Al Trash is the owner of Medical RTW Co. engaged in selling ready-to-wear (RTW)medical scrubs, gowns, ,and PPEs. The company officially started the business on January 2, 2020 renting a space in Cubao, while waiting for the construction of their office-store in Makati. On April 1, 2020, the company borrowed P1,500,000 from a bank to finance the construction of the building. The principal is payable P50,000 every beginning of the quarter; April 1, July 1, Oct. 1, and Jan. 1, plus 3% quarterly interest on the remaining quarterly balance of the loan. First payment started on July 1, 2020.The building was constructed by the Eyala Builders and was officially turned over to Medical RTW Co. on October 1, 2020. The company transferred the following day.The land where the building was constructed is under a lease-contract with Eyala Realty for 25 years for P5,000 per month One-year rent was paid in advance on October 1, 2020. Effective date of the lease is Oct. 1, 2020 to coincide with the use of the building. The contract stipulates that every year the rent will increase by 5%. The building is, therefore, considered an improvement and will be turned over to the Eyala Realty after 25 years unless the contract for the lease is extended.

The company adjusts, closes, and prepares their financial statements every 6 months ending June 30 and December 31. The following is their post-closing trial balance on December 31, 2020:

MEDICAL RTW COMPANY
Post-Closing Trial Balance
December 31, 2020
	Debit	Credit
Cash	219,410
Accounts Receivable	45,796
Allowance for doubtful accounts		4,580
Store Supplies	12,500
Office Supplies	7,895
Merchandise Inventory	128,750
Prepaid Insurance	13,500
Prepaid Rent	45,000
Store Equipment	650,000
Accum. Depreciation - Store Equipment		89,375
Office Equipment	305,000
Accum. Depreciation - Office Equipment		40,000
Leasehold Improvement - building	1,485,000
Al Trash, Capital		1,289,646
Utilities Payable		1,500
Accounts Payable		45,750
Interest Payable		42,000
Notes Payable		1,400,000
Total	2,912,851	2,912,851

Additional information pertaining to the post-closing trial balance follows:

1. Customers who are reselling the RTWs can buy on credit with terms: 5/15; n/45.
2. The Company estimates bad debts every sixth month at 10% of the ending accounts receivable. The company will continue to follow this for the year 2021.
3. The Company paid P18,000 for 1-year insurance for the building beginning Oct. 1, 2020.
4. Fixed assets depreciations are computed based on the following:

Date purchased Fixed assets Est. Life Salvage Value Depreciation

Feb. 1, 2020 Store Equipment 10 years P50,000 1.5 declining

balance

Jan. 12, 2020 Office Equipment 7 years 25,000 Straight-line

The transactions for the period Jan. 1 through June 30, 2021 are summarized as follows:

Cash Receipts:
From Cash Sales		1,093,529
From Credit Sales: (P350,000 less 5% sales discount)		332,880
		1,426,409
Cash disbursements:
Cash purchases of RTW clothes		630,694
Accounts payable - suppliers of RTW		100,000
Transportation of merchandise purchased		62,300
Transportation of merchandise sold		10,500
Additional 1-year insurance for the building
Beginning July 1, 2021		12,000
Loan interest		82,500
Loan principal		100,000
Sales salaries		137,500
Office salaries		75,000
Utilities (including accrued in December)		14,400
Store supplies		24,700
Office supplies		12,350
		1,261,944

Additional information pertaining to Jan. 1 through June 30, 2021 transactions:

1. Accrued sales salaries on June 30, P12,500.
2. Accrued utilities on June 30, P2,150
3. Total credit purchases, P92,150
4. Total credit sales, P380,400
5. Actual count of remaining supplies on June 30:

Store - P7,200

Office - 5,245

6. Actual count of unsold merchandise in the store, P104,500
7. Merchandise out on consignment, costing P13,700
8. Accounts receivable written-off, P3,245.

The following are some of the nominal/temporary accounts use by the company as prepared by the bookkeeper:

Bad debts expense

Sales Salaries

Office Salaries

Store supplies expense

Office supplies expense

Rent expense

Insurance Expense

Transportation expense

Interest expense

Depreciation expense, __________

REQUIRED for the period ending June 30, 2021:

1. Prepare a classified balance sheet, report form.

Note: You are not required to prepare journal and adjusting entries.