Fundamentals of

Accountancy,
Business and
Management 1
 Lord, we praise and glorify Your
Holy name. Forgive us from our
sins that separate us from Your
love. Thank You for the gift of life,
family, health and security. Help us
to keep in our minds and hearts the
lessons in this SLP. Bless our
families and our homes. All this we
pray in the name of Jesus Christ our
Savior. Amen.
Learning Objectives:
 analyze and record transactions of a merchandising
business in the general journal under the periodic and
perpetual inventory system
 post transactions of a merchandising business to the
general ledger
 prepare a trial balance
 reflect on a Bible text on the importance of inventory
Am I able to identify and analyze business transactions?
Am I able to journalize transactions in the general journal?
Am I able to post transactions to the general ledger?
Am I able to prepare unadjusted trial balance?
Am I able to adjust entries?
Am I able to prepare adjusted trial balance?
Am I able to prepare financial statements?
Am I able to close the books?
Am I able to prepare post-closing trial balance?
Am I able to reverse entries?
Merchandising business
• “buy and sell” business
• physical form of goods bought and
sold is not changed
Inventory
• the goods that a business has
purchased and intended for resale
• original form
• without any further processing
Inventory Systems
• Perpetual inventory system
• Periodic inventory system
Perpetual Inventory System
• continuing forever
• Inventory account is updated each
time a purchase or sale is made
• Cost of goods sold is updated each
time a sale or sales return is made
• commonly used for inventories that
are specifically identifiable and are of
high value
Periodic Inventory System
• occurring or recurring at regular
intervals
• a physical count of inventory is
performed
Journalizing
Transaction 1: You decided to open up your
merchandising business “FABM 1 General
Merchandise”. On Jan. 2, 2021, you provided
₱20,000 as initial investment.
Perpetual System
Cash ₱20,000  
Owner’s capital   ₱20,000

Periodic System
Cash ₱20,000  
Owner’s capital   ₱20,000
 Transaction 2: On Jan. 3, 2021, you obtained a
1-year loan of ₱50,000, 2% interest, with a
written promise to pay.
Perpetual System
Cash 50,000  
Notes payable   50,000

Periodic System
Cash 50,000  
Notes payable   50,000
Transaction 3: On Jan. 4, 2021, you bought
office supplies on account, ₱1,500.
Perpetual System
Supplies 1,500  
Accounts payable   1,500

Periodic System
Supplies 1,500  
Accounts payable   1,500
Transaction 4: On Jan. 5, 2021, you purchased
furniture (shelf) worth ₱10,000. You made a
downpayment of ₱5,000 and promised to pay the rest
in a 6-month installment basis.
Perpetual System
Furniture and fixtures 10,000  
Cash   5,000
Accounts payable   5,000
Periodic System
Furniture and fixtures 10,000  
Cash   5,000
Accounts payable   5,000
Transaction 5: On Jan. 8, 2021, you purchased
goods worth ₱30,000. You paid ₱20,000 cash and
promised to pay the rest after 10 days.

Perpetual System
Inventory 30,000  
Cash   20,000
Accounts payable   10,000
Periodic System
Purchases 30,000  
Cash   20,000
Accounts payable   10,000
 Transaction 6: On Jan. 9, 2021, you paid
shipping cost of ₱2,000 on the purchase on
January 8.
Perpetual System
Inventory 2,000  
Cash   2,000
Periodic System
Freight-in 2,000  
Cash   2,000
Transaction 7: On Jan. 11, 2021, you sold goods
costing ₱2,500 for ₱20,000 on account.

Perpetual System
Accounts receivable 20,000  
Sales   20,000
Cost of Goods Sold 2,500  
Inventory   2,500

Periodic System
Accounts receivable 20,000  
Sales   20,000
Transaction 8: On Jan. 15, 2021, you returned
damaged goods worth ₱1,750 to the supplier
deducted from your credit.
Perpetual System
Accounts payable 1,750  
Inventory   1,750
Periodic System
Accounts payable 1,750  
Purchase returns   1,750
 Transaction 9: On Jan. 17, 2021, a customer
returned goods with sale price of ₱2,000 and cost
of ₱250.
Perpetual System
Sales returns 2,000  
Accounts receivable   2,000
Inventory 250  
Cost of goods sold   250

Periodic System
Sales returns 2,000  
Accounts receivable   2,000
Transaction 10: On Jan. 18, 2021, you paid your
remaining balance from the transaction made on
January 8.
Perpetual System
Accounts payable *8,250  
Cash   *8,250
Periodic System
Accounts payable *8,250  
Cash   *8,250
Transaction 11: On Jan. 25, 2021, you withdrew
₱3,000 from your business for personal use.

Perpetual System
Owner’s drawing 3,000  
Cash   3,000
Periodic System
Owner’s drawing 3,000  
Cash   3,000
 Transaction 12: On Jan. 30, 2021, you paid rent
and utilities worth ₱2,000 and ₱1,500,
respectively.
Perpetual System
Rent expense 2,000  
Utilities expense 1,500  
Cash   3,500

Periodic System
Rent expense 2,000  
Utilities expense 1,500  
Cash   3,500
Posting to Ledger
 Transaction 1:
Both Perpetual and Periodic System
Cash ₱20,000  
Owner’s capital   ₱20,000

Account Title: Cash Account No. _____

Date Item Ref. Debit Credit Balance
01/02 Initial investment   20,000   20,000
Account Title: Owner’s capital Account No. _____
Date Item Ref. Debit Credit Balance
01/02 Initial investment   20,000  20,000
 Transaction 2:
Both Perpetual and Periodic System
Cash 50,000  
Notes payable   50,000

Account Title: Cash Account No. _____

Date Item Ref. Debit Credit Balance
01/02 Initial investment   20,000   20,000
01/03 Loan   50,000   70,000

Account Title: Notes payable Account No. _____

Date Item Ref. Debit Credit Balance
01/03 Loan   50,000  50,000
 Transaction 3:
Both Perpetual and Periodic System
Supplies 1,500  
Accounts payable   1,500

Account Title: Supplies Account No. _____

Date Item Ref. Debit Credit Balance
01/04 Purchases supplies   1,500   1,500

Account Title: Accounts payable Account No. _____

Date Item Ref. Debit Credit Balance
01/04 Purchases supplies     1,500 1,500
 Transaction 4:
Both Perpetual and Periodic System
Furniture and fixtures 10,000  
Cash   5,000
Accounts payable   5,000
Account Title: Furniture and fixtures Account No. _____
Date Item Ref. Debit Credit Balance
01/05 Bought furniture   10,000  10,000

Account Title: Cash Account No. _____

Date Item Ref. Debit Credit Balance
01/02 Initial investment   20,000   20,000
01/03 Loan   50,000   70,000
01/05 Bought furniture     5,000 65,000

Account Title: Accounts payable Account No. _____

Date Item Ref. Debit Credit Balance
01/04 Purchases supplies     1,500 1,500
01/05 Bought furniture     5,000 6,500
Transaction 5:
Perpetual System
Inventory 30,000  
Cash   20,000
Accounts payable   10,000

Periodic System
Purchases 30,000  
Cash   20,000
Accounts payable   10,000
 Both Perpetual and Periodic:

Account Title: Cash Account No. _____

Date Item Ref. Debit Credit Balance
01/02 Initial investment   20,000   20,000
01/03 Loan   50,000   70,000
01/05 Bought furniture     5,000 65,000
01/08 Bought inventory     20,000 45,000

Account Title: Accounts payable Account No. _____

Date Item Ref. Debit Credit Balance
01/04 Purchases supplies     1,500 1,500
01/05 Bought furniture     5,000 6,500
01/08 Bought inventory     10,000 16,500
 Perpetual only:

Account Title: Inventory Account No. _____

Date Item Ref. Debit Credit Balance
01/08 Bought inventory   30,000  30,000

Periodic only:
Account Title: Purchases Account No. _____
Date Item Ref. Debit Credit Balance
01/08 Bought inventory   30,000  30,000
 Transaction 6:
Perpetual System
Inventory 2,000  
Cash   2,000

Periodic System
Freight-in 2,000  
Cash   2,000
 Both Perpetual and Periodic:
Account Title: Cash Account No. _____
Date Item Ref. Debit Credit Balance
01/02 Initial investment   20,000   20,000
01/03 Loan   50,000   70,000
01/05 Bought furniture     5,000 65,000
01/08 Bought inventory     20,000 45,000
01/09 Paid shipping     2,000 43,000
 Perpetual only:

Account Title: Inventory Account No. _____

Date Item Ref. Debit Credit Balance
01/08 Bought inventory   30,000 30,000
01/09 Paid shipping   2,000   32,000

Periodic only:
Account Title: Freight-in Account No. _____
Date Item Ref. Debit Credit Balance
01/09 Paid shipping   2,000   2,000
Transaction 7:
Perpetual System
Accounts receivable 20,000  
Sales   20,000
Cost of Goods Sold 2,500  
Inventory   2,500

Periodic System
Accounts receivable 20,000  
Sales   20,000
 Both Perpetual and Periodic:
Account Title: Accounts receivable Account No. _____
Date Item Ref. Debit Credit Balance
01/11 Sold inventory   20,000   20,000

Account Title: Sales Account No. _____

Date Item Ref. Debit Credit Balance
01/11 Sold inventory   20,000 20,000
 Perpetual only:

Account Title: Inventory Account No. _____

Date Item Ref. Debit Credit Balance
01/08 Bought inventory   30,000 30,000
01/09 Paid shipping   2,000   32,000
01/11 Sold inventory     2,500 29,500

Account Title: Cost of goods sold Account No. _____

Date Item Ref. Debit Credit Balance
01/11 Sold inventory   2,500  2,500
Transaction 8:
Perpetual System
Accounts payable 1,750  
Inventory   1,750

Periodic System
Accounts payable 1,750  
Purchase returns   1,750
 Both Perpetual and Periodic:
Account Title: Accounts payable Account No. _____
Date Item Ref. Debit Credit Balance
01/04 Purchases supplies     1,500 1,500
01/05 Bought furniture     5,000 6,500
01/08 Bought inventory     10,000 16,500
01/15 Returned purchase   1,750   14,750
 Perpetual only:
Account Title: Inventory Account No. _____
Date Item Ref. Debit Credit Balance
01/08 Bought inventory   30,000 30,000
01/09 Paid shipping   2,000   32,000
01/11 Sold inventory     2,500 29,500
01/15 Returned purchase     1,750 27,750

Periodic only:
Account Title: Purchase returns Account No. _____
Date Item Ref. Debit Credit Balance
01/15 Returned purchase     1,750 1,750
 Transaction 9:
Perpetual System
Sales returns 2,000  
Accounts receivable   2,000
Inventory 250  
Cost of goods sold   250

Periodic System
Sales returns 2,000  
Accounts receivable   2,000
 Both Perpetual and Periodic:
Account Title: Accounts receivable Account No. _____
Date Item Ref. Debit Credit Balance
01/11 Sold inventory   20,000   20,000
01/17 Refund to customer     2,000 18,000

Account Title: Sales returns Account No. _____

Date Item Ref. Debit Credit Balance
01/17 Refund to customer   2,000  2,000
 Perpetual only:
Account Title: Inventory Account No. _____
Date Item Ref. Debit Credit Balance
01/08 Bought inventory   30,000 30,000
01/09 Paid shipping   2,000   32,000
01/11 Sold inventory     2,500 29,500
01/15 Returned purchase     1,750 27,750
01/17 Refund to customer   250   28,000

Account Title: Cost of goods sold Account No. _____

Date Item Ref. Debit Credit Balance
01/11 Sold inventory   2,500  2,500
01/17 Refund to customer     250 *2,250
 Transaction 10:
Both Perpetual and Periodic System
Accounts payable *8,250  
Cash   *8,250
Both Perpetual and Periodic:
Account Title: Accounts payable Account No. _____
Date Item Ref. Debit Credit Balance
01/04 Purchases supplies     1,500 1,500
01/05 Bought furniture     5,000 6,500
01/08 Bought inventory     10,000 16,500
01/15 Returned purchase   1,750   14,750
01/18 Paid supplier   8,250   6,500
Account Title: Cash Account No. _____
Date Item Ref. Debit Credit Balance
01/02 Initial investment   20,000   20,000
01/03 Loan   50,000   70,000
01/05 Bought furniture     5,000 65,000
01/08 Bought inventory     20,000 45,000
01/09 Paid shipping     2,000 *43,000
01/18 Paid supplier     8,250 34,750
Transaction 11:
Both Perpetual and Periodic System
Owner’s drawing 3,000  
Cash   3,000
 Both Perpetual and Periodic:
Account Title: Owner’s drawing Account No. _____
Date Item Ref. Debit Credit Balance
01/25 Drawing     3,000 30,00

Account Title: Cash Account No. _____

Date Item Ref. Debit Credit Balance
01/02 Initial investment   20,000   20,000
01/03 Loan   50,000   70,000
01/05 Bought furniture     5,000 65,000
01/08 Bought inventory     20,000 45,000
01/09 Paid shipping     2,000 43,000
01/18 Paid supplier     8,250 34,750
01/25 Drawing   3,000  31,750
 Transaction 12:
Both Perpetual and Periodic System
Rent expense 2,000  
Utilities expense 1,500  
Cash   3,500

Both Perpetual and Periodic:

Account Title: Rent expense Account No. _____
Date Item Ref. Debit Credit Balance
01/25 Paid rent   2,000   2,000
Account Title: Utilities expense Account No. _____
Date Item Ref. Debit Credit Balance
01/25 Paid utilities   1,500   1,500
Account Title: Cash Account No. _____
Date Item Ref. Debit Credit Balance
01/02 Initial investment   20,000   20,000
01/03 Loan   50,000   70,000
01/05 Bought furniture     5,000 65,000
01/08 Bought inventory     20,000 45,000
01/09 Paid shipping     2,000 43,000
01/18 Paid supplier     8,250 34,750
01/25 Drawing   3,000   31,750
01/30 Paid rent and utilities     3,500 28,250
Unadjusted Trial
Balance
 *FABM 1 General Merchandise
Unadjusted Trial Balance
January 31, 2021
  Perpetual Periodic
Accounts Debit Credit Debit Credit
Cash ₱ 28,250   ₱ 28,250  
Accounts receivable 18,000   18,000  
Inventory 28,000      
Supplies 1,500   1,500  
Furniture and fixtures 10,000   10,000  
Accounts payable   ₱ 6,500   ₱ 6,500
Notes payable   50,000   50,000
Owner’s capital   20,000   20,000
Owner’s drawing 3,000   3,000  
Sales   20,000   20,000
Sales returns 2,000   2,000  
Purchases     30,000  
Purchase returns       1,750
Freight-in     2,000  
Cost of goods sold 2,250      
Rent expense 2,000   2,000  
Utilities expense 1,500 1,500
Totals ₱ 96,500 ₱ 96,500 ₱ 98,250 ₱ 98,250
Questions?
Mary Mother of the Good Shepherd
Pray for us.

Jesus, You are my Lord

My happiness lies in You alone.