ABM Fundamentals-of-ABM-1 Module-14-Accounting-Cycle-of-a-Merchandising-Business PDF

Preview

Summary

IFundamentals ofAccountancy, Businessand Management 1Quarter 4 – Module 14:Accounting Cycle of aMerchandising BusinessSenior High SchoolWriter: ARBEL S. ICBAN T-III Sta. Cruz High Integrated SchoolEditors: JANE P. VALENCIA, EdD – Math/ABM Supervisor CHAIRMAN ANGELINA B. CAWIGAN – Master Teacher II M...

Description

Senior High School

Fundamentals of Accountancy, Business and Management 1 Quarter 4 – Module 14: Accounting Cycle of a Merchandising Business

Writer:

ARBEL S. ICBAN T-III Sta. Cruz High Integrated School Editors: JANE P. VALENCIA, EdD – Math/ABM Supervisor CHAIRMAN ANGELINA B. CAWIGAN – Master Teacher II MARIZ JEAN C. SANGCAP – Teacher III

I

What I Need to Know

This module was designed and written with you in mind. It is here to help you master the Accounting Cycle of a Merchandising Business. The scope of this module permits it to be used in many different learning situations. The language used recognizes the diverse vocabulary level of students. The lessons are arranged to follow the standard sequence of the course. But the order in which you read them can be changed to correspond with the textbook you are now using. The module has one lesson, namely: Lesson 1 – prepares a trial balance After going through this module, you are expected to: 1. define trial balance; 2. prepare a trial balance of a merchandising business; and 3. give the importance of trial balance

What I Know

Directions: Choose the letter of the best answer. Write the chosen letter on a separate sheet of paper.

1. An accounting cycle is a series of recurring steps that has usually the fourth step of __________. a. analyzing business transactions from source documents b. journalizing business transactions c. preparing chart of accounts d. preparing a trial balance 2. Which of the following is NOT included in the columns of a trial balance? a. Adjusting entries b. Account title c. Debit balance d. Credit balance 3. If the trial balance does not balance, what would the accountant least likely to do? a. Record gain or loss on balancing to bring the columns. b. Check if an amount for P10,101 was recorded as P10,110. c. Double-check the signs of the balances and the placement in the columns. d. Consult the ledger and make sure that all accounts with balances have been reflected. 4. If the trial balance does not balance, what would the accountant least likely do? a. Check the journal entries. b. Recompute the totals c. Confirm that all figures use the same grouping d. Get the difference between total debits and credits. 5. Statement 1: A trial balance is usually prepared before journalizing and posting have been made. Statement 2: A trial balance is prepared to check the equality of debits and

credits. a. Statement 1 is true; statement 2 is false. b. Statement 1 is false; statement 2 is true. c. Both statements are true. d. Both statements are false.

Lesson

1

Preparing the Trial Balance of a Merchandising Business

To prepare the trial balance, account balances from the general ledger are copied and arranged in financial statements order or based on account number. This is the fourth step in the accounting cycle of a merchandising business.

What’s In

Fact or Bluff. Write FACT if the statement is true and BLUFF if otherwise. _______

1. A trial balance is usually prepared before journalizing and posting have been made.

_______

2. A trial balance is prepared to check the equality of debits and credits.

_______

3. To prepare a trial balance, account balances from the ledger are copied and arranged in financial statements order or based on account number.

_______

4. The trial balance does not mean that the report is free from errors because an incorrect analysis may still result to balanced trial balance.

_______

5. The trial balance normally includes columns for the journal entries, account number, account name, debit balance and credit balance.

What’s New

Directions: Read and answer the following questions:

Recall that in the previous module, journal entries are summarized into their respective ledger accounts. Now, as the business owner of # WeHealAsOne Drugstore, how will you ensure that all entries made into the general ledger are properly balanced?

Questions: 1. How will a business owner check if the totality of debit and credit balances is equal? 2. If the debit and credit balances did not tally, what may be the possible reason/s for this?

What is It

Trial Balance/Unadjusted Trial Balance – is a listing of general ledger accounts together with their respective debit and credit balances. Thus, it provides evidence that total debits = total credits. Below is the illustration from general ledger to trial balance.

GENERAL LEDGER

Date Explanation Jan.3 To record sold merchandise from CDE on account Balance

Date

Date

Explanation

Explanation

Date Explanation Jan.1 To record purchased merchandise from ABC on account Balance

Accounts Receivable Ref Dr Date GJ1 xx

Explanation

102 Cr

Ref

xx Accounts Payable Ref Dr Date Jan.1

Ref

Sales Dr

Date Jan.3

201 Cr xx

Explanation Ref To record GJ1 purchased merchandise from ABC on account Balance

xx 401 Cr xx

Explanation Ref To record sold GJ1 merchandise from CDE on account Balance

Purchases Ref Dr Date xx

Explanation

xx 501 Cr

Ref

xx

TRIAL BALANCE/ UNDJUSTED TRIAL BALANCE

Account Number 102 201 401 501

(Business Name) Unadjusted Trial Balance (Date) Account Title Accounts Receivable Accounts Payable Sales Purchases Total:

Dr xx

Cr xx xx

xx xx

xx

What’s More

Directions: Prepare the unadjusted trial balance of #LearnAsOne Bookstore.

Date Feb5

Explanation Ref To record GJ1 returned merchandise of Beng Book Feb20 To record GJ1 collected remaining balance of School Office Supplies

Cash Dr 2,000

Date Feb1

Explanation To record purchased merchandise from Beng Book

Ref GJ1

15,000

17,000

30,000 13,000

Balance

Date Explanation Feb15 To record sold merchandise to School Office Supplies

Balance

Date

Explanation

Accounts Receivable Ref Dr Date Explanation Ref record GJ1 GJ1 20,000 Feb18 To returned merchandise of School Office Supplies Feb20 To record GJ1 collected remaining balance of School Office Supplies 20,000 0

Ref

Sales Dr

Date Explanation Feb15 To record sold merchandise to School Office Supplies Balance

Sales Returns and Allowances Date Explanation Ref Dr Date Explanation Feb18 To record GJ1 5,000 returned merchandise of School Office Supplies Balance 5,000

Date Feb1

Explanation To record purchased merchandise from Beng Book Balance

101 Cr 30,000

Purchases Ref Dr Date GJ1 30,000

30,000

Explanation

Ref GJ1

201 Cr 5,000

15,000

20,000

401 Cr 20,000

20,000

Ref

402 Cr

Ref

501 Cr

Date

Purchase Returns and Allowances Explanation Ref Dr Date Explanation Feb5 To record returned merchandise of Beng Book Balance

What I Have Learned

Exit Slip: 3,2,1 3 >>> Name three things you learned in Trial Balance today:

2 >>> List two things you want to learn more about:

1 >>> Ask one queation about today’s lesson:

What I Can Do Directions: Answer the following questions. 1. How do you prepare a trial balance?

Ref GJ1

502 Cr 2,000

2,000...