TRANSACTIONS FOR ADJUSTING ENTRIES

1. Complete the adjustments section of the worksheet [WS].

a. On November 1, the company paid ₱90,000 for a 6-month insurance contract with Assurance Guaranteed.

b. On November 21, the company issued a 90-day 6% note for money borrowed from A1 Loan amounting to ₱150,000.

c. On November 22, Aim High Trading contracted the company to deliver specialized hardware. The company received
₱53,600 in advance from Aim High Trading. ₱23,600 worth of parts have been delivered by month-end

d. On November 30, the company has earned commissions of ₱8,000 from Steadfast Faith Company for goods sold on
consigment basis. This remains to be uncollected at month- end.

e. On November 30, the company received its utilities bill for the month of November amounting to ₱23,000. This remains
to be unpaid at month-end.

f. On November 30, Store Supplies costing ₱5,000 were on hand.

g. The company purchased the equipment on July 1, 2022. The equipment was estimated to have a useful life of five years
and a residual value of 10% of cost.

h. The company purchased the furniture on July 1, 2022. The furniture was estimated to have a useful life of four years
with no residual value.

i. The allowance for doubtful accounts is estimated at 3% of accounts receivable.

j. Based on a physical count, ending inventory was determined to be ₱130,000.

 ERIK TORSTEN HARDWARE
Worksheet
For the Month Ended November 30, 2022

Adjusted
Trial Balance Adjustments Trial Balance
Accounts Debit Credit Debit Credit Debit
Cash 455,263 455,263
Accounts Receivable 75,000 75,000
Allowance for Doubtful Accounts 1,500 750
Merchandise Inventory, November 1 150,000
Store Supplies 17,000 12,000 5,000
Prepaid Insurance Expense 90,000 15,000 75,000
Equipment 230,000 230,000
Accumulated Depreciation - Equipment 13,800 3,450
Furniture 180,000 180,000
Accumulated Depreciation - Furniture 15,000 3,750
Accounts Payable 46,500
Notes Payable 150,000
Unearned Sales Revenue 53,600 23,600
Torsten, Capital 837,200
Torsten, Drawing 16,000 16,000
Sales 332,100 23,600
Sales Returns and Allowances 6,000 6,000
Sales Discounts 2,122 2,122
Purchases 147,000 20,000 167,000
Freight In 2,000 2,000
Purchase Returns and Allowances 7,500
Purchase Discounts 2,985
Cleaning Services Expense 15,000 15,000
Freight Out 1,800 1,800
Rent Expense 30,000 30,000
Salaries Expense 43,000 43,000
TOTAL 1,460,185 1,460,185
Merchandise Inventory, November 30 20,000 130,000
Insurance Expense 15,000 15,000
Interest Expense 2,250 2,250
Interest Payable 2,250
Commission Receivable 8,000 8,000
Commission Income 8,000
Utilities Expense 23,000 23,000
Utilities Payable 23,000
Store Supplies Expense 12,000 12,000
Depreciation Expense - Equipment 3,450 3,450
Depreciation Expense - Furniture 3,750 3,750
Dubtful Accounts Expense 750 750
TOTAL 111,800 111,800 1,501,385
Net Income
TOTAL
E

0, 2022

Adjusted Statement of Statement of

Trial Balance Profit or Loss Financial Position
Credit Debit Credit Debit Credit
455,263
75,000
2,250 0 2,250
150,000
5,000
75,000
230,000
17,250 17,250
180,000
18,750 18,750
46,500 46,500
150,000 150,000
30,000 30,000
837,200 837,200
16,000
355,700 355,700
6,000
2,122
167,000
2,000
 7,500 7,500
2,985 2,985
15,000
1,800
30,000
43,000

130,000 130,000
15,000
2,250
2,250 2,250
8,000
8,000 8,000
23,000
23,000 23,000
12,000
3,450
3,750
750
1,501,385 477,122 504,185 1,174,263 1,127,200
27,063 47,063
504,185 504,185 1,174,263 1,174,263
Erik Torsten Hardware
Adjusting Entries

November 2022
30 Insurance Expense

Adjustment for used/expired portion of prepayment

30 Interest Expense

Issued a 90-day 6% note for money borrowed from A1

30 Unearned Sales Revenue

Deliver specialized hardware to Aim High Trading

30 Commission Receivable

Earned commisions from Steadfast Faith Company

30 Utilities Expense

Received utilities bill for the month of November

30 Store Supplies Expense

Store supplies costing 5,000 were on hand

30 Depreciation Expense - Equipment

Purchased equpment on July 1, 2022 that has a useful life of 5 years and a residual value of 10% cos

30 Depreciation Expense - Furniture

Purchased furniture on July 1, 2022 that has a useful life of four years with no residual value.

30 Depreciation Expense

30 Doubtful Accounts

Allowance for doubtful accounts is estimated at 3% of accounts receivable.

30 Merchandise Inventory
 Based on a physical count, ending inventory was determined to be ₱130,000.

Insurance Expense
Date Debit Credit
11/30 15,000
0

Interest Expense
Date Debit Credit
11/30 2,250

Unearned Sales Revenue

Date Debit Credit
11/22 53,600
11/30 23,600

Commissions Receivable
Date Debit Credit
11/30 8,000.00

Utilities Expense
Date Debit Credit
11/30 23,000.00

Store Supplies Expense

Date Debit Credit
11/30 23,000.00

* Depreciation Expense - E
Date Debit Credit
11/30 3,450.00

Depreciation Expense - Fu
Date Debit Credit
11/30 3,750.00

Doubtful Accounts
Date Debit Credit
11/30 750.00
nce Expense 15,000
Prepaid Insurance Expense
nt for used/expired portion of prepayment

t Expense 2,250
Interest Payable
90-day 6% note for money borrowed from A1

ned Sales Revenue 23,600

Sales
pecialized hardware to Aim High Trading

ssion Receivable 8,000

Commission Income
ommisions from Steadfast Faith Company

s Expense 23,000
Utilities Payable
utilities bill for the month of November

Supplies Expense 12,000

Store Supplies
pplies costing 5,000 were on hand

ciation Expense - Equipment 3,450

Accumulated Depreciation
d equpment on July 1, 2022 that has a useful life of 5 years and a residual value of 10% cost.

ciation Expense - Furniture 3,750

Accumulated Depreciation - Furniture
d furniture on July 1, 2022 that has a useful life of four years with no residual value.

ciation Expense 3,750

Accumulated Depreciation

ul Accounts 750
Allowance for doubtful accounts
e for doubtful accounts is estimated at 3% of accounts receivable.

andise Inventory 20,000

Income Summary
 a physical count, ending inventory was determined to be ₱130,000.

Balance
15,000

Balance
2,250

Balance
53,600 -
30,000

eceivable
Balance
8,000

Balance
23,000

Balance
23,000

Balance
3,450

Balance
3,750

Balance
750.00
 Erik Torsten Hardware
Closing Entries

November 2022
30 Sales
15,000 Commissions Income
Purchases Returns and
Purchases Discounts
Merchandise Inventory,
2,250
Closing of nominal accou

30 Income Summary
23,600 Merchandise Inventory,
Sales Returns and Allow
Sales Discounts
Purchases
8,000 Freight In
Cleaning Services Expen
Freight Out
Rent Expense
23,000 Salaries Expense
Insurance Expense
Interest Expense
Utilities Expense
12,000 Store Supplies Expense
Depreciation Expense -
Depreciation Expense -
Doubtful Accounts Expe
3,450 Close expense accounts

30 Income Summary

3,750 Close income summary

30
Torsten, Capital

3,750 Close drawings

750

20,000
 Torsten, Capital - Novem
Net Income
Torsten, Drawing - Nove
Prepaid insurance Expense Torsten, Capital
Date Debit Credit Balance
11/1 90,000 90,000
11/30 15,000 75,000

Interest Payable
Date Debit Credit Balance
11/30 2,250 2,250

Sales
Date Debit Credit Balance
11/1 332,100 332,100
11/30 23,600 355,700

Commissions Income
Date Debit Credit Balance
11/30 8,000 8,000

Utilities Payable
Date Debit Credit Balance
11/30 23,000 23,000

Store Supplies
Date Debit Credit Balance
11/1 17,000 17,000
11/30 12,000 5,000

Accumulated Depreciation
Date Debit Credit Balance
11/1 13,800.00 13,800
11/30 3,450 17,250

Accumulated Depreciation
Date Debit Credit Balance
11/1 15,000.00 15,000
11/30 3,750 18,750

Allowance for Doubtful Accounts

Date Debit Credit Balance
11/1 1,500.00 1,500.00
11/30 750 2,250
Erik Torsten Hardware
Closing Entries

November 2022
Sales 355,700
Commissions Income 8,000
Purchases Returns and Allowances 7,500
Purchases Discounts 2,985
Merchandise Inventory, November 30 130,000
Income Summary 504,185
Closing of nominal accounts with credit balances

Income Summary 457,122

Merchandise Inventory, December 1 150,000
Sales Returns and Allowances 6,000
Sales Discounts 2,122
Purchases 147,000
Freight In 2,000
Cleaning Services Expense 15,000
Freight Out 1,800
Rent Expense 30,000
Salaries Expense 43,000
Insurance Expense 15,000
Interest Expense 2,250
Utilities Expense 23,000
Store Supplies Expense 12,000
Depreciation Expense - Equipment 3,450
Depreciation Expense - Furniture 3,750
Doubtful Accounts Expense 750
Close expense accounts and cost of sales accounts with debit balances

Income Summary 47,063

Torsten, Capital 47,063
Close income summary

Torsten, Capital 837,200

Torsten, Drawing 837,200
Close drawings

Income Summary
457,122 130,000

504,185
457,122 634,185
177,063
 634,185 634,185

Torsten, Capital - November 1, 2022 837,200

Net Income 47,063.00
Torsten, Drawing - November 30, 2022 -16000
Torsten, Capital 868,263
Erik Torsten Hardware
Reversing Entries

December 2022
1 Interest Payable 2,250
Interest Expense
Reversing accrued interest expense

Commissions Income 8,000

Commissions Receivable
Reversing accrued commission income

Utilities Payable 23,000

Utilities Expense
Reversing accrued utilities
 2,250

8,000

23,000
ERIK TORSTEN HARDWARE
Posting

CASH
Date Particulars Debit
30-Nov Balance

ACCOUNTS RECEIVABLE
Date Particulars Debit
30-Nov Balance

ALLOWANCE FOR DOUBTFUL ACCOUNTS

Date Particulars Debit
30-Nov Balance
Approximation of uncollected receivables

COMMISSION RECEIVABLE
Date Particulars Debit
Accrual of uncollected commission 8,000
Reversing accrued commission income

MERCHANDISE INVENTORY
Date Particulars Debit
01-Nov Balance
Reflect the decrease of Inventory

STORE SUPPLIES
Date Particulars Debit
30-Nov Balance
Recognition of used store supplies
 PREPAID INSURANCE EXPENSE
Date Particulars Debit
30-Nov Balance
Adjustment for used portions of prepayment

EQUIPMENT
Date Particulars Debit
30-Nov Balance

ACCUMULATED DEPRECIATION - EQUIPMENT

Date Particulars Debit
30-Nov Balance
Recording of accumulated depreciation of
equipment

FURNITURE
Date Particulars Debit
30-Nov Balance

ACCUMULATED DEPRECIATION - FURNITURE

Date Particulars Debit
30-Nov Balance
Recording of accumulated depreciation of furniture

ACCOUNTS PAYABLE
Date Particulars Debit
30-Nov Balance

NOTES PAYABLE
Date Particulars Debit
30-Nov Balance

INTEREST PAYABLE
Date Particulars Debit
Accrual of interest from loan
Reversing accrued interest expense 2,250

UTILITIES PAYABLE
Date Particulars Debit
Accrual of utilities for the month
Reversing accrued utilities 23,000

UNEARNED SALES REVENUE

Date Particulars Debit
30-Nov Balance
Recognition of earned portion of advanced sales 23,600

TORSTEN, CAPITAL
Date Particulars Debit
01-Nov Balance
To close net income to capital
To close drawings to capital 16,000

TORSTEN, DRAWING
Date Particulars Debit
30-Nov Balance
To close drawing to capital

INCOME SUMMARY
Date Particulars Debit
Closing of nominal accounts with credit balances
Closing of nominal accounts with debit balances 305,097
To reflect the decrease in inventory 20,000
To close net income to capital 49,088
 SALES
Credit Balance Date
455,263 30-Nov

Credit Balance
75,000 COMMISSION INCOME
Date

NTS
Credit Balance
1,500
750 2,250
SALES RETURNS AND ALLOWANCE
Date
30-Nov

Credit Balance
8,000
8,000 0
SALES DISCOUNTS
Date
30-Nov

Credit Balance
150,000
20,000 130,000
PURCHASES
Date
30-Nov

Credit Balance
17,000
12,000 5,000 FREIGHT IN
Date
 30-Nov

Credit Balance
90,000
15,000 75,000 PURCHASE RETURNS AND ALLOWANC
Date
30-Nov

Credit Balance
230,000
PURCHASE DISCOUNTS
Date
30-Nov
PMENT
Credit Balance
13,800
3,450 17,250
CLEANING SERVICES EXPENSE
Date
30-Nov

Credit Balance
180,000

FREIGHT OUT
Date
ITURE 30-Nov
Credit Balance
15,000
3,750 18,750

INSURANCE EXPENSE
Date

Credit Balance
46,500

INTEREST EXPENSE
Date
Credit Balance
 150,000

Credit Balance RENT EXPENSE

2,250 2,250 Date
0 30-Nov

Credit Balance SALARIES EXPENSE

23,000 23,000 Date
0 30-Nov

Credit Balance STORE SUPPLIES EXPENSE

53,600 Date
30,000

Credit Balance UTILITIES EXPENSE

837,200 Date
49,088 886,288
870,288

Credit Balance DEPRECIATION EXPENSE - EQUIPMEN

16,000 Date
16,000 0

Credit Balance DEPRECIATION EXPENSE - FURNITUR

374,185 374,185 Date
69,088
49,088
0

DOUBTFUL ACCOUNTS EXPENSE

Date
 SALES
Particulars Debit Credit Balance
Total
Recognition of earned portion of advanced 332,100
sales
Closing of nominal accounts with credit 23,600 355,700
balance 355,700 0

COMMISSION INCOME
Particulars Debit Credit Balance
Accrual of nominal
Closing uncollected commission
accounts with credit 8,000 8,000
balance 8,000 0
Reversing accrued commission income 8,000 (8,000)

SALES RETURNS AND ALLOWANCES

Particulars Debit Credit Balance
Total
Closing of nominal account with debit 6,000
balance 6,000 0

SALES DISCOUNTS
Particulars Debit Credit Balance
Total
Closing of nominal accounts with debit 1,000
balances 1,000 0

PURCHASES
Particulars Debit Credit Balance
Total
Closing of nominal accounts with debit 147,000
balances 147,000 0

FREIGHT IN
Particulars Debit Credit Balance
Total
Closing of nominal accounts with debit 2,000
balances 2,000

PURCHASE RETURNS AND ALLOWANCES

Particulars Debit Credit Balance
Total
Closing of nominal accounts with credit 7,500
balances 7,500 0

PURCHASE DISCOUNTS
Particulars Debit Credit Balance
Total
Closing of nominal accounts wit credit 2,985
balances 2,985 0

CLEANING SERVICES EXPENSE

Particulars Debit Credit Balance
Total
Closing of nominal account with debit 15,000
balances 15,000

FREIGHT OUT
Particulars Debit Credit Balance
Total
Closing of nominal accounts with debit 1,800
balances 1,800 0

INSURANCE EXPENSE
Particulars Debit Credit Balance
Adjustment
Closing for expired
of nominal portion
accounts of prepayment
with debit 15,000 15,000
balances 15,000 0

INTEREST EXPENSE
Particulars Debit Credit Balance
Accrual of interest from loan 2,250 2,250
Closing of nominal accounts with debit
balances 2,250 0
Reversing accrued interest expense 2,250

RENT EXPENSE
Particulars Debit Credit Balance
Total
Closing of nominal accounts with debit 30,000
balances 30,000 0

SALARIES EXPENSE
Particulars Debit Credit Balance
Total
Closing of nominal accounts with debit 43,000
balances 43,000 0

STORE SUPPLIES EXPENSE

Particulars Debit Credit Balance
Recognition
Closing of usedaccounts
of nominal store supplies
with debit 12,000 12,000
balances 12,000 0

UTILITIES EXPENSE
Particulars Debit Credit Balance
Accrual
Closing of nominal
utilities for the month
accounts with debit 23,000 23,000
balances 23,000 0
Reversing accrued utilities 23,000 (23,000)

DEPRECIATION EXPENSE - EQUIPMENT

Particulars
Recording of accumulated depreciation of Debit Credit Balance
equipment
Closing of nominal accounts with debit 3,450 3,450
balances 3,450 0

DEPRECIATION EXPENSE - FURNITURE

Particulars Debit Credit Balance
Recording of accumulated depreciation of
furniture
Closing of nominal accounts with debit 3,750 3,750
balances 3,750 0

DOUBTFUL ACCOUNTS EXPENSE

Particulars Debit Credit Balance
Estimation
Closing of uncollected
of nominal receivables
accounts with debit 750 750
balances 750 0
 ERIK TORSTEN HARDWARE
Statement of Profit or Loss
For the Month Ended November 30, 2022
Notes
Net sales 1 347,578
Cost of sales 2 (158,515)
Gross profit 189,063
Other income 3 8,000
Total income 197,063
Expenses
Distribution Costs 4 5,250
Administrative expenses 5 142,500
Finance cost [Interest Expense] 2,250 (150,000)
Net Income 47,063
 ERIK TORSTEN HARDWARE
Statement of Changes in Equity
For the Month Ended November 30, 2022

Torsten, Capital - November 1, 2022 837,200

Net Income 47,063
884,263
Torsten, Drawing -16,000.00
Torsten, Capital - November 30, 2022 868,263
 NOTES TO STATEMENT OF PROFIT OR LOSS

Notes
1 Sales 355,700
Sales Returns & Allowances 6,000
Sales Discounts 2,122 (8,122)
Net Sales 347,578

2 Merchandise Inventory, November 1 150,000

Net cost of purchases
Purchases 147,000
Purchase Returns & Allowances 7,500
Purchase Discounts 2,985 (10,485)
Net Purchases 136,515
Freight In 2,000 138,515
Total goods available for sale 288,515
Merchandise Inventory, November 30 130,000
Cost of Sales 158,515

3 Commission Income 8,000

Other Income 8,000

4 Depreciation Expense - Equipment 3,450

Freight Out 1,800
Distribution Costs 5,250

5 Prepaid Insurance Expense

Salaries Expense 43,000
Rent Expense 30,000
Utilities Expense 23,000
Cleaning Services Expense 15,000
Insurance Expense 15,000
Store Supplies Expense 12,000
Depreciation Expense - Furniture 3,750
Doubtful Accounts Expense 750
Administrative Expense 142,500
 ERIK TORSTEN HARDWARE
Statement of Financial Position
November 30, 2022 Note 1

Notes
Assets
Current Assets
Cash ### 455,263
Trade and other receivables 7 80,750 Note 2
Merchandise Inventory 130,000
Prepaid Expenses 8 80,000### 746,013

Non-Current Assets
Property, Plant, and Equipment 9 374,000
TOTAL ASSETS ### 1,120,013

Liabilities
Current Liabilities
Trade and other Payables 10 ### 219,725
Unearned Sales Revenue 30,000
TOTAL LIABILITIES ### 249,725 Note 3

Owners Equity
Torsten, Capital 870,288 Note 4
TOTAL LIABILITIES AND OWNERS EQUITY ### 1,120,013
Note 5

Note 6

Note 7

Note 8

Note 9
Note 10
 NOTES TO STATEMENT OF FINANCIAL POSITION

Net Sales
Sales ### 355,700.00
Less: Sales Discounts ### 2,122
Sales Returns and Allowances 6,000 8,122
Net Sales ### 347,578

Cost of Sales
Merchandise Inventory, Beginning ### 150,000
Add: Net cost of purchases
Purchases ### 147,000
Less: Purchase Discounts ### 2,985
Purchase Returns and Allowances 7,500 10,485
Net Purchases P 136,515
Add: Freight in 2,000 138,515
Cost of goods available for sale ### 288,515
Merchandise Inventory, End 130,000
Cost of Sales ### 158,515

Other Income
Commissions Income ### 8,000

Distribution Costs
Rent Expense, Store ### 18,000
Utilities Expense, Store 13,800
Store Supplies Expense 12,000
Cleaning Services Expense, Store 9,000
Insurance Espense, Store 9,000
Freight out 1,800
Total Distribution Costs ### 63,600

Administrative Expenses
Salaries Expense ### 43,000
Depreciation Expense - Furniture 3,750
Depreciation Expense - Equipment 3,450
Rent Expense, Office 12,000
Utilities Expense, Office 9,200
Cleaning Services Expense, Office 6,000
Insurance Expense, Office 6,000
Doubtful Accounts Expense 750
Total Administrative Expenses ### 84,150

Finance Cost
Interest Expense ### 225

Trade and Other Receivables

Accounts Receivable ### 75,000
Less: Allowance for Doubtful Accounts 2,250### 72,750
Commissions Receivable 8,000
Total Trade and Other Receivables ### 80,750

Prepaid Expenses
Store Supplies ### 5,000
Prepaid Insurance Expense 75,000
Total Prepaid Expenses ### 80,000

Property, Plant , and Equipment

Furniture ### 180,000
Less: Accumulated Depereciation - Furniture 17,250### 162,750
Equipment ### 230,000
Less: Accumulated Depereciation - Equipment 18,750 211,250
Carrying Amount ### 374,000

Trade and Other Payables

Accounts Payable ### 46,500
Notes Payable 150,000
Interest Payable 225
Utilities Payable 23,000
Unearned Sales Revenue 30,000
Total Trade and Other Payables ### 249,725
 ERIK TORSTEN HARDWARE
Post-Closing Trial Balance
November 30, 2022
Debits Credits
Cash 455,263
Accounts Receivable 75,000
Allowance for Doubtful Accounts 2,250
Commission Receivable 8,000
Merchandise Inventory 130,000
Store Supplies 5,000
Prepaid Insurance Expense 75,000
Equipment 230,000
Accumalated Depreciation - Equipment 17,250
Furniture 180,000
Accumalated Depreciation - Furniture 18,750
Accounts Payable 46,500
Interest Payable 225
Note Payable 150,000
Utilities Payable 23,000
Unearned Sales Revenue 30,000
Torsten, Capital 870,288
1,158,263 1,158,263