


Purchase Returns & Allowances 115 27,000
To record credit for merchandise returned.

11 Accounts Payable 201 200,000


Purchase Discount 115 4,000
Cash 101 196,000
To record payment of accounts payable.

13 Cash 101 274,400


Sales Discount 410 5,600
Accounts Receivable 105 280,000
To record collection of receivables.

14 Purchases 115 150,000


Cash 101 150,000
To record purchase of merchandise.
PERIODIC METHOD J2
DATE PARTICULARS F DEBIT CREDIT
Nov.
15 Salaries Expense 530 20,000
Cash 101 20,000
To record payment of salaries.

16 Cash 101 323,000


Notes Payable 202 323,000
To record borrowed money.

17 Cash 101 50,000


Purchase Returns & Allowances 115 50,000
To record cash refund from supplier.

18 Purchases 115 78,000


Accounts Payable 201 78,000
To record purchase of merchandise.

20 Freight In 115 2,000


Cash 101 2,000
To record freight charge to merchandise.

23 Cash 101 220,000


Sales 401 220,000
To record cash sales.

26 Purchases 115 240,000


Cash 101 240,000
To record purchase of merchandise.

27 Accounts Payable 201 28,000


Cash 101 28,000
To record partial payment of accounts.

28 Hanei, Drawing 302 12,000


Cash 101 12,000
To record withdrawal of owner.

29 Sales Returns & Allowances 405 20,000


Cash 101 20,000
To record cash refund to customers.

30 Accounts Receivable 105 360,000


Sales 401 360,000
To record sales on account.

Advertising Expense 506 5,000


Rent Expense 510 10,000
Salaries Expense 530 20,000
Utilities Expense 540 15,000
Cash 101 50,000
To record payment for various expenses.
PERIODIC METHOD FOR CLOSING ENTRIES J3
DATE PARTICULARS F DEBIT CREDIT
Nov.
30 Sales 401 860,000
Sales Discount 410 5,600
Sales Returns & Allowances 405 20,000
Income Summary 601 834,400
To close Net Sales to Income Summary.

Income Summary 601 75,000


Advertising Expense 506 5,000
Freight Out 507 5,000
Rent Expense 510 10,000
Salaries Expense 530 40,000
Utilities Expense 540 15,000
To close Expenses to Income Summary.

Income Summary 601 616,000


Purchase Returns & Allowances 503 77,000
Purchase Discount 504 4,000
Purchases 502 695,000
Freight in 505 2,000
To close Net Purchases to Income Summary.

Merchandise Inventory 115 35,000


Income Summary 601 35,000
To close Ending Inventory.

Hanie, Capital 301 12,000


Hanei, Drawing 302 12,000
To close Drawing Account to Capital
Account.

Income Summary 601 178,400


Hanie, Capital 301 178,400
To close Income Summary Account to
Capital Account.
PERIODIC METHOD
HANIEVON MERCHANDISING
GENERAL LEDGER
CASH 101
BALANCE
DATE PARTICULARS F DEBIT CREDIT DEBIT CREDIT
1 Investment J1 950,000 950,000
2 Purchase of Equipment J1 65,000 885,000
4 Purchase of Supplies J1 24,000 861,000
5 Payment of freight charge J1 5,000 856,000
11 Payment of accounts J1 196,000 660,000
13 Collection from customer J1 274,400 934,400
14 Purchase of Merchandise J1 150,000 784,400
15 Payment of Salary J2 20,000 764,400
16 Proceeds from borrowings J2 323,000 1,087,400
17 Received cash refund J2 50,000 1,137,400
20 Payment of freight charge J2 2,000 1,135,400
23 Collection from cash sales J2 220,000 1,355,400
26 Purchase of Merchandise J2 240,000 1,115,400
27 Payment to supplier J2 28,000 1,087,400
28 Withdrawal of the owner J2 12,000 1,075,400
29 Refund to customer J2 20,000 1,055,400
30 Payment for various expenses J2 50,000 1,005,400

ACCOUNTS RECEIVABLE 105


BALANCE
DATE PARTICULARS F DEBIT CREDIT DEBIT CREDIT
5 Sales on account J1 280,000 280,000
13 Collection from customer J1 280,000 0
30 Sales on account J2 360,000 360,000

MERCHANDISE INVENTORY 115


BALANCE
DATE PARTICULARS F DEBIT CREDIT DEBIT CREDIT
30 Closing of Ending Inventory J3 35,000 35,000

SUPPLIES 120
BALANCE
DATE PARTICULARS F DEBIT CREDIT DEBIT CREDIT
4 Purchase of Supplies J1 24,000 24,000

EQUIPMENT 150
BALANCE
DATE PARTICULARS F DEBIT CREDIT DEBIT CREDIT
2 Purchase of Equipment J1 65,000 65,000

NOTES PAYABLE 202


BALANCE
DATE PARTICULARS F DEBIT CREDIT DEBIT CREDIT
16 Proceeds from borrowings J2 323,000 323,000
PERIODIC METHOD

ACCOUNTS PAYABLE 201


BALANCE
DATE PARTICULARS F DEBIT CREDIT DEBIT CREDIT
3 Purchase of Merchandise J1 227,000 227,000
6 Credit of Merchandise return J1 27,000 200,000
11 Payment of accounts J1 200,000 0
18 Purchase of Merchandise J2 78,000 78,000
27 Payment to supplier J2 28,000 50,000

HANEI, CAPITAL 301


BALANCE
DATE PARTICULARS F DEBIT CREDIT DEBIT CREDIT
1 Investment J1 950,000 950,000
30 Closing of Drawing Account J3 12,000 938,000
30 Closing of Income Summary J3 178,400 1,116,400

HANEI, DRAWING 302


BALANCE
DATE PARTICULARS F DEBIT CREDIT DEBIT CREDIT
28 Withdrawal of the owner J2 12,000 12,000
30 Closing of Drawing Account J4 12,000 0

SALES 401
BALANCE
DATE PARTICULARS F DEBIT CREDIT DEBIT CREDIT
5 Sales on account J1 280,000 280,000
23 Collection from cash sales J2 220,000 500,000
30 Sales on account J2 360,000 860,000
30 Closing of Net Sales J3 860,000 0

SALES RETURNS & ALLOWANCES 405


BALANCE
DATE PARTICULARS F DEBIT CREDIT DEBIT CREDIT
29 Refund to Customers J2 20,000 20,000
30 Closing of Net Sales J3 20,000 0

SALES DISCOUNT 410


BALANCE
DATE PARTICULARS F DEBIT CREDIT DEBIT CREDIT
13 Collection from customer J1 5,600 5,600
30 Closing of Net Sales J3 5,600 0

PURCHASE DISCOUNT 504


BALANCE
DATE PARTICULARS F DEBIT CREDIT DEBIT CREDIT
11 Payment of accounts J1 4,000 4,000
30 Closing of Net Purchases J3 4,000 0
PERIODIC METHOD

PURCHASES 502
BALANCE
DATE PARTICULARS F DEBIT CREDIT DEBIT CREDIT
3 Purchase of Merchandise J1 227,000 227,000
14 Purchase of Merchandise J1 150,000 377,000
18 Purchase of Merchandise J2 78,000 455,000
26 Purchase of Merchandise J2 240,000 695,000
30 Closing of Net Purchases J3 695,000 0

PURCHASE RETURNS & ALLOWANCES 503


BALANCE
DATE PARTICULARS F DEBIT CREDIT DEBIT CREDIT
6 Credit of Merchandise return J1 27,000 27,000
17 Received cash refund J2 50,000 77,000
30 Closing of Net Purchases J3 77,000 0

FREIGHT IN 505
BALANCE
DATE PARTICULARS F DEBIT CREDIT DEBIT CREDIT
20 Payment of freight charge J2 2,000 2,000
30 Closing of Net Purchases J3 2,000 0

ADVERTISING EXPENSE 506


BALANCE
DATE PARTICULARS F DEBIT CREDIT DEBIT CREDIT
30 Payment for various expenses J2 5,000 5,000
30 Closing of Expenses J3 5,000 0

FREIGHT OUT 507


BALANCE
DATE PARTICULARS F DEBIT CREDIT DEBIT CREDIT
5 Payment of freight charge J1 5,000 5,000
30 Closing of Expenses J3 5,000 0

RENT EXPENSE 510


BALANCE
DATE PARTICULARS F DEBIT CREDIT DEBIT CREDIT
30 Payment for various expenses J2 10,000 10,000
30 Closing of Expenses J3 10,000 0

SALARIES EXPENSE 530


BALANCE
DATE PARTICULARS F DEBIT CREDIT DEBIT CREDIT
15 Payment of Salary J2 20,000 20,000
30 Payment for various expenses J2 20,000 40,000
30 Closing of Expenses J3 40,000 0
PERIODIC METHOD

UTILITIES EXPENSE 540


BALANCE
DATE PARTICULARS F DEBIT CREDIT DEBIT CREDIT
30 Payment for various expenses J2 15,000 15,000
30 Closing of Expenses J3 15,000 0

INCOME SUMMARY 601


BALANCE
DATE PARTICULARS F DEBIT CREDIT DEBIT CREDIT
30 Closing of Net Sales J3 834,400 834,400
30 Closing of Net Purchases J3 616,000 218400
30 Closing of Expenses J3 75,000 143,400
30 Closing of Ending Inventory J3 35,000 178,400
30 Closing of Income Summary J3 178,400 0

HANIEVON MERCHANDISING
PRELIMINARY TRIAL BALANCE
NOVEMBER 30, 2016

ACCOUNT NO. ACCOUNT TITLE DEBIT CREDIT


101 CASH 1,005,400
105 ACCOUNTS RECEIVABLE 360,000
115 MERCHANDISE INVENTORY 0
120 SUPPLIES 24,000
150 EQUIPMENT 65,000
201 ACCOUNTS PAYABLE 50,000
202 NOTES PAYABLE 323,000
301 HANEI, CAPITAL 950,000
302 HANEI, DRAWING 12,000
401 SALES 860,000
405 SALES RETURNS & ALLOWANCES 20,000
410 SALES DISCOUNT 5,600
502 PURCHASES 695,000
503 PURCHASE RETURNS & ALLOWANCES 77,000
504 PURCHASE DISCOUNT 4,000
505 FREIGHT IN 2,000
506 ADVERTISING EXPENSE 5,000
507 FREIGHT OUT 5,000
510 RENT EXPENSE 10,000
530 SALARIES EXPENSE 40,000
540 UTILITIES EXPENSE 15,000
TOTAL 2,264,000 2,264,000
PERIODIC METHOD

HANIEVON MERCHANDISING
STATEMENT OF COST OF GOODS SOLD
FOR THE MONTH ENDED NOVEMBER 30, 2016

BEGINNING INVENTORY Php 0.00


PURCHASES Php 695,000
LESS: PURCHASE RETURNS & ALLOWANCES 77,000
PURCHASE DISCOUNT 4,000
ADD: FREIGHT IN 2,000
NET PURCHASES 616,000.00
TOTAL GOODS AVAILABLE FOR SALE Php 616,000.00
LESS: ENDING INVENTORY 35,000.00
COST OF GOODS SOLD Php 581,000.00

HANIEVON MERCHANDISING
STATEMENT OF FINANCIAL PERFORMANCE
FOR THE MONTH ENDED NOVEMBER 30, 2016

NET SALES Php 834,400.00


LESS: COST OF GOODS SOLD 581,000.00
GROSS INCOME Php 253,400.00
LESS: OPERATING EXPENSES
ADVERTISING EXPENSE Php 5,000.00
FREIGHT OUT 5,000.00
RENT EXPENSE 10,000.00
SALARIES EXPENSE 40,000.00
UTILITIES EXPENSE 15,000.00 75,000.00
NET INCOME Php 178,400.00

HANIEVON MERCHANDISING
STATEMENT OF CHANGES IN OWNER’S EQUITY
FOR THE MONTH ENDED NOVEMBER 30, 2016

HANEI, CAPITAL Php 950,000.00


ADD: NET INCOME 178,400.00
TOTAL Php 1,128,400.00
LESS: HANEI, DRAWING 12,000.00
HANEI, CAPITAL – END Php 1,116,400.00
PERIODIC METHOD
HANIEVON MERCHANDISING
STATEMENT OF FINANCIAL POSITION
AS OF NOVEMBER 30, 2016

ASSETS
CASH & CASH EQUIVALENTS Php 1,005,400.00
RECEIVABLES 360,000.00
INVENTORIES 35,000.00
PREPAID EXPENSES 24,000.00
PROPERTY, PLANT AND EQUIPMENT 65,000.00
TOTAL ASSETS Php 1,489,400.00

LIABILITIES AND OWNER’S EQUITY

LIABILITIES
ACCOUNTS PAYABLE Php 50,000.00
NOTES PAYABLE 323,000.00
TOTAL LIABILITIES Php 373,000.00

OWNER’S EQUITY
HANEI, CAPITAL 1,116,400.00
TOTAL LIABILITIES AND OWNER’S EQUITY Php 1,489,400.00

HANIEVON MERCHANDISING
POST CLOSING TRIAL BALANCE
NOVEMBER 30, 2016

ACCOUNT NO. ACCOUNT TITLE DEBIT CREDIT


101 CASH 1,005,400
105 ACCOUNTS RECEIVABLE 360,000
115 MERCHANDISE INVENTORY 35,000
120 SUPPLIES 24,000
150 EQUIPMENT 65,000
201 ACCOUNTS PAYABLE 50,000
202 NOTES PAYABLE 323,000
301 HANEI, CAPITAL 1,116,400
TOTAL 1,489,400 1,489,400
PERIODIC METHOD

HANIEVON MERCHANDISING
STATEMENT OF CASH FLOWS
FOR THE MONTH ENDED NOVEMBER 30, 2016

Cash Flow From Operating Activities:


Payment for Supplies Php (24,000.00)
Payment for Freight Charges (7,000.00)
Payment for Accounts Payables to Suppliers (224,000.00)
Collection from Customers 274,400.00
Payment for the purchase of (390,000.00)
Merchandise
Payment for Various Expenses (70,000.00)
Proceeds from Borrowed Money 323,000.00
Refund from the returned Cash 50,000.00
Purchases
Collection from Cash Sales 220,000.00
Payment for the refund of returned sales merchandise (20,000.00)
Net Cash Provided by (Used in) from Operating Activities Php 132,400.00

Cash Flow From Investing Activities:


Payment for the purchase of an Equipment Php(65,000.00)
Net Cash Provided by (Used in) from Investing Activities (65,000.00)

Cash Flow From Financing Activities:


Investment by the Owner Php950,000.00
Withdrawal by the Owner (12,000.00)
Net Cash Provided by (Used in) from Financing Activities 938,000.00
Net Increase (Decrease) in Cash Php 1,005,400.00
Add: Cash Balance at the Beginning of the Period 0.00
Cash Balance at the End of the Period Php 1,005,400.00