Listed below are the February 1, 2019 balances of Joseph the Dreamer Company:

CODE ACCOUNT TITLE DEBIT CREDIT

110 Cash 33,000.00
120 Accounts receivable 192,000.00
125 Allowance for uncollectible accounts 12,000.00
130 Merchandise inventory 413,000.00
140 Supplies 51,000.00
150 Prepaid insurance 48,000.00
160 Land 460,000.00
170 Building 1,750,000.00
175 Accumulated depreciation - Building 350,000.00
180 Equipment 2,310,000.00
185 Accumulated depreciation - Equipment 630,000.00
210 Accounts payable 96,000.00
220 Notes payable
230 Interest payable
240 Salaries payable
250 Mortgage payable 2,600,000.00
310 Joseph's capital 1,569,000.00
320 Joseph's withdrawals
330 Income summary
410 Sales
420 Sales returns and allowances
430 Sales discounts
510 Purchases
520 Purchase returns and allowances
530 Purchase discounts
540 Transportation-in
610 Salaries expense
620 Supplies expense
630 Insurance expense
640 Depreciation expense - Building
650 Depreciation expense - Equipment
660 Transportation-out
670 Advertising expense
680 Interest expense
690 Miscellaneous expense
700 Uncollectible account expense
TOTAL 5,257,000.00 5,257,000.00
During the February 2019, the following transactions occurred:

1 Collected P113,000 from customers on account.

1 Made an additional investment in the form of an equipment amounting to P10,000.

2 Paid P64,000 of accounts due less discounts of 3%

4 Purchased merchandise, P170,000. Terms: FOB Shipping point; 3/10, n/10.

5 Sold merchandise on account to Gonzales Company, P270,000. Terms: FOB shipping point; 2/10,
n/30.

5 Transferred P300,000 from savings account under the personal account of the owner to savings
account in the name of the business.

7 Paid advertising expense, P6,000.

7 Sold merchandise for cash, P250,000.

8 Paid the amount due from the Feb. 4 transaction.

8 Hired an assistant and signed a contract of P15,000 per month.

9 Paid Ilo-ilo freight P4,000 for delivering merchandise last Feb.4

10 Received returns from the Gonzales company, P70,000.

10 Borrowed P100,000 by issuing a note that carried a 9% annual interest rate with and a 2-year
term.

12 Received payment from the Gonzales company less returns and discounts.

14 Paid P26,000 interest on the mortgage payable.

14 Write-off uncollectible accounts amounting to P2,000

15 Paid salaries, P51,000.

16 Sold merchandise on account to Ronzales company, P392,000. Terms FOB destination; 2/10,
n/30.

18 Paid freight charges on the sale of Feb. 16 amounting to P1,000.

19 Acquired supplies for cash, P21,000.

20 Purchased P125,000 of merchandise from Lozada Company on account. Terms: FOB destination
3/10, n/30.

22 Paid P7,000 miscellaneous expenses.

23 Received payment from Ronzales company less discounts.

24 Purchased P373,000 of merchandise on account from Agustin company. Terms: FOB shipping
point; 3/10, n/30.
24 Paid P9,000 freight for delivering merchandise acquired from Agustin.

25 Sold merchandise to Ronzales company on account, P420,000. Terms: FOB shipping point; 2/10,
n/30.

26 Received returns from Ronzales company, P71,000.

27 Collected cash amounting P500 from the account previously written off.

28 Withdrew P400,000 from the business.

28 Returned merchandise purchased from Agustin on February 4, P25,000.

Additional information: The company is a merchandising business that uses periodic method in
accounting for its inventories and gross method in recording cash discounts. The company reports
balances every month-end period.

Required:

1 Post the Feb 1, 2019 balances to the ledger accounts. (Use Yellow paper)

2 Record the transactions for the month of February in a journal (Use general journal) and post
the transactions to the ledger (Use yellow paper).

3 Prepare the adjusting entries (Use general journal).

4 Prepare journal entries on all Sales, Purchases, Returns and related collections/payment on a
separate general journal

5 Prepare the worksheet (Unadjusted trial balance, adjustments, adjusted trial balance) with the
following information (Use a 10-column worksheet):

a Salaries in the amount of P51,000 have accrued on Feb. 28.

b Insurance coverage with premiums of P2,000 has expired at month-end. Insurance was
previously recorded to prepaid insurance.

c Depreciation on the building and on the equipment for the month amounted to P9,000 and
P12,000, respectively. Equipment invested on February 1, 2019 had a depreciable cost of P8,000,
residual value of P2,000 and a useful life of 24 months. (Record depreciation on the nearest month).

d Supplies on hand at month-end amounted to P14,000. Initial entry was recorded to supplies.

e Company estimates that 2% of net credit sales will be uncollectible

f Recorded accrued interest for the borrowed amount on February 10, 2019. Round off to the
nearest month for accrual of interest.