1|P ag e

NCIII
BOOKKEEPING
PRACTICE SET
2|P ag e

Terms of transactions
Merchandise may be purchased and sold either on credit terms or for cash on delivery. When goods are sold
on account, a period of time called credit period is allowed for payment. If the credit period is 30 days, then
the payment is expected within 30 days from the invoice date. It is usually described as net credit period or
net terms noted as “n/30”.
Some businesses also give discounts called cash discount/ purchase discount. It is noted as “2/10” which
means the buyer may avail 2% (numerator) discount if the invoice is paid within 10 days (denominator) from
the invoice date.

Transportation Cost
Commonly used Shipping terms:
FOB-D - S
FOB Destination- the seller bears the shipping cost
FOB-SP - B
FOB Shipping Point- the buyer shoulders the shipping cost FC - B
Freight Collect- the buyer pays the shipping cost FP - S

Freight Prepaid- the seller pays the shipping coat

Inventory Systems
PERPETUAL INVENTORY SYSTEM
The inventory account is continuously updated. At the time of sale, the cost of sales is determined and
recorded by a debit to the cost of sales account and a credit to inventory account.

PERIODIC INVENTORY SYSTEM

No entries are made to the inventory account as the merchandise is bought and sold. When Goods are
purchased, a separate set of accounts – purchases, purchases discounts, purchases returns and allowances,
and transportation in – is used to accumulate information on the net cost of the purchases.

Under this method, you are required to prepare a “Cost of Goods Sold Schedule”.

DEFERALS AND ACCRUALS

Deferral- postponement of the recognition of an expense already paid but not yet incurred or a revenue
already collected but not yet earned (there is already a payment or money involved).
Accrual – the recognition of an expense already incurred but unpaid or a revenue earned but uncollected
(there is no payment made).

Practice is the key ;)

3|P ag e

The following Chart of Accounts are used by SV Merchandising Store: using the
Perpetual Method
101 Cash 400 Sales
110 Accounts Receivable 410 Sales Discounts
120 Supplies 420 Sales Returns and Allowances
130 Merchandise Inventory 500 Cost of Sales
140 Office Equipment 610 Salaries Expense
210 Accounts Payable 620 Freight Out
220 Notes Payable 630 Advertising Expense
310 Villa, Capital 640 Rent Expense
320 Villa, Drawings 650 Utilities Expense
330 Income Summary

The following Chart of Accounts are used by SV Merchandising Store: using the
Periodic Method
101 Cash 400 Sales
110 Accounts Receivable 410 Sales Discounts
120 Supplies 420 Sales Returns and Allowances
130 Inventory 510 Purchases
140 Office Equipment 520 Purchases Discounts
210 Accounts Payable 530 Purchases Returns and Allowances
220 Notes Payable 540 Freight In
310 Villa, Capital 610 Salaries Expense
320 Villa, Drawings 620 Freight Out
330 Income Summary 630 Advertising Expense
640 Rent Expense
650 Utilities Expense

Inventory count at the end of the month: P48,480

Prepare the Following:
1. Journal Entries
2. General Ledger
3. Trial Balance
4. Cost of Goods Sold Schedule (for periodic method)
5. Statement of Financial Performance
6. Statement of Changes in Equity
7. Statement of Financial Position
8. Statement of Cash Flows
9. Closing Entries
10. Post-Closing Trial Balance
Using the following Chart of Accounts:
101 Cash 210 Accounts Payable
110 Accounts Receivable 220 Notes Payable
120 Supplies 310 Villa, Capital
130 Merchandise Inventory
140 Office Equipment
4|P ag e

Serenity Villa opened SV Merchandising Store. The following transactions occurred during the
month of July 2018:

1-
Jul Villa invested P128,000 in the business.
2 Acquired Computer Set for P21,000. Villa paid 5,000 and issued a promissory note for
the remaining balance.
2 Acqired supplies for cash, P1,200.
3 Purchase P81,900 of merchandise from LOWKEY company on account.
Terms: FOB Destination, 2/10, n/30.
5 Sold merchandise to THORE for P48,600 on account.
Terms: FOB Destination, 2/10, n/30.
The cost of merchandise sold was P28,880.
Paid P550 freight on the same day.
7 Received collections from customers billed on sales of P48,600 on July 5.
9 Returned merchandise purchased from LOWKEY Company, P380.
11 Paid the amount due from July 3 transactrion.
13 Purchase merchandise P12,300 and additional supplies P450 for cash.
15 Paid 15th month salary, P8,000.
16 Received refund for poor quality of merchandise from a supplier on cash purchase
made on July 13, P870.
18 Sold merchandise to various customers, P24,300.
The cost of merchandise is P16,500.
19 Purchase 15,800 of merchandise from Eleonor Shop.
FOB Shipping point, terms, 2/10, n/30.
23 Receive sales returns, P3,800 from various customers. It's cost is P2,900.
24 Borrowed money from Town Bank, signed promisory note for P13,500.
24 Paid freight on July 21 purchase, P580.
26 Sold merchandise on account for P36,800 terms, 2/10, n/30 FOB Destinaton. The
merchandise sold had a cost of P21,300.
28 Serenity Villa withdrew cash from the business, P9,000.
30 Paid Eleonor Shop in full.
31 Paid Salary to employees, P8,000.
31 Paid News Hub for 1 month advertisement of the store, P1,580.
31 Paid Rent and Utilities expenses for the month, P2,800 and P700 respectively.
5|P ag e

General Journal- PERPETUAL METHOD

GJ-1
Date Account Title and Explanation PR Debit Credit
1-Jul

11
6|P ag e

GJ-2
13

15

16

18

19

23

24

24

26
7|P ag e

GJ-3
26

28

30

31

31

31
8|P ag e

GJ-4
Closing Entries

Date Account Title and Explanation PR Debit Credit

31-Jul

31

31

31
9|P ag e

General Ledger- PERPETUAL METHOD

Account Name: CASH

Account No. 101 Balance
Date Particulars Post Debit Credit Debit Credit

Account Name: ACCOUNTS RECEIVABLE

Account No. 110 Balance
Date Particulars Post Debit Credit Debit Credit

Account Name: SUPPLIES

Account No. 120 Balance
Date Particulars Post Debit Credit Debit Credit
10 | P a g e

Account Name: MERCHANDISE

INVENTORY
Account No. 130 Balance
Date Particulars Post Debit Credit Debit Credit

Account Name: OFFICE EQUIPMENT

Account No. 140 Balance
Date Particulars Post Debit Credit Debit Credit

Account Name: ACCOUNTS PAYABLE

Account No. 210 Balance
Date Particulars Post Debit Credit Debit Credit

Account Name: NOTES

PAYABLE
Account No. 220 Balance
Date Particulars Post Debit Credit Debit Credit
11 | P a g e

Account Name: VILLA,

CAPITAL
Account No. 310 Balance
Date Particulars Post Debit Credit Debit Credit

Account Name: VILLA, DRAWINGS

Account No. 320 Balance
Date Particulars Post Debit Credit Debit Credit

Account Name: INCOME SUMMARY

Account No. 330 Balance
Date Particulars Post Debit Credit Debit Credit

Account Name:
SALES
Account No. 400 Balance
Date Particulars Post Debit Credit Debit Credit

Account Name: SALES

DISCOUNT
Account No. 410 Balance
Date Particulars Post Debit Credit Debit Credit
12 | P a g e

Account Name: SALES RETURNS AND ALLOWANCES

Account No. 420 Balance
Date Particulars Post Debit Credit Debit Credit

Account Name: COST OF SALES

Account No. 500 Balance
Date Particulars Post Debit Credit Debit Credit

Account Name: SALARIES EXPENSE

Account No. 610 Balance
Date Particulars Post Debit Credit Debit Credit

Account Name: FREIGHT OUT

Account No. 620 Balance
Date Particulars Post Debit Credit Debit Credit

Account Name: ADVERTISING EXPENSE

Account No. 630 Balance
Date Particulars Post Debit Credit Debit Credit
13 | P a g e

Account Name: RENT EXPENSE

Account No. 640 Balance
Date Particulars Post Debit Credit Debit Credit

Account Name: UTILITIES EXPENSE

Account No. 650 Balance
Date Particulars Post Debit Credit Debit Credit

SV Merchandising Store
Trial Balance
31-Jul-18
Perpetual
Acct. # Account Title Debit Credit
14 | P a g e

SV Merchandising Store
Statement of Financial Performance
For the month ended July 31,2018
Perpetual

SV Merchandising Store
Statement of Changes in Equity
For the month ended July 31,2018
Perpetual
15 | P a g e

SV Merchandising Store
Statement of Financial Position
July 31,2018
Perpetual
ASSETS
Current Assets

LIABILITIES AND OWNER'S EQUITY

SV Merchandising Store
Statement of Cash Flow
July 31,2018
Perpetual
16 | P a g e

SV Merchandising Store
Post-closing Trial Balance
July 31,2018
Perpetual
Acct # Account Title Debit Credit
17 | P a g e

General Journal- PERIODIC METHOD

GJ-1
Date Account Title and Explanation PR Debit Credit
1-Jul

11
18 | P a g e

GJ-2
13

15

16

18

19

23

24

24

26

28

30
19 | P a g e

GJ-3
31

31

31
20 | P a g e

GJ-4
Closing Entries
Post
Date Account Title and Explanation Ref. Debit Credit
31-Jul

31

31

31

31
21 | P a g e

General Ledger- PERIODIC METHOD

Account Name: CASH

Account No. 101 Balance
Date Particulars Post Debit Credit Debit Credit

Account Name: ACCOUNTS RECEIVABLE

Account No. 110 Balance
Date Particulars Post Debit Credit Debit Credit

Account Name: SUPPLIES

Account No. 120 Balance
Date Particulars Post Debit Credit Debit Credit
22 | P a g e

Account Name: OFFICE EQUIPMENT

Account No. 140 Balance
Date Particulars Post Debit Credit Debit Credit

Account Name: ACCOUNTS PAYABLE

Account No. 210 Balance
Date Particulars Post Debit Credit Debit Credit

Account Name: NOTES PAYABLE

Account No. 220 Balance
Date Particulars Post Debit Credit Debit Credit

Account Name: VILLA, CAPITAL

Account No. 310 Balance
Date Particulars Post Debit Credit Debit Credit

Account Name: VILLA, DRAWINGS

Account No. 320 Balance
Date Particulars Post Debit Credit Debit Credit
23 | P a g e

Account Name: INCOME SUMMARY

Account No. 330 Balance
Date Particulars Post Debit Credit Debit Credit

Account Name: SALES

Account No. 400 Balance
Date Particulars Post Debit Credit Debit Credit

Account Name: SALES DISCOUNT

Account No. 410 Balance
Date Particulars Post Debit Credit Debit Credit

Account Name: SALES RETURNS AND ALLOWANCES

Account No. 420 Balance
Date Particulars Post Debit Credit Debit Credit

Account Name: PURCHASES

Account No. 510 Balance
Date Particulars Post Debit Credit Debit Credit

Account Name: PURCHASES DISCOUNT

24 | P a g e

Account No. 520 Balance

Date Particulars Post Debit Credit Debit Credit

Account Name: PURCHASES RETURNS AND ALLOWANCES

Account No. 530 Balance
Date Particulars Post Debit Credit Debit Credit

Account Name: FREIGHT IN

Account No. 540 Balance
Date Particulars Post Debit Credit Debit Credit

Account Name: SALARIES EXPENSE

Account No. 610 Balance
Date Particulars Post Debit Credit Debit Credit

Account Name: FREIGHT OUT

Account No. 620 Balance
Date Particulars Post Debit Credit Debit Credit
25 | P a g e

Account Name: ADVERTISING EXPENSE

Account No. 630 Balance
Date Particulars Post Debit Credit Debit Credit

Account Name: RENT EXPENSE

Account No. 640 Balance
Date Particulars Post Debit Credit Debit Credit

Account Name: UTILITIES EXPENSE

Account No. 650 Balance
Date Particulars Post Debit Credit Debit Credit
26 | P a g e

SV Merchandising Store
Trial Balance
31-Jul-18
Periodic
Acct. # Account Title Debit Credit

SV Merchandising Store
Statement of Financial Performance
For the month ended July 31,2018
Periodic
27 | P a g e

SV Merchandising Store
Cost of Goods Sold Schedule
For the month ended July 31,2018
Periodic

SV Merchandising Store
Statement of Changes in Equity
For the month ended July 31,2018
Periodic
28 | P a g e

SV Merchandising Store
Statement of Financial Position
July 31,2018
Periodic
ASSETS

LIABILITIES AND OWNER'S EQUITY

29 | P a g e

SV Merchandising Store
Statement of Cash Flow
July 31,2018
Periodic

SV Merchandising Store
Post-closing Trial Balance
July 31,2018
Periodic
Acct. # Account Title Debit Credit