The Fashion Rack The Fashion Rack is a retail merchandising business that sells trendy clothing at discounted prices. The business is owned and managed by Cady Heron who started the business on April 1, 2021. The Fashion Rack has a monthly accounting period. The employees are paid at the end of the month. The Chart of Accounts is shown below. The Fashion Rack Chart of Accounts 101 Assets Cash Revenues 401 Sales 111 Accounts Receivable 402 Sales Returns and Allowances 112 Allowance for Doubtful Accounts 403 Sales Discounts 121 Merchandise Inventory Cost of Sales 131 Supplies 501 Purchases 133 Prepaid Advertising Expense 502 Freight In 134 Prepaid Insurance Expense 503 Purchases Returns and Allowances 141 Equipment 504 Purchases Discounts 142 Accumulated Depreciation - Equipment Expenses 143 Furniture 611 Freight Out 144 Accumulated Depreciation - Furniture 612 Advertising Expense Liabilities 613 Insurance Expense 203 Accounts Payable 614 Interest Expense 221 Utilities Payable 615 Janitorial Services Expense 222 Interest Payable 616 Rent Expense 231 Notes Payable 617 Salaries Expense Owner's Equity 618 Supplies Expense 301 Heron, Capital 619 302 Heron, Drawing 631 399 Income Summary 632 641 Utilities Expense Depreciation Expense Equipment Depreciation Expense Furniture Uncollectible Accounts Expense The Post-Closing Trial Balance was prepared on September 30, 2021, which is shown below. The Fashion Rack Post-Closing Trial Balance September 30, 2021 Account Name Dr Cr Cash 598,000 Accounts Receivable 62,100 Allowance for Doubtful Accounts 4,200 Merchandise Inventory 889,960 Supplies 41,000 Prepaid Insurance Expense 84,000 Equipment 200,000 Accumulated Depreciation - Equipment 18,000 Furniture 300,000 Accumulated Depreciation - Furniture 30,000 Accounts Payable 183,000 Heron, Capital 1,939,860 Totals 2,175,060 2.175,060 The Schedule of Accounts Receivable and Schedule of Accounts Payable were prepared on September 30, 2021, which are shown below. The Fashion Rack The Fashion Rack Schedule of Accounts Payable Schedule of Accounts Receivable September 30, 2021 September 30, 2021 Erin Quinn 21,100 A Fashion Statement 78,300 Luther Hargreeves 24,000 Classy Trends 104,700 Miguel Diaz 17,000 Total 62,100 Total 183,000 An Excel spreadsheet is provided for you with the following tabs: GJ (for General Journal) GL (for General Ledger) - with opening balances on October 1, 2021 WS (for 10-column worksheet) SPL (for Statement of Profit or Loss) SOE (for Statement of Owner's Equity) SFP (for Statement of Financial Position) NOTES (for Notes to Financial Statements) PCTB (for Post-Closing Trial Balance) INSTRUCTIONS: (1) Analyze the transactions for October and record each transaction in the general journal. IGJJ Use general journal page 25. Date Transactions Oct 1 Issued Check 601 for P44,000 to pay Properties Management, Inc., the monthly rent. 2 3 4 Signed a three-month radio advertising contract with Cable Station for P51,000, issued Check 602 to pay the full amount. Received P20,678 from Erin Quinn, a credit customer, as full payment of her account amounting to P21,100. The difference is treated as Sales Discount. Issued Check 603 for P76,734 to A Fashion Statement, a creditor, as full payment for an account amounting to P78,300. The difference is treated as Purchases Discount. Sold goods on account to Alex Wilder for P30,000, on terms 2/10, 1/15, n/30. Trade 5 discounts of 20% and 10% were given to Alex Wilder. Freight of P500 is on terms FOB DP, Collect. 6 Issued Check 604 for P10,500 to ABC Supply for various store supplies. 8 Received P17,000 from Miguel Diaz, a credit customer, as full payment of his account. 9 Received a cash refund for returning defective supplies worth P1,500 to ABC Supply. 10 Issued a credit memo to Alex Wilder amounting to P6,000 for defective goods. 13 14 Sold goods on account to Jane Hopper for P20,500 on terms 2/10, n/30. Freight of P1,000 is on terms FOB SP, Collect. Purchased goods on account from Unique Styles for P48,200 on terms 2/15, n/30. Freight of P1,000 is on terms FOB SP, Prepaid. Cash sales for the period October 1-15, P318,000. 15 Note: Cash sales should be summarized daily. For simplicity purposes, cash sales for this group case analysis is summarized bi-monthly Purchased goods from A Fashion Statement for P70,000 on terms 20% down payment, 16 balance 2/10, n/30, issued Check 605 for the down payment. Freight of P2,000 is on terms FOB DP, Collect. Issued Check 606 for the freight. Cady Heron withdrew the following for personal use: P20,000 cash, issued Check 607; 17 supplies costing P2,000; and merchandise costing P10,000 but is priced to sell at P15,000, 18 Received a credit memo amounting to P7,000 from Unique Styles as a price reduction for goods delivered with wrong specifications. Date Transactions 19 Received P5,000 from Jane Hopper as partial payment of her account. 20 Collected the account of Alex Wilder in full. 21 Issued Check 608 for P15,000 to Unique Styles as partial payment. 22 Borrowed money from Prime Bank for P200,000, giving a 6% 90-day note. 23 Collected the account of Jane Hopper in full. 25 Issued Check 609 for P10,000 to A+ Janitors for October janitorial services. 27 Issued Check 610 to A Fashion Statement representing full settlement of account. Issued Check 611 for P50,000 to Classy Threads representing partial settlement of account. 28 29 Issued Check 612 to Unique Styles representing full settlement of account. 30 Issued Check 613 for P48,000 to pay the two store assistants and one store manager. 31 Cash sales for the period October 16-31, P160,400. (2) Post accounts from the general journal to the general ledger accounts [GL]. (3) Check the accuracy of the general ledger by preparing a Trial Balance in the first two columns of a 10-column worksheet [WS]. Make sure that the total debits and the total credits are equal. (4) Complete the adjustments section of the worksheet [WS]. Use the following information. (a) On October 31, the firm received its utilities bill for the month of October amounting to P14,300. This remains to be unpaid at month-end. Record an adjustment for the utilities for the month of October. (b) Record an adjustment for the accrued interest from the noted issued on October 22, 2021 for the month of October. (c) On October 31, an inventory of the supplies showed that items costing P27,400 were on hand. Record an adjustment for the supplies used in October. (d) On September 30, 2021, the firm purchased a six-month insurance policy for P84,000. Record an adjustment for the expired insurance in October. (e) On October 1, 2021, the firm signed three-month advertising contract for P51,000 with a local cable telvision station and paid the full amount in advance. Record an adjustment for the used advertising for October. (0) On April 1, 2021, the firm purchased an equipment for P200,000. The equipment was estimated to have a useful life of five years and a salvage value of 10% of cost. Record an adjustment for depreciation on the equipment for October. (g) On April 1, 2021, the firm purchased furniture for P300,000. The furniture was estimated to have a useful life of five years with no salvage value. Record an adjustment for depreciation on the furniture for October. (h) The allowance for doubtful accounts is to be increased by 1/2 of 1% of accounts receivable. Record an adjustment for the expected loss from uncollectible accounts for the month of October. (i) Based on a physical count, ending inventory was determined to be P648,160. Record an adjustment for the ending inventory. (5) Determine the net income or net loss for October and complete the worksheet [WS]. (6) Prepare a natural form Statement of Profit or Loss for the month ended October 31, 2021 ISPLI. Include any supporting notes to financial statements [NOTES]. (7) Prepare a Statement of Owner's Equity for the month ended October 31, 2021|SOE]. (8) Prepare a report form Statement of Financial Position as of October 31, 2021 ISFP). Include any supporting notes to financial statements [NOTES. (9) Journalize and post the adjusting entries on October 31, 2021 using the general journal and the general ledger [GJ and GLJ. (10) Journalize and post the closing entries on October 31, 2021 using the general journal and the general ledger [GJ and GLI. (11) Prepare a post-closing Trial Balance as of October 31, 2021 [PCTB]. (12) Journalize and post the necessary reversing entries on November 1, 2021 using the general journal and the general ledger [GJ and GLJ