Periodic Method Illustrative Problem

Comprehensive Problem
Listed below are the Feb. 1, 2013 account balances of the Teresita Buenaflor Company:
Debit Credit
110 Cash 33,000
120 Accounts Receivable 192,000
130 Merchandise Inventory 413,000
140 Supplies 51,000
150 Prepaid Insurance 48,000
160 Land 460,000
170 Building 1,750,000
175 Accumulated Depreciation - Building 350,000
180 Equipment 2,310,000
185 Accumulated Depreciation - Equipment 630,000
210 Accounts Payable 108,000
220 Salaries Payable
230 Mortgage Payable 2,600,000
310 Buenaflor, Capital 1,569,000
320 Buenaflor, 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
5,257,000 5,257,000
During the month of February 2013, the following transactions occurred:
Feb. 1 Collected P113,000 from customers on account

2 Paid P64,000 of accounts due less discounts of 3%
4 Purchased merchandise, P170,000. Terms: FOB shipping point; 3/10, n/30
5 Sold merchandise on account to Gonzales Company, P270,000. Terms: FOB shipping
point; 2/10, n/30
7 Paid for advertising for the month of February, P6,000
7 Sold merchandise for cash, P250,000
8 Paid the amount due from the Feb. 4 transaction
9 Paid Iloilo freight P4,000 for delivering merchandise last Feb. 4
10 Received returns from the Gonzales Company , P70,000
12 Received payment from the Gonzales Company less returns and discounts
14 Paid P26,000 interest on the mortgage payable
15 Paid salaries, P51,000
16 Sold merchandise on account to Ronzales Company, P392,000. Terms: FOB destination;
2/10, n/30
18 Paid P4,000 freight charges on the sale of Feb. 16
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 La Paz Express 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
28 Buenaflor withdrew P400,000 from the business
28 Returned merchandise purchased from Agustin on Feb. 24, P25,000
28 Salaries in the amount of P51,000 have accrued
28 Insurance coverage with premiums of P2,000 has expired at month-end
28 Depreciation on the building and on the equipment for the month amounted to
P9,000 and P12,000 respectively
28 Supplies on hand amounted to P14,000
28 A count of the merchandise inventory amounted to P397,000
Required:
1 Post the Feb. 1, 2013 account balances to the ledger accounts.
2 Record the transactions for the month of February in a journal and post the
transactions to the ledger.
3 Prepare a Trial Balance
4 Prepare a Statement for Performance, Statement of Changes in Owner's Equity,
Statement of Financial Position and Statement of Cash Flow
5 Prepare the closing entries for the month
6 Post the closing entries to the ledger accounts.
7 Prepare a Post-closing Trial Balance.
Teresita Buenaflor Company
GENERAL JOURNAL
For the Month Ended February 2013
Page 1
DATE PARTICULARS PR DEBIT CREDIT
2013
February 1 Cash 110 113,000.00
Accounts Receivable 120 113,000.00
to record collection of accounts
#
2 Accounts Payable 210 64,000.00
Cash 110 62,080.00
Purchase Discount 530 1,920.00
to record payment of account with discount
#
4 Purchases 510 170,000.00
Accounts Payable 210 170,000.00
to record purchase of merchandise on account
#
5 Accounts Receivable 120 270,000.00
Sales 410 270,000.00
to record sales on account
#
7 Advertising Expense 670 6,000.00
Cash 110 6,000.00
to record payment for advertising
#
7 Cash 110 250,000.00
Sales 410 250,000.00
to record sale of merchandise for cash
#
Cash 110 164,900.00
Purchase Discount 530 5,100.00
to record payment for account with discount
#
9 Transportation In 540 4,000.00
Cash 110 4,000.00
to record payment for freight in
#
10 Sales Returns and Allowances 420 70,000.00
to record returned merchandise
#
12 Cash 110 196,000.00
Sales Discount 430 4,000.00
to record collection of account with discount
#
Page 2

2013
February 14 Interest Expense 680 26,000.00
Cash 110 26,000.00
to record payment for interest on mortgage payable
#
15 Salaries Expense 610 51,000.00
Cash 110 51,000.00
to record payment for salaries
#
Sales 410 392,000.00
#
18 Transportation Out 660 4,000.00
Cash 110 4,000.00
to record payment for freight out
#
19 Supplies 140 21,000.00
Cash 110 21,000.00
to record purchase of supplies for cash
#
20 Purchases 510 125,000.00
#
22 Miscellaneous Expense 690 7,000.00
Cash 110 7,000.00
to record payment for miscellaneous expense
#
23 Cash 110 384,160.00
Sales Discount 430 7,840.00
to record collection of account with discount
#
24 Purchases 510 373,000.00
#
24 Transportation In 540 9,000.00
Cash 110 9,000.00
to record payment for freight in
#
Sales 410 420,000.00
#
Page 3

2013
February 26 Sales Returns and Allowances 420 71,000.00
to record return of merchandise from Ronzales
#
28 Buenaflor, Withdrawals 320 400,000.00
Cash 110 400,000.00
to record withdrawal
#
Purchase Returns & Allowances 420 25,000.00
to record return of merchandise to Agustin
#
28 Salaries Expense 610 51,000.00
Salaries Payable 220 51,000.00
to record accrual of salaries
#
28 Insurance Expense 630 2,000.00
Prepaid Insurance 150 2,000.00
to record expired insurance
#
28 Depreciation Expense-Building 640 9,000.00
Depreciation Expense-Equipment 650 12,000.00
Acc. Depreciation - Building 175 9,000.00
Acc. Depreciation - Equipment 185 12,000.00
to record depreciation for the month
#
28 Supplies Expense 620 58,000.00
Supplies 140 58,000.00
to record adjustment for supplies
#
Page 4 CLOSING ENTRIES

February 28 Merchandise Inventory, end 130 397,000.00
Sales 410 1,332,000.00
Purchase Returns and Allowances 520 25,000.00
Purchase Discounts 530 7,020.00
Income Summary 330 1,761,020.00
to close temporary accounts with
credit balances and to establish
the ending merchandise inventory
#
28 Income Summary 330 1,472,840.00
Merchandise Inventory, beg. 130 413,000.00
Sales Returns and Allowances 420 141,000.00
Sales Discounts 430 11,840.00
Purchases 510 668,000.00
Transportation In 540 13,000.00
Salaries Expense 610 102,000.00
Supplies Expense 620 58,000.00
Insurance Expense 630 2,000.00
Depreciation Expense - Building 640 9,000.00
Depreciation Expense - Equipment 650 12,000.00
Transportation Out 660 4,000.00
Advertising Expense 670 6,000.00
Interest Expense 680 26,000.00
Miscellaneous Expense 690 7,000.00
to close temporary accounts with
debit balances and to remove
beginning inventory
#
28 Income Summary 330 288,180.00
Buenaflor, Capital 310 288,180.00
to close the Income summary acct.
#
28 Buenaflor, Capital 310 400,000.00
Buenaflor, Withdrawals 320 400,000.00
to close the withdrawal account
#
GENERAL LEDGER
110 CASH BALANCE

DATE PARTICULARS PR DEBIT CREDIT DEBIT
2013
February 1 Opening balance / 33,000.00 33,000.00
1 Collection of accounts GJ1 113,000.00 146,000.00
2 payment of accounts GJ1 62,080.00 83,920.00
7 payment for advertising GJ1 6,000.00 77,920.00
7 cash sales GJ1 250,000.00 327,920.00
8 payment of account GJ1 164,900.00 163,020.00
9 payment for freight in GJ1 4,000.00 159,020.00
12 Collection of accounts GJ1 196,000.00 355,020.00
14 payment for interest GJ2 26,000.00 329,020.00
15 payment for salaries GJ2 51,000.00 278,020.00
18 payment for freightout GJ2 4,000.00 274,020.00
19 purchase of supplies GJ2 21,000.00 253,020.00
22 payment for misc.expense GJ2 7,000.00 246,020.00
23 collection-Ronzales Co. GJ2 384,160.00 630,180.00
28 withdrawal GJ3 400,000.00 221,180.00
120 ACCOUNTS RECEIVABLE BALANCE

2013
1 collection of accounts GJ1 113,000.00 79,000.00
5 Gonzales company GJ1 270,000.00 349,000.00
10 returns-Gonzales Company GJ1 70,000.00 279,000.00
12 payment-Gonzales Co. GJ1 200,000.00 79,000.00
16 sales on acct.-Ronzales Co. GJ2 392,000.00 471,000.00
23 collection-Ronzales GJ2 392,000.00 79,000.00
25 sales on acct.-Ronzales Co. GJ2 420,000.00 499,000.00
26 returns-Ronzales Company GJ3 71,000.00 428,000.00
130 MERCHANDISE INVENTORY BALANCE

2013
28 Closing entry GJ4 397,000.00 810,000.00
28 Closing entry GJ4 413,000.00 397,000.00
140 SUPPLIES BALANCE

2013
19 cash purchase GJ2 21,000.00 72,000.00
28 used supplies GJ3 58,000.00 14,000.00
150 PREPAID INSURANCE BALANCE

2013
28 expired insurance GJ3 2,000.00 46,000.00
160 LAND BALANCE

2013
170 BUILDING BALANCE

2013
February 1 Opening balance / 1,750,000.00 1,750,000.00
175 ACCUMULATED DEPRECIATION - BUILDING BALANCE

2013
February 1 Opening balance / 350,000.00
28 depreciation for Feb. GJ3 9,000.00
180 EQUIPMENT BALANCE

2013
February 1 Opening balance / 2,310,000.00 2,310,000.00
185 ACCUMULATED DEPRECIATION - EQUIPMENT BALANCE

2013
28 depreciation for Feb. GJ3 12,000.00
210 ACCOUNTS PAYABLE BALANCE

2013
2 payment of accounts GJ1 64,000.00
4 purchase of merchandise GJ1 170,000.00
8 payment of account GJ1 170,000.00
20 purchase-Lozada Company GJ2 125,000.00
24 purchase-Agustin Company GJ2 373,000.00
28 returns to Agustin Co. 25,000.00
220 SALARIES PAYABLE BALANCE

2013
February 28 accrual of salaries GJ3 51,000.00
230 MORTGAGE PAYABLE BALANCE

2013
February 1 Opening balance / 2,600,000.00
310 BUENAFLOR, CAPITAL BALANCE

2013
February 1 Opening balance / 1,569,000.00
28 Closing entry GJ4 288,180.00
320 BUENAFLOR, WITHDRAWALS BALANCE

2013
February 28 withdrawal GJ3 400,000.00 400,000.00
28 Closing entry GJ4 400,000.00 -
330 INCOME SUMMARY BALANCE

2013
February 28 Closing entry GJ4 1,761,020.00
28 Closing entry GJ4 1,472,840.00
410 SALES BALANCE

2013
February 5 sales on account-Gonzales GJ1 270,000.00
7 cash sales GJ1 250,000.00
16 sales on account-Ronzales GJ2 392,000.00
25 sales on account-Ronzales GJ2 420,000.00
28 closing entry GJ4 1,332,000.00
420 SALES RETURNS AND ALLOWANCES BALANCE

2013
February 10 returns from Gonzales GJ1 70,000.00 70,000.00
26 returns from Ronzales GJ3 71,000.00 141,000.00
28 closing entry GJ4 141,000.00 -
430 SALES DISCOUNTS BALANCE

2013
February 12 discount-Gonzales GJ1 4,000.00 4,000.00
23 discount-Ronzales GJ2 7,840.00 11,840.00
510 PURCHASES BALANCE

2013
February 4 purchase of merchandise GJ1 170,000.00 170,000.00
20 pchse on acct.-Lozada Co. GJ2 125,000.00 295,000.00
24 pchse on acct.-Agustin Co. GJ2 373,000.00 668,000.00
520 PURCHASE RETURNS AND ALLOWANCES BALANCE

2013
February 28 returns to Agustin Co. GJ3 25,000.00
28 closing entry GJ4 25,000.00
530 PURCHASE DISCOUNTS BALANCE

2013
February 2 payment of account GJ1 1,920.00
8 payment of account GJ1 5,100.00
28 closing entry GJ4 7,020.00
540 TRANSPORTATION IN BALANCE

2013
February 9 payment for freight in GJ1 4,000.00 4,000.00
610 SALARIES EXPENSE BALANCE

2013
February 15 payment for salaries GJ2 51,000.00 51,000.00
28 accrual of salaries GJ3 51,000.00 102,000.00
620 SUPPLIES EXPENSE BALANCE

2013
February 28 used supplies GJ3 58,000.00 58,000.00
630 INSURANCE EXPENSE BALANCE

2013
February 28 expired insurance GJ3 2,000.00 2,000.00
640 DEPRECIATION EXPENSE-BUILDING BALANCE

2013
February 28 depreciation for Feb. GJ3 9,000.00 9,000.00
650 DEPRECIATION EXPENSE-EQUIPMENT BALANCE

2013
February 28 depreciation for Feb. GJ3 12,000.00 12,000.00
660 TRANSPORTATION OUT BALANCE

2013
February 18 payment for freight out GJ2 4,000.00 4,000.00
670 ADVERTISING EXPENSE BALANCE
2013
February 7 payment for advertising GJ1 6,000.00 6,000.00
680 INTEREST EXPENSE BALANCE

2013
February 14 payment for interest GJ2 26,000.00 26,000.00
690 MISCELLANEOUS EXPENSE BALANCE

2013
February 22 payment for misc. expense GJ2 7,000.00 7,000.00
GENERAL LEDGER
the Month Ended February 2013
BALANCE
CREDIT
BALANCE
CREDIT
BALANCE
CREDIT
BALANCE
CREDIT
BALANCE
CREDIT
BALANCE
CREDIT
BALANCE
CREDIT
BALANCE
CREDIT
350,000.00
359,000.00
BALANCE
CREDIT
BALANCE
CREDIT
630,000.00
642,000.00
BALANCE
CREDIT
108,000.00
44,000.00
214,000.00
44,000.00
169,000.00
542,000.00
517,000.00
BALANCE
CREDIT
51,000.00
BALANCE
CREDIT
2,600,000.00
BALANCE
CREDIT
1,569,000.00
1,857,180.00
1,457,180.00
BALANCE
CREDIT
BALANCE
CREDIT
1,761,020.00
288,180.00
-
BALANCE
CREDIT
270,000.00
520,000.00
912,000.00
1,332,000.00
-
BALANCE
CREDIT
BALANCE
CREDIT
BALANCE
CREDIT
BALANCE
CREDIT
25,000.00
-
BALANCE
CREDIT
1,920.00
7,020.00
-
BALANCE
CREDIT
BALANCE
CREDIT
BALANCE
CREDIT
BALANCE
CREDIT
BALANCE
CREDIT
BALANCE
CREDIT
BALANCE
CREDIT
BALANCE
CREDIT
BALANCE
CREDIT
BALANCE
CREDIT
Trial Balance
February 28, 2013
PARTICULARS DEBIT
110 Cash 221,180.00
120 Accounts Receivable 428,000.00
130 Merchandise Inventory 413,000.00
140 Supplies 14,000.00
150 Prepaid Insurance 46,000.00
160 Land 460,000.00
170 Building 1,750,000.00
175 Accumulated Depreciation - Building
180 Equipment 2,310,000.00
185 Accumulated Depreciation - Equipment
210 Accounts Payable
230 Mortgage Payable
310 Buenaflor, Capital
320 Buenaflor, Withdrawals 400,000.00
330 Income Summary
410 Sales
420 Sales Returns and Allowances 141,000.00
430 Sales Discounts 11,840.00
510 Purchases 668,000.00
520 Purchase Returns and Allowances
530 Purchase Discounts
540 Transportation In 13,000.00
610 Salaries Expense 102,000.00
620 Supplies Expense 58,000.00
630 Insurance Expense 2,000.00
640 Depreciation Expense - Building 9,000.00
650 Depreciation Expense - Equipment 12,000.00
660 Transportation Out 4,000.00
670 Advertising Expense 6,000.00
680 Interest Expense 26,000.00
690 Miscellaneous Expense 7,000.00
Total 7,102,020.00
Trial Balance
February 28, 2013
CREDIT
359,000.00
642,000.00
517,000.00
51,000.00
2,600,000.00
1,569,000.00
1,332,000.00
25,000.00
7,020.00
7,102,020.00
Statement of Cost of Goods Sold
Merchandise Inventory, beginning 413,000.00

Add: Net Purchases
Purchases 668,000.00
Purchase Returns and Allowances (25,000.00)
Purchase Discounts (7,020.00)
Transportation In 13,000.00 648,980.00
Cost of Goods Available for Sale 1,061,980.00
Less: Merchandise Inventory, end 397,000.00
Cost of Goods Sold 664,980.00
Statement for Performance
Gross Sales 1,332,000.00

Less: Sales Returns and Allowances 141,000.00
Sales Discounts 11,840.00 152,840.00
Net Sales 1,179,160.00
Less: Cost of Goods Sold 664,980.00
Gross Profit 514,180.00
Less: Expenses
Salaries Expense 102,000.00
Supplies Expense 58,000.00
Insurance Expense 2,000.00
Depreciation Expense - Building 9,000.00
Depreciation Expense - Equipment 12,000.00
Transportation Out 4,000.00
Advertising Expense 6,000.00
Interest Expense 26,000.00
Miscellaneous Expense 7,000.00 226,000.00
Net Profit 288,180.00

Statement of Changes in Owner's Equity
Buenaflor, Capital beg. 1,569,000.00
Add: Investments
Net Income 288,180.00 288,180.00
Less: Withdrawals (400,000.00)
Buenaflor, Capital end 1,457,180.00

Statement of Financial Position (Report Form)
Statement of Financial Position
As of February 28, 2013
ASSETS
Current Assets
Cash 221,180.00
Accounts Receivable 428,000.00
Merchandise Inventory 397,000.00
Supplies 14,000.00
Prepaid Insurance 46,000.00 1,106,180.00
Non-Current Assets
Land 460,000.00
Building 1,750,000.00
Accumulated Dep'n-Bldg. (359,000.00)
Equipment 2,310,000.00
Accumulated Dep'n-Eqpt. (642,000.00) 3,519,000.00
TOTAL ASSETS 4,625,180.00
LIABILITIES & OWNER'S EQUITY

LIABILITIES
Current Liabilities
Accounts Payable 517,000.00
Salaries Payable 51,000.00 568,000.00
Non-Current Liabilities
Mortgage Payable 2,600,000.00
TOTAL LIABILITIES 3,168,000.00
OWNER'S EQUITY
Buenaflor, Capital 1,457,180.00
TOTAL LIABILITIES & OWNER'S EQUITY 4,625,180.00

Statement of Cash Flow
For the Month Ended February 28, 2013
Cash Flow from Operating Activities

Cash Sales 250,000.00
Collection of accounts 693,160.00
Payment for freight in (13,000.00)
Purchase of supplies (21,000.00)
Payment for advertising (6,000.00)
Payment for interest (26,000.00)
Payment for salaries (51,000.00)
Payment for freight out (4,000.00)
Payment for Accounts Payable (226,980.00)
Payment for miscellaneous expenses (7,000.00)
Net Cash Flow from Operating Activities 588,180.00
Cash Flow from Investing Activities
Net Cash Flow from Investing Activities -
Cash Flow from Financing Activities
Withdrawals (400,000.00)
Net Cash Flow from Financing Activities (400,000.00)
Total Cash Flow from Operating, Investing & Financing 188,180.00

Add: Cash balance, beginning 33,000.00
Ending Cash Balance, February 2013 221,180.00
Post-Closing Trial Balance
February 28, 2013
PARTICULARS DEBIT
110 Cash 221,180.00
120 Accounts Receivable 428,000.00
130 Merchandise Inventory 397,000.00
140 Supplies 14,000.00
150 Prepaid Insurance 46,000.00
160 Land 460,000.00
170 Building 1,750,000.00
175 Accumulated Depreciation - Building
180 Equipment 2,310,000.00
185 Accumulated Depreciation - Equipment
210 Accounts Payable
230 Mortgage Payable
310 Buenaflor, Capital
Total 5,626,180.00
Post-Closing Trial Balance
February 28, 2013
CREDIT
359,000.00
642,000.00
517,000.00
51,000.00
2,600,000.00
1,457,180.00
5,626,180.00

Periodic Method Illustrative Problem

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Periodic Method Illustrative Problem

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What transactions occurred during the month?

What transactions occurred during the month?

What financial statements were prepared?

What financial statements were prepared?

Comprehensive Problem

During the month of February 2013, the following transactions occurred:

Feb. 1 Collected P113,000 from customers on account

DATE PARTICULARS PR DEBIT CREDIT

DATE PARTICULARS PR DEBIT CREDIT

Page 4 CLOSING ENTRIES

110 CASH BALANCE

120 ACCOUNTS RECEIVABLE BALANCE

130 MERCHANDISE INVENTORY BALANCE

140 SUPPLIES BALANCE

150 PREPAID INSURANCE BALANCE

160 LAND BALANCE

170 BUILDING BALANCE

175 ACCUMULATED DEPRECIATION - BUILDING BALANCE

180 EQUIPMENT BALANCE

185 ACCUMULATED DEPRECIATION - EQUIPMENT BALANCE

210 ACCOUNTS PAYABLE BALANCE

220 SALARIES PAYABLE BALANCE

230 MORTGAGE PAYABLE BALANCE

310 BUENAFLOR, CAPITAL BALANCE

320 BUENAFLOR, WITHDRAWALS BALANCE

330 INCOME SUMMARY BALANCE

410 SALES BALANCE

420 SALES RETURNS AND ALLOWANCES BALANCE

430 SALES DISCOUNTS BALANCE

510 PURCHASES BALANCE

520 PURCHASE RETURNS AND ALLOWANCES BALANCE

530 PURCHASE DISCOUNTS BALANCE

540 TRANSPORTATION IN BALANCE

610 SALARIES EXPENSE BALANCE

620 SUPPLIES EXPENSE BALANCE

630 INSURANCE EXPENSE BALANCE

640 DEPRECIATION EXPENSE-BUILDING BALANCE

650 DEPRECIATION EXPENSE-EQUIPMENT BALANCE

660 TRANSPORTATION OUT BALANCE

680 INTEREST EXPENSE BALANCE

690 MISCELLANEOUS EXPENSE BALANCE

Merchandise Inventory, beginning 413,000.00

Gross Sales 1,332,000.00

Net Profit 288,180.00

Buenaflor, Capital beg. 1,569,000.00

Buenaflor, Capital end 1,457,180.00

TOTAL ASSETS 4,625,180.00

LIABILITIES & OWNER'S EQUITY

TOTAL LIABILITIES & OWNER'S EQUITY 4,625,180.00

Cash Flow from Operating Activities

Cash Flow from Investing Activities

Net Cash Flow from Investing Activities -

Cash Flow from Financing Activities

Total Cash Flow from Operating, Investing & Financing 188,180.00

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