ACCOUNTING CYCLE FOR MERCHANDISING CONCERN BUSINESS – PERPETUAL INVENTORY SYSTEM – PRACTICE SET

Time Duration and Allotment: Week 18; 6 hours

Abstract:
This focuses on the application of the steps in the accounting cycle for merchandising concern business in a practice-set based materials.

Lesson Objectives:
As a result of completing this learning module, students will be able to:
 Perform the steps in the accounting cycle.

Module Guide:

1. Answer the following practice set below. Use pencil for convenience. BE NEAT.

PRACTICE SET

LEGNA GENERAL MERCHANDISE

Legna Naiugalac is the sole owner of Legna General Merchandise. The transactions for the month of August 2017 consisted of the following:

August 1 Received P200,000.00 cash from Legna Naiugalac as initial investment.

2 Bought merchandise inventory on account P50,000.00. Term 10/30, n/40.
3 Sold merchandise on account, P40,000. The Actual cost of goods sold is
P15,000.00. Term: 5/10, n/30.
5 Received returns from July 3 sale, P4,000.00. The cost of inventory is P1,500.00.
8 Paid taxes and licenses, P12,000.00 to the city government.
9 Additional investment of L. Naiugalac, P30,000.00.
12 Received July 3 sales.
15 Bought merchandise inventory for cash, P80,000.00 and paid freight on shipment,
P2,000.00.
17 Return P3,000.00 cost of goods purchased on July 15.
19 Sold merchandise amounting to P70,000.00. The cost of sales is P20,000.00.
 20 Paid freight for July 19 transaction, P500.00.
21 Paid the account on July 2.
Withdraw P5,000.00 for personal use.
22 Received returns from July 19 sales, P7,000.00. The cost of inventory is P2,000.00.
25 Sold merchandise on account, P60,000.00. The actual cost of goods sold is
P20,000.00.
28 Paid advertisement, P2,000.00.
30 Paid utilities for the month, P3,000.00.
31 Paid salaries to employees, P50,000.00.
Paid rental for the month, P35,000.00.

Required: Perform the complete accounting cycle using Perpetual Inventory System for Legna General Merchandise. Observe all customary procedures in all respects, i.e.,
complete explanation in the journals / particulars in the ledgers, correct folio referencing, double ruling, proper indention, etc.

Legna General Merchandise

Chart of Accounts

ASSETS:
Current Assets:
101 - Cash
102 - Accounts Receivable
103 - Merchandise Inventory
104 - Supplies
Non-Current Assets:
105 - Equipment

LIABILITIES:
Current Liabilities:
106 - Accounts Payable
Non-Current Liabilities:
107 - Note Payable
OWNER’S EQUITY:
108 - L. Nauigalac, Capital
109 - L. Nauigalac, Drawing
110 - Income Summary

INCOME:
111 - Sales
112 - Sales Returns and Allowances
113 - Sales Discounts

COST / EXPENSES:
114 - Cost of Goods Sold
118 - Salaries
119 - Rent Expense
120 - Taxes and Licenses
121 - Advertisement
122 - Utilities
123 - Freight-Out
 GENERAL JOURNAL

2017 ACCOUNT TITLES F DEBIT CREDIT

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 GENERAL LEDGER
101
CASH
BALANCES
DATE PARTICULARS F DEBIT CREDIT
DEBIT CREDIT
102
ACCOUNTS RECEIVABLE
BALANCES
DATE PARTICULARS F DEBIT CREDIT
DEBIT CREDIT

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MERCHANDISE INVENTORY
BALANCES
DATE PARTICULARS F DEBIT CREDIT
DEBIT CREDIT
104
SUPPLIES
BALANCES
DATE PARTICULARS F DEBIT CREDIT
DEBIT CREDIT

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EQUIPMENT
BALANCES
DATE PARTICULARS F DEBIT CREDIT
DEBIT CREDIT

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ACCOUNTS PAYABLE
BALANCES
DATE PARTICULARS F DEBIT CREDIT
DEBIT CREDIT
107
NOTES PAYABLE
BALANCES
DATE PARTICULARS F DEBIT CREDIT
DEBIT CREDIT

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L. NAUIGALAC, CAPITAL
BALANCES
DATE PARTICULARS F DEBIT CREDIT
DEBIT CREDIT

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L. NAUIGALAC, DRAWING
BALANCES
DATE PARTICULARS F DEBIT CREDIT
DEBIT CREDIT
110
INCOME SUMMARY
BALANCES
DATE PARTICULARS F DEBIT CREDIT
DEBIT CREDIT

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SALES
BALANCES
DATE PARTICULARS F DEBIT CREDIT
DEBIT CREDIT
112
SALES RETURNS AND ALLOWANCES
BALANCES
DATE PARTICULARS F DEBIT CREDIT
DEBIT CREDIT

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SALES DISCOUNTS
BALANCES
DATE PARTICULARS F DEBIT CREDIT
DEBIT CREDIT

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COST OF GOODS SOLD
BALANCES
DATE PARTICULARS F DEBIT CREDIT
DEBIT CREDIT
118
SALARIES
BALANCES
DATE PARTICULARS F DEBIT CREDIT
DEBIT CREDIT

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RENT EXPENSE
BALANCES
DATE PARTICULARS F DEBIT CREDIT
DEBIT CREDIT

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TAXES AND LICENSES
BALANCES
DATE PARTICULARS F DEBIT CREDIT
DEBIT CREDIT
121
ADVERTISEMENT
BALANCES
DATE PARTICULARS F DEBIT CREDIT
DEBIT CREDIT

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UTILITIES
BALANCES
DATE PARTICULARS F DEBIT CREDIT
DEBIT CREDIT

123
FREIGHT-OUT
BALANCES
DATE PARTICULARS F DEBIT CREDIT
DEBIT CREDIT
 Legna General Merchandise
Trial Balance
_________________________

Account Titles Debit Credit

Legna General Merchandise
Income Statement
_________________________
 Legna General Merchandise
Statement of Changes in Equity
_________________________
Legna General Merchandise
Balance Sheet
_________________________
Legna General Merchandise
Statement of Cash Flows
_________________________
 GENERAL JOURNAL
(for the purpose of Closing Entries)

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Legna General Merchandise
Post-Closing Trial Balance
_________________________
 Activities, Resources, and Assessment
Online (Hybrid Model Blended (Asynchronous Model) Offline (Flex Model)

Resources: Resources: Resources:

Schoology App/Messenger Schoology App/Messenger Textbook: Fundamentals of Accounting, Business and
Textbook: Fundamentals of Accounting, Business and Textbook: Fundamentals of Accounting, Business and Management by: Rodiel C. Ferrer and Zeus Vernon B.
Management by: Rodiel C. Ferrer and Zeus Vernon B. Management by: Rodiel C. Ferrer and Zeus Vernon B. Millan
Millan Millan
Fundamentals of Accounting by: Rafael Lopez
Fundamentals of Accounting by: Rafael Lopez Fundamentals of Accounting by: Rafael Lopez

Activities: Activities: Activities:

Topic discussion will be through GoogleMeet App. Topic discussion will be through GoogleMeet App. Topic discussion will be during classroom meetups.
Such teleconferencing will be recorded, the video of
which will be made available to you via Messenger
Group Chat or Gmail address.

Assessment: Assessment: Assessment:

Topic quiz will be publish at Schoology App. Topic quiz will be publish at Schoology App. Topic quiz will be issued to you and will be answered
Instructions as to the time allocated for answering and Instructions as to the time allocated for answering and at home, which will be immediately due for submission
deadline for submission of quiz will be announced via deadline for submission of quiz will be announced via the following day at the box placed at the SVCI guard
Messenger Group Chat. Messenger Group Chat. house. Communication as to the receipt the said quiz
will be through text messaging.

_End of module_