CASE 1

On January 1, 2020, ABC Trading Corporation was established as a corporation with an authorized capital of P500,000
and with paid-up capital of P300,000. ABC is engaged in buying and selling merchandise with a store located in
Koronadal City. The corporation prepares financial statements on a monthly basis; hence, it prepares adjusting and
closing entries at the end of each month. ABC maintains the following chart of accounts:

111 Cash
113 Accounts receivable
115 Merchandise Inventory
118 Input VAT
121 Store Equipment
121A Accumulated Depreciation – Store Equipment
122 Office Equipment
122A Accumulated Depreciation – Office Equipment
211 Accounts Payable
212 Withholding tax payable
213 Expanded Withholding tax payable
214 SSS, Philhealth and PAG-IBIG Contribution payable
215 Utilities payable
218 Output VAT
219 Cash Dividends payable
311 Ordinary shares capital, P100 par
312 Retained earnings
313 Income Summary
411 Sales
412 Sales Returns and Allowances
413 Sales Discounts
511 Purchases
512 Purchase Returns and Allowances
513 Purchase Discounts
522 Salaries expense
523 SSS, Philhealth and PAG-IBIG Contribution
531 Rent expense
532 Utilities expense
533 Supplies expense
534 Transportation expense
541 Depreciation expense – Store equipment
542 Depreciation expense – Office equipment
551 Miscellaneous expenses
561 Income tax expense

The corporation’s accounting policy includes the following:

1. The corporation uses special journals to record sales, purchases, cash receipts, and cash disbursements in
addition to general journal. It also maintains subsidiary ledger for its customers and suppliers or creditors.
2. Depreciation on office equipment is 10% per annum based on the store and office equipment balance
3. Purchases of supplies are immediately charged to expense.
4. Merchandise inventory at September 30 is P120,000.

ABC’s post-closing trial balance as of August 31, 2020 is as follows:

Debit Credit
Cash P200,000.00
Accounts receivable 25,000.00
Merchandise Inventory 100,000.00
Input VAT 12,000.00
Store Equipment 120,000.00
Accumulated Depreciation – Store Equipment P8,000.00
Office Equipment 81,000.00
Accumulated Depreciation – Office Equipment 5,400.00
Accounts payable 30,000.00
Withholding tax payable 800.00
Expanded withholding tax payable 500.00
SSS, Philhealth and PAG-IBIG Contribution payable 5,550.00
Utilities payable 3,800.00
Ordinary share capital, P100 par 300,000.00
Retained earnings 183,950.00
 ABC TRADING CORPORATION ABC TRADING CORPORATION
Gensan Drive, Koronadal City Gensan Drive, Koronadal City

Sales Invoice No. 6001 Date: Sept. 3 Sales Invoice No. 6003 Date: Sept. 15
Customer: Sunset Co. Customer: Twinkle Corp.
Address: Brgy. Sto Niño, Koronadal City Address: Brgy. Sta Cruz, Koronadal City
Terms: 2/10, n/30 Terms: 2/10, n/30

Particulars Qty Amount Particulars Qty Amount

Sales P150,000 - Sales P180,000 -
VAT 18,000 VAT 21,600
TOTAL P 168,000 - TOTAL P 201,600 -

Prepared by: Prepared by:

LITA DELA LITA DELA

CRUZ CRUZ

ABC TRADING CORPORATION ABC TRADING CORPORATION

Gensan Drive, Koronadal City Gensan Drive, Koronadal City

Sales Invoice No. 6002 Date: Sept. 10 Receiving Report No. 7001 Date: Sept. 6
Customer: Light Co. Customer: Sunset Co.
Address: Brgy. Concepcion, Koronadal City Address: Brgy. Sto Niño, Koronadal City
Terms: 2/10, n/30 Reason: Damaged merchandise

Particulars Qty Amount Particulars Qty Amount

Sales P100,000 - Invoice No. 1341 P20,000 -
VAT 12,000 VAT 2,400
TOTAL P 112,000 - TOTAL P 22,400 -

Prepared by: Prepared by:

LITA DELA PEDRO

CRUZ CAGAS
 ABC TRADING CORPORATION ABC TRADING CORPORATION
Gensan Drive, Koronadal City Gensan Drive, Koronadal City

Official Receipt No. 2001 Date: Sept. Official Receipt No. 2003 Date: Sept.

8 Customer: HAPPY TRADING 20 Customer: LIGHT CO.

Address: Brgy. Assumption, Koronadal City Address: Brgy. Concepcion, Koronadal City
INVOICE:COD INVOICE:6002
Particulars Amount Particulars Amount
Cash Sales P130,000 - Amount P112,000 -
VAT 15,600 - Discount (2,000) -
Total P145,600 Total P110,000

CASH CHECK P145,600 CASH CHECK P110,000

Prepared by: Prepared by:

DELIA DECLARO DELIA DECLARO

ABC TRADING CORPORATION ABC TRADING CORPORATION

Gensan Drive, Koronadal City Gensan Drive, Koronadal City

Official Receipt No. 2002 Date: Sept. 11 Official Receipt No. 2004 Date: Sept.

Customer: SUNSET CO. 22 Customer: SUNSHINE CO.

Address: Brgy. Sto Niño, Koronadal City Address: Brgy. San Jose, Koronadal City
INVOICE:6001 INVOICE:5004
Particulars Amount Particulars Amount
Amount P168,000 - Amount P25,000 -
Returns (22,400) - Total P25,000
Discount (2,600) -
Total P143,000 CASH CHECK P25,000

CASH CHECK P143,000 Prepared by:

DELIA DECLARO
Prepared by:

DELIA
DECLARO
 CBA CO. FED CORP.
Brgy. Saravia, Koronadal City Brgy. San Roque, Koronadal City

Invoice No. Date: Sept. 1 Invoice No. Date: Sept. 8

1341
Customer: ABC TRADING CORPORATION 9041
Customer: ABC TRADING CORPORATION
Address: Gensan Drive, Koronadal City Address: Gensan Drive, Koronadal City
Terms: 2/10, n/30 Terms: n/30

Particulars Qty Amount Particulars Qty Amount

Amount P120,000 - Amount P70,000 -
VAT 14,400 VAT 8,400
TOTAL P 134,400 - TOTAL P 78,400 -

Prepared by: Prepared by:

Sara NELLY
Geronemo PADILLA

ZYX CO. CBA CO.

Brgy. Carpenter Hill, Koronadal City Brgy. Saravia, Koronadal City

Invoice No. Date: Sept. 5 Receiving Report No. Date: Sept. 4

5027
Customer: ABC TRADING CORPORATION 9451
Customer: ABC TRADING CORPORATION
Address: Gensan Drive, Koronadal City Address: Gensan Drive, Koronadal City
Terms: 1/15, n/30 Reason: Damaged merchandise

Particulars Qty Amount Particulars Qty Amount

Amount P180,000 - Invoice No. 1341 P20,000 -
VAT 12,600 VAT 2,400
TOTAL P 201,600 - TOTAL P 22,400 -

Prepared by: Prepared by:

ED MANALO TINA PAY

 ABC TRADING CORPORATION ABC TRADING CORPORATION
Gensan Drive, Koronadal City Gensan Drive, Koronadal City

Check Voucher No. 91001Date: Nov. 3 Check Voucher No. 91003Date: Sept. 5

Payee: National Bookstore Payee: AGRIDA REALTY CORP.

Description Amount Description Amount

Office Supplies P 1,500 - Rent for P 10,000 -
VAT 180 - September
TOTAL P 1,680 - Expanded (500) -
Withholding Tax
Check # 4210001 TOTAL P 9,500 -

Approved by: Recorded by: Received by: Check # 4210003

ALEX D. SET
Approved by: Recorded by: Received by:

ALEX D.
ABC TRADING CORPATION SET
Gensan Drive, Koronadal City
ABC TRADING CORPORATION
Check Voucher No. 91002Date: Sept. Gensan Drive, Koronadal City

5 Payee: STARBRIGHT OFFICE DEPOT Check Voucher No. 91004Date: Sept. 10

Description Amount Payee: BIR

Office Equipment P 6,000 -
VAT 720 - Description Amount
TOTAL P 6,720 - Withholding tax P 800 -
on compensation
Check # 4210002 Expanded 500
withholding tax
Approved by: Recorded by: Received by: TOTAL P 1,300 -

ALEX D. SET Check # 4210004

Approved by: Recorded by: Received by:

ALEX D.
SET
 ABC TRADING CORPORATION ABC TRADING CORPORATION
Gensan Drive, Koronadal City Gensan Drive, Koronadal City

Check Voucher No. 91005Date: Sept. 10 Check Voucher No. 91007Date: Sept. 10

Payee: SSS, PhilHealth, Pag-IBIG Payee: SOCOTECO 1

Description Amount Description Amount

Employee’s Share P 2,050 - Electricity usage P 3,000 -
Employer’s Share 3,500 (August 2020)
TOTAL P 5,550 - TOTAL P 3,000 -

Check # 4210005 Check # 4210007

Approved by: Recorded by: Received by: Approved by: Recorded by: Received by:

ALEX D. ALEX D.
SET SET

ABC TRADING CORPORATION ABC TRADING CORPORATION

Gensan Drive, Koronadal City Gensan Drive, Koronadal City

Check Voucher No. 91006Date: Sept. 10 Check Voucher No. 91008Date: Sept. 15

Payee: KORONADAL WATER DISTRICT Payee: Cash

Description Amount Description Amount

Water P 800 - Payroll P 24,000 -
consumption Pag-IBIG (200)
(August 2020) PhilHealth (750)
TOTAL P 800 - TOTAL P 23,050 -

Check # 4210006 Check # 4210008

Approved by: Recorded by: Received by: Approved by: Recorded by: Received by:

ALEX D. ALEX D.
SET SET
 ABC TRADING CORPORATION ABC TRADING CORPORATION
Gensan Drive, Koronadal City Gensan Drive, Koronadal City

Check Voucher No. 91009Date: Sept. 16 Check Voucher No. 91011Date: Sept. 25

Payee: UST Co. Payee: IHG Co.

Description Amount Description Amount

Invoice No. 1475 P 30,000 - Cash Purchases P 30,000 -
TOTAL P 30,000 - VAT 3,600 -
TOTAL P 33,600 -
Check # 4210009
Check # 4210011
Approved by: Recorded by: Received by:
Approved by: Recorded by: Received by:
ALEX D. ____________ _____________
SET ALEX D.
SET
ABC TRADING CORPORATION ABC TRADING CORPORATION
Gensan Drive, Koronadal City Gensan Drive, Koronadal City

Check Voucher No. 91010Date: Sept. 20 Check Voucher No. 91012Date: Sept. 30

Payee: ZXY Co. Payee: CBA Co.

Description Amount Description Amount

Invoice No. 5027 P 201,600 - Invoice No. 1341 P 134,400 -
Discount (1,800) - Returns (22,400) -
TOTAL P 199,800 - TOTAL P 112,000 -

Check # 4210010 Check # 4210012

Approved by: Recorded by: Received by: Approved by: Recorded by: Received by:

ALEXIS D. ALEX D.
SET SET
 ABC TRADING CORPORATION ABC TRADING CORPATION
Gensan Drive, Koronadal City Gensan Drive, Koronadal City

Check Voucher No. 91013Date: Sept. 30 Check Voucher No. 91015Date: Dec. 10

Payee: CASH Payee: Cash

Description Amount Description Amount

Payroll P 24,000 - Cash Dividend P 30,000 -
SSS (1,100) - TOTAL P 30,000 -
Withholding Taxes (800)
TOTAL P 22,100 - Check # 4210015

Check # 4210013 Approved by: Recorded by: Received by:

Approved by: Recorded by: Received by:
ALEX D. SET
ALEX D.
SET
UST Co.
Brgy. Paraiso, Koronadal City
ABC TRADING CORPORATION
Gensan Drive, Koronadal City Official Receipt No. 4702 Date: Sept. 16

Check Voucher No. 91014Date: Oct. 10 Customer: ABC TRADING CORPORATION

Address: Gensan Drive, Koronadal City
Payee: SSS, PhilHealth, Pag-IBIG INVOICE:1475
Particulars Amount
Description Amount Amount P30,000 -
Employer share P 3,500 - Total P30,000
on SSS,
PhilHealth, Pag- CASH CHECK P30,000
IBIG contributions
TOTAL P 3,500 - Prepared by:

Check # 4210014 DINA KO

Approved by: Recorded by: Received by:

ALEX D.
SET
 ZYX CO. CBA CO.
Brgy. Carpenter Hill, Koronadal City Brgy. Saravia, Koronadal City

Official Receipt No. Date: Sept. 20 Official Receipt No. 4917 Date: Sept. 30
2328
Customer: ABC TRADING CORPORATION Customer: ABC TRADING CORPORATION
Address: Gensan Drive, Koronadal City Address: Gensan Drive, Koronadal City
INVOICE:5027 INVOICE:1341
Particulars Qty Amount Particulars Amount
Amount P199,800 - Amount P112,000 -
TOTAL P199,800 - Total P112,000 -

CASH CHECK P199,800 CASH CHECK P112,000

Prepared by: Prepared by:

TOM CRUZ DAN SIRA

IHG CO. National Bookstore

Brgy. Cacub, Koronadal City Alunan Ave., Koronadal City

Official Receipt No. 2715 Date: Sept. Official Receipt No. 1723 Date: Sept. 3

25 Customer: ABC TRADING CORPORATION Customer: ABC TRADING CORPORATION

Address: Gensan Drive, Koronadal City Address: Gensan Drive, Koronadal City
INVOICE:COD INVOICE:COD
Particulars Amount Particulars Qty Amount
Amount P30,000 - Office Supplies P1,500 -
VAT 3,600 - VAT 180 -
Total P33,600 TOTAL P 1,680 -

CASH CHECK P33,600 CASH CHECK P 1,680

Prepared by: Prepared by:

BETTY LAFIA Mitch Dolojo

 STARBRIGHT
OFFICE DEPOT LANDBANK OF THE PHILIPPINES
Brgy. Zone 1, Koronadal City Jose Abad Santos St., Koronadal City

Official Receipt No. 14322Date: Sept. PAYMENT’S SLIP Date: Sept. 10

Payment for: BIR
5 Customer: ABC TRADING CORPORATION Company Name: ABC TRADING CORPORATION
Address: Gensan Drive, Koronadal City Reference: 817-541-348-000
INVOICE:
Description Amount Particulars Amount
Office Equipment P6,000 - WHT on compensation P 800 -
VAT 720 - Expanded WHT on 500
TOTAL P 6,720 - rent
TOTAL P 1,300 -
CASH CHECK P 6,720
CASH CHECK P 1,300
Prepared by:
Prepared by:
PETER B, MIGUEL
DIVINA WATING

Agrida Realty Copr.

Brgy. Zone 2, Koronadal City LANDBANK OF THE PHILIPPINES
Jose Abad Santos St., Koronadal City
Official Receipt No. 99170Date: Sept. 5
PAYMENT’S SLIP Date: Nov. 10
Customer: ABC TRADING CORPORATION
Address: Gensan Drive, Koronadal City Payment for: SSS, PhilHealth, and Pag-IBIG
INVOICE: Company Name: ABC TRADING CORPORATION
Particulars Qty Amount Reference: B52-248-776-315
Rent- June. 2020 P10,000 -
Expanded (500) - Particulars Amount
Withholding Tax Employees’ Share P 2,050 -
on Rent Employer’s Share 3,500
TOTAL P 9,500 - TOTAL P 5,550 -

CASH CHECK P 9,500 CASH CHECK P 5,550

Prepared by: Prepared by:

Melody DIVINA WATING

Tabamo
 KORONADAL WATER DISTRIC ABC TRADING CORPORATION
Brgy. Zone 3, Koronadal City Gensan Drive, Koronadal City

Official Receipt No. 94108Date: Sept. 10 PAYROLL SUMMARY

For the Period September 1 to 15, 2020
Customer: ABC TRADING CORPORATION
Address: Gensan Drive, Koronadal City GROSS DEDUCTION NET
INVOICE:575409 P24,000 Pag-IBIG P200 P23,050 -
Particulars Amount PhilHealth750
Water P800 - Total P950
consumption TOTAL P23,050 -
(Aug. 2020)
TOTAL P 800 - CASH CHECK P23,050

CASH CHECK P 800 Prepared by: Approved by:

Prepared by: DELIA ALEX D.

DECLARO SET
Melody
Tabamo

SOCOTECO 1 ABC TRADING CORPORATION

Brgy. Morales, Koronadal City Gensan Drive, Koronadal City

Official Receipt No. 45123Date: Sept. 10 PAYROLL SUMMARY

For the Period September 16 to 30, 2020
Customer: ABC TRADING CORPORATION CASH
CASH CHECK
Address: Gensan Drive, P3,000
Koronadal City GROSS DEDUCTION CHECKNETP22,100
INVOICE:344550 P24,000 SSS P22,100 -
Particulars Amount P1,100 WH Tax
Electric usage P3,000 - 800
(August 2020) Total P1,900
TOTAL P3,000 - TOTAL P22,100 -

Prepared by: Approved by:

Prepared by:
DELIA ALEX D.
Trixie DECLARO SET
Mangonon
 KORONADAL WATER DISTRIC
Brgy. Zone 3, Koronadal City
STATEMENT OF ACCOUNT
No. 32175 Date: Oct. 5

Customer: ABC TRADING CORPORATION

Address: Gensan Drive, Koronadal City

Particulars Qty Amount

Water P350 -
consumption
(Sept. 2020)
TOTAL P350 -

Prepared by:

BILLY
GUMAPAC

SOCOTECO 1
Brgy. Morales, Koronadal City
STATEMENT OF ACCOUNT
No. 48124 Date: Oct. 7

Customer: ABC PARTNERSHIP

Address: Gensan Drive, Koronadal
City
Particulars Qty Amount
Electric usage P1,000 -
(Sept. 2020)
TOTAL P1,000 -

Prepared by:

Lily Viray