Nciii Bookkeeping: (Merchandising Operations)

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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
1
2
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
3
Service vs
Merchandising
Net Sales
Sales
Minus
Sales Return
Sales Discount
Net Sales

4
Service vs
Merchandising
ALL Merchandise
Inventory account
Purchases
Freight in
Purchase Return
Purchase Discount

5
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

6
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

7
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
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

8

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

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
9

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

Feb-07 cash 110 250,000.00
sales 410 250,000.00
to record cash sales
10

cash 110 164,900.00
to record payment purchase on account with 3% discount

Feb-09 merchandise inventory 130 4,000.00
cash 110 4,000.00
to record transportation cost on feb 4 transactions
11

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

Feb-12 cash 110 196,000.00
sales discounts 430 4,000.00
270,000 – 70,000 (SRA) = 200,000
200,000 x .02 (discount) = 4,000
200,000 – 4,000 = 196,000

13

Feb-14 interest expense 680 26,000.00
cash 110 26,000.00
to record interest payment on mortgage payable
Feb-15 salaries expense 610 51,000.00
cash 110 51,000.00
to record payment for employee salaries
14

sales 410 392,000.00
to record sales on account term: fob destination 2/10, n/30
15

Feb-18 transportation-out 660 4,000.00
cash 110 4,000.00
to record transportation cost on sales
Feb-19 supplies 140 21,000.00
cash 110 21,000.00
to record purchase of supplies on cash
accouns payable 210 125,000.00
to record purchase on account term; fob distination 3/10, n/30
16

Feb-22 miscellaneous expense 690 7,000.00
cash 110 7,000.00
to record payment for miscellaneous expenses
Feb-23 cash 110 384,160.00
sales discounts 430 7,840.00

accounts payable 210 373,000.00
to record purchase on account term; fob shipping point 3/10, n/30
17

cash 110 9,000.00
to record transportation cost
sales 410 420,000.00
to record sales on account term, fob shipping point; 2/10, n/30
18

Feb-26 sales return and allowances 420 71,000.00
to record returned goods
19

Feb-28Buenaflor withdrawals 320 400,000.00
cash 110 400,000.00
Feb-28accounts payable 210 25,000.00
purchase return and allowances 520 4,737,750.00 4,737,750.00
25,000.00
20
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-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-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-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
21
ACCOUNTS RECEIVABLE ACCOUNT NO. 120

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-26 71,000.00 428,000.00
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MERCHANDISE INVENTORY ACCOUNT NO. 130

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

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

Feb-01 beginning 48,000.00 48,000.00
48,000.00
48,000.00
LAND ACCOUNT NO. 160

Feb-01 beginning 460,000.00 460,000.00
460,000.00
460,000.00
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BUILDING ACCOUNT NO. 170

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

Feb-01 beginning 350,000.00 350,000.00
350,000.00
350,000.00
EQUIPMENT ACCOUNT NO. 180

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

Feb-01 beginning 630,000.00 630,000.00
630,000.00
630,000.00
25
ACCOUNTS PAYABLE ACCOUNT NO. 210

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

Feb-01 beginning 2,600,000.00 2,600,000.00
2,600,000.00
2,600,000.00
BUENAFLOR CAPITAL ACCOUNT NO. 310

Feb-01 beginning 1,569,000.00 1,569,000.00
1,569,000.00
1,569,000.00
BUENAFLOR WITHDRAWAL ACCOUNT NO. 320

Feb-01 beginning 400,000.00 400,000.00
400,000.00
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SALES ACCOUNT NO. 410

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

Feb-10 70,000.00 70,000.00
71,000.00 141,000.00
141,000.00
SALES DISCOUNTS ACCOUNT NO. 430

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

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

Feb-15 51,000.00 51,000.00
51,000.00
51,000.00
TRANSPORTATION OUT ACCOUNT NO. 660

Feb-18 4,000.00 4,000.00
4,000.00
4,000.00
ADVERTISING EXPENSE ACCOUNT NO. 670

Feb-07 6,000.00 6,000.00
6,000.00
6,000.00
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INTEREST EXPENSE ACCOUNT NO. 680

Feb-14 26,000.00 26,000.00
26,000.00
26,000.00
MISCELLANEOUS EXPENSE ACCOUNT NO. 690

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 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
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
ASSET
current asset
cash 221,180.00
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
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
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
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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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
36

CLOSING ENTRIES
Feb-28 income summary 1,140,090.00
Sales discount 11,840.00
salaries expense 51,000.00
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
37
INCOME SUMMARY ACCOUNT NO. 310

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)
38
name of entity
Worksheet
For the ___________ Ended ________________
Post Closing Trial Balance

No. Account Title Debit Credit
cash 221,180.00
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
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!!!

Nciii Bookkeeping: (Merchandising Operations)

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© 2009 Cengage Learning

© 2009 Cengage Learning

© 2009 Cengage Learning

» OWNERSHIP WHO PAYS

© 2009 Cengage Learning

Dec. 31 Merchandise Inventory ending 000 xxx

© 2009 Cengage Learning

date Account Title and Explaination P.R. Debit Credit

64,000 x .97 = 62, 080

64,000 – 62,080 = 1920

date Account Title and Explaination P.R. Debit Credit

date Account Title and Explaination P.R. Debit Credit

date Account Title and Explaination P.R. Debit Credit

date Account Title and Explaination P.R. Debit Credit

date Account Title and Explaination P.R. Debit Credit

date Account Title and Explaination P.R. Debit Credit

date Account Title and Explaination P.R. Debit Credit

date Account Title and Explaination P.R. Debit Credit

270,000 – 70,000 (SRA) = 200,000

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

200,000 – 4,000 = 196,000

date Account Title and Explaination P.R. Debit Credit

date Account Title and Explaination P.R. Debit Credit

date Account Title and Explaination P.R. Debit Credit

date Account Title and Explaination P.R. Debit Credit

date Account Title and Explaination P.R. Debit Credit

date Account Title and Explaination P.R. Debit Credit

date Account Title and Explaination P.R. Debit Credit

date Account Title and Explaination P.R. Debit Credit

CASH ACCOUNT NO. 110

ACCOUNTS RECEIVABLE ACCOUNT NO. 120

MERCHANDISE INVENTORY ACCOUNT NO. 130

SUPPLIES ACCOUNT NO. 140

PREPAID INSURANCE ACCOUNT NO. 150

LAND ACCOUNT NO. 160

BUILDING ACCOUNT NO. 170

ACCUMULATED DEP-BUILDING ACCOUNT NO. 175

EQUIPMENT ACCOUNT NO. 180

ACCUMULATED DEP-EQUIPENT ACCOUNT NO. 185

ACCOUNTS PAYABLE ACCOUNT NO. 210

MORTGAGE PAYABLE ACCOUNT NO. 230

BUENAFLOR CAPITAL ACCOUNT NO. 310

BUENAFLOR WITHDRAWAL ACCOUNT NO. 320

SALES ACCOUNT NO. 410

SALES RETURN AND ALLOWANCES ACCOUNT NO. 420

SALES DISCOUNTS ACCOUNT NO. 430

COST OF SALES ACCOUNT NO. 510

SALARIES EXPENSE ACCOUNT NO. 540

TRANSPORTATION OUT ACCOUNT NO. 660

ADVERTISING EXPENSE ACCOUNT NO. 670

INTEREST EXPENSE ACCOUNT NO. 680

MISCELLANEOUS EXPENSE ACCOUNT NO. 690

office equipment 2,310,000.00

LIABILITIES AND EQUITY

Buenaflor capital 1,360,910.00

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

Cash flow form operating Activities

Cash flow form Investing Activities - -

Cash flow form financing Activities

date Account Title and Explaination P.R. Debit Credit

Feb-28 merchandise inventory 2/28/2017 -

date Account Title and Explaination P.R. Debit Credit