Chapter5aa1sol 2012 PDF

CHAPTER 5
SUGGESTED ANSWERS
EXERCISES
Exercise 5 1
Req. 1.
1. Inventory on Consignment 90,000
Merchandise Inventory 90,000
To record transfer of merchandise to consignee.
2. Consignee Receivable (P24,000 x 130%) 31,200

Consignment Sales Revenue 31,200
To record consignment sales.
3. Cost of Consignment Goods Sold 24,000

Inventory on Consignment 24,000
To record cost of goods sold.
4. Merchandise Inventory 66,000

Inventory on Consignment 66,000
To record return of consigned goods.
5. Commission Expense (P31,200 x 10%) 3,120

Cash 28,080
Consignee Receivable 31,200
Req. 2.
Consignment Sales P24,000 x 130% P31,200
Charges: Cost P24,000
Commission 3,120 27,120
P 4,080
Exercise 5-2
Req.1. Consignment profits calculated separately

Books of Consignor
1. Consignment Out 7,000
Merchandise Shipment on Consignment 7,000
2. Cash 3,500
Consignment-Out 2,500
Consignment-Out 6,000
3. Consignment-Out 1,300
Consignment Income 1,300
Sales (4 sets @P1,500) P6,000
CGS (4 sets @P700) ( 2,800)
Freight-in (4/10 x P1,000) ( 400)
Commission (25% x P6,000) ( 1,500)
Consignment income P1,300
AA1 - Chapter 5 (2012 edition) page100
Books of Consignee
1. Received 10 sets of electric fan from Ledesma (Memo)
2. Consignment-In 1,000
Cash 1,000
3. Cash 6,000
Consignment-In 6,000
Commission on Consignment 1,500
Cash 3,500
Req. .2Consignment profits not calculated separately
Books of Consignor
1. Shipped merchandise to Amoranto, a consignee, (Memo)
2. Cash 3,500
Freight 400
Commission 1,500
Goods on Consignment 600
Sales 6,000
3. Goods on Consignment 4,200

Income Summary 4,200
Unsold merchandise on consignment (6 sets @P700)
Books of Consignee
1. Received 10 sets of electric fan from Ledesma, a consignor (Memo)
2. Ledesma 1,000
Cash 1,000
3. Cash 6,000
Sales 6,000
4. Purchases (P6,000 P1,500 commission) 4,500

Ledesma 4,500
5. Ledesma 3,500
Cash 3,500
Exercise 5 3
Req. No.1
Sales P420,000
Charges:
Freight P10,000
Commissions 42,000 52,000
Balance P368,000
Remittance Enclosed 278,000
Balance P 90,000
Req. No. 2
Consignment Sales P420,000
Less Cost of consignment sales 362,880 P57,120
Commission 42,000
Profit from consignment P15,120
*Cost of goods sold P420,000 /1.25 = P336,000

Freight costs P40,000 / P500,000 = 8%
Freight on goods sold P336,000 x 8% = P26,880
Total costs of goods sold P336,000 + P26,880 =
P362,880
Req. No. 3
a. Consignors Books:
Consignment Out 500,000

Cash 30,000
Cash 278,000
Receivable from Consignee 90,000

Consignees Books:
Memorandum entry to record receipt of goods on consignment.
Consignment In 10,000
Cash 10,000
Cash 420,000
Cash 278,000
Payable to Consignor 90,000
b. Consignors Books:
Memo entry to record shipment of goods on consign.
Freight Out 30,000

Cash 30,000
Cash 278,000
Receivable from Consignee 90,000
Freight Out 10,000
Commissions 42,000
Sales 420,000
Goods on Consignment 177,120

Freight Out 13,120
Consignees Books:
Memorandum entry to record receipt of goods on consignment.
CCB Industries 10,000

Cash 10,000
Cash 420,000
Sales 420,000
Purchases 378,000

Cash 278,000
Payable to Consignor 90,000
Req. No. 4 Consignors financial statements:
Statement of Financial Position Assets section

Receivable from Consignee P 90,000
Inventory on consignment 177,120
Exercise 5 4
1. Sales of laser discs, net of commissions and cartage P181,800
Less: Cost P180,000
Freight and handling 5,400 185,400
Loss on laser discs consignment P 3,600
2. Sales of TV sets, net of commissions and delivery & installation costs P173,250
Less: Cost (15 x P9,000) P135,000
Freight and handling [(15 + 3*)/24** x P10,800] 8,100
Freight on return of defective units 1,080 144,180
Profit on TV sets on consignments P 29,070
* Number of units returned = Cost of returned units / Cost per unit

= P27,000 / P9,000
= 3
** Units shipped to consignee = Total cost of TV sets shipped / Cost per unit
= P216,000 / P9,000
= 24
3. TV sets P54,000 + (P10,800 6/24 = P2,700) = P56,700
Exercise 5 5
1. Sales (300 x P1,000) + (100** x P1,100) P410,000*
Cost of sales (400 x P600) 240,000
Gross profit P170,000
Expenses:
Freight (400/500 x P5,500) P 4,400
Safety devices (100/200 x P10,000) 5,000
Commission (P410,000 x 10%) 41,000
Delivery cost 4,500 54,900
Consignment profit P115,100
*Consignee remittance and charges represent only 90% of sales in as much as the 10% commission
of the consignee has not yet been included among the charges (P364,500 + P4,500 = P369,000 /
90% = P410,000)
** The 100 units with safety device sold at P1,100 is computed as follows:
Sales P410,000
Sales of units without safety device (300 x P600) 300,000
Sales of units with safety device P110,000
Units sold (P110,000 / P1,100) 100
2. Cost (100 x P600) P60,000

Freight (100/500 x P5,500) 1,100
Safety device (100/200 x P10,000) 5,000
Inventory cost of consigned goods P66,100
PROBLEMS
Problem 5-1
Req. 1 Books of consignor; consignment profits not calculated separately
April Memo entry for the shipment of merchandise on cons.
Cash 5,000
Receivable Consignee 13,250
Freight Out 1,000
Cartage In 750
Sales 20,000

Freight Out 600
Cartage In 450
May Cash 10,000

Sales 15,000

Freight Out 300
Cartage In 225
Req. 1. Books of consignee; consignment sales merged with regular sales
April Memo entry for the receipt of shipment on cons.
CCM Corp. 1,750

Cash 1,750
Accounts Receivable 24,000
Sales 24,000
Purchases 20,000
CCM Corp. 20,000
Cash 10,000
CCM Corp. 5,000

Cash 5,000
May Accounts Receivable 18,000

Sales 18,000
Purchases 15,000
CCM Corp. 15,000
Cash 15,000
CCM Corp. 10,000

Cash 10,000
Req. 2 Books of consignor; consignment profits calculated separately

April Consignment-Out 36,000
Merchandise Inventory 36,000
Cash 5,000

Sales (8 sets @P2,500) P 20,000
CGS (8 sets @P1,800) ( 14,400)
Freight-in (P1,000 x 8/20) ( 400)
Cartage-in (P750 x 8/20) ( 300)
Consignment profit P 4,900
May Cash 10,000


Sales (6 sets @P2,500) P15,000
CGS (6 sets @P1,800) ( 10,800)
Freight-in (P1,000 x 6/20) ( 300)
Cartage-in (P750 x 6/20) ( 225)
Req. 2. Books of consignee; consignment sales not merged with regular sales
April Memo entry for the receipt of shipment on cons.
Consignment In. 1,750

Cash 1,750

Commissions on Consignment. 4,000
Cash 10,000

Cash 5,000
Accounts Payable - Consignor 13,250
May Accounts Receivable 18,000

Commissions on Consignment. 3,000
Cash 15,000

Cash 10,000
Accounts Payable - Consignor 5,000
3. Charge and Profit analysis
April May
Total Sales Inventory Sales Inventory
Charges by consignor:
Cost of consigned goods P36,000 P14,400 P21,600 P10,800 P10,800
Charges by consignee
Freight-in 1,000 400 600 300 300
Cartage-in 750 300 450 225 225
Total P37,750 P15,100 P22,650 P11,325 P11,325
Sales price 20,000 15,000
Consignment profit P 4,900 P 3,675
Problem 5-2
Req. 1 Charge and Profit Analysis
Total Sales Inventory
Charges by consignor:
Cost of consigned goods P46,000 P16,000 P30,000
Freight-out 750 300 450
Charges by consignee
Cartage-in 1,000 400 600
Delivery and installation 1,600 1,600
Commission 8,000 8,000
Total P57,350 P26,300 P31,050
Sales price 32,000
*Note: Freight and cartage on sets returned are charged against sales of the period.
Req. 2
Books of consignor
2. Consignment Out 750

Cash 750
3. Cash 5,000
Receivable Consignees 16,400
4. Merchandise Shipment on Consignment 4,000

Returned merchandise (4 sets @P1,000)

Books of consignee
1. Received 50 cordless phones.
2. Accounts Receivable 32,000

3. Cash 15,600
P32,000 P16,400 (collectible) = P15,600
4. Returned four (4) defective cordless phones.
5. Consignment In 15,600
Delivery and Installation 1,600
Cash 5,000
Remittance
Problem 5-3
Req. 1
Account sales Alejo

Sales (65 stoves @ P3,600) P234,000
Commission (25% of P234,000) ( 58,500)
Freight ( 2,600)
Amount owed P172,900
Total amount remitted ( 187,900)
Balance-charge against Sunstar P 15,000
2. Correcting entry to bring accounts with Alejo up to date

Consignment Commissions 58,500
Freight on Consignment Shipments (P2,600 x 65/100) 1,690
Prepaid Expenses on Consigned Merchandise (P2,600 x 35/100) 910
Consignment Sales 6,000
Alejo 67,100
Entry that should have been made for transactions of Alejo on the books of consignor:
Cash 187,900
Consignment Commission 58,500
Freight on Consignment Shipments 1,690
Prepaid Expenses on Consigned Merchandise 910
Alejo 15,000
Net effect of entries already made with Alejo for transfer of merchandise and remittance
Cash 187,900
Alejo 52,100
Account sales Burgos

Sales (15 stoves @ P3,600) P54,000
Commission (25% of P54,000) ( 13,500)
Freight ( 2,000)
Amount owed P38,500
Total amount remitted ( 11,500)
Balance-amount owed Sunstar P27,000
Correcting entry to bring accounts with Burgos up to date

Consignment Commissions 13,500
Freight on Consignment Shipments (P2,600 x 65/100) 750
Prepaid Expenses on Consigned Merchandise (P2,600 x 35/100) 1,250
Burgos 57,500
Entry that should have been made for transactions of Burgos on the books of consignor:
Cash 11,500
Consignment Commission 13,500
Freight on Consignment Shipments 750
Prepaid Expenses on Consigned Merchandise 1,250
Burgos 27,000
Net effect of entries already made with Burgos for transfer of merchandise and remittance
Cash 11,500
Burgos 84,500
Problem 5-4
Entries to bring account with Domingo up to date

1. Cash 5,100
Operating Expenses 900
Receivables-Consignees 6,000
Remittance for 10 sets less charges
2. Sales 3,000
Receivables Consignees 3,000
Unsold units previously recognized as sales.
3. Merchandise in Transit 1,600

Cost of Goods Sold 1,600
Merchandise returned and still in transit.
Entries to bring account with Estrella up to date
1. Cash 13,400
Merchandise on Consignment 600
Operating Expenses 1,000
2. Sales 9,000
3. Merchandise on Consignment 4,800

Unsold units in the hands of consignee
4. Merchandise on Consignment 1,700

Expenditures related to unsold consigned goods
charged to expense
Entries to bring account with Fajardo up to date
1. Operating Expenses 960

Receivables Consignees 600
Accounts Payable 360
2. Sales 2,400
3. Merchandise in Transit 1,280

Closing Entries
1. Sales 715,600
2. Income Tax 61,902

Income Tax Payable 61,902
3. Income Summary 61,902

Income Tax 61,902
4. Income Summary 144,438

Retained Earnings 144,438
2.
Moonstar Company
Statement of Financial Position
December 31, 2012
Current assets: P134,000

Cash 62,720
Receivables Consignees
Inventories:
On hand P112,000
In transit 2,880
On consignment 7,100 121,980
Total Current Assets 318,700
Plant and Equipment 170,000
Total Assets P488,700
Current Liabilities:
Accounts Payable P25,360
Income Tax Payable 61,902
Ordinary Share Capital, P100 par P200,000
Retained Earnings
Balance, beginning P 57,000
Net income for 2011 144,438 201,438
Total Shareholders Equity 401,438
Total Liabilities and Shareholders Equity P488,700
MULTIPLE CHOICE
1. A
2 D
3. A
4. D P180,000 + P9,000 = P189,000
5. A Receipts (215 x P500) P107,500

Less Shipping charges 2,100
Remittance P105,400
6. B (215 x 40% x P580) + (215 x 60% x P640) (215 x P500) = P24,940
7. A Receipts ( 7 dozens x 12 x P2,000) P168,000

Charges: Expenses P 3,000
Commissions (15% x P168,000) 25,200 28,200
Remittance P139,800
8. A Sales 7 x 12 x P2,000 P168,000

Cost of Sales 7 x 12 x P1,000 P84,000
Freight 7 x P30 210
Expenses 3,000
Commission P168,000 x 15% 25,200 112,410
P 55,590
9. B Cost (3 x12 x P1,000) P 36,000

Freight (P30 x 3) 90
P 36,090
10. C
11. B Sales ( 4 x P7,000) P28,000
Charges: Commission (20% x P28,000) P5,600
Freight 1,600 7,200
Remittance P20,800
12. D Cost (6 x P4,000) P24,000

Freight (P1,600 x 6/10) 960
Balance of Merchandise on Consignment account P24,960
13. D Sales P28,000

Cost (4 x P4,000) 16,000
Less: Commission P5,600
Freight (P1,600 x 4/10) 640 6,240
Net profit on consignment P 5,760
14. C Remittance P64,980

Charges:
Delivery expense P 850
Repairs 2,000 2,850
Total P67,380
85%
P79,800
15. D Sales P79,800

Cost of sales 52,000*
Expenses:
Commission (P79,800 x 15%) P11,970
Repairs (P2,000 x 60/100) 1,200
Delivery 850
Shipping cost (P900 x 260/300) 780 14,800
Consignment profit P13,000
16. B Sales P79,800

Less Sales of units w/o defects (200 x P300) 60,000
Sales of repaired units P19,800
Selling price of repaired units P330
Number of repaired units that were sold 60
Units sold without repairs 200
Total number of units sold 260
Unit cost x P200
Cost of sales P52,000
17. D Cost (40 x P200) P 8,000

Repairs (P2,000 x 40/100) 800
Shipping cost (P900 x 40/300) 120
Value of inventory on consignment P 8,920
18. D Remittance P54,600

Charges:
Cartage P 600
Advertising 3,600
Delivery and installation 2,400 6,600
Total P61,200
85%
Sales P72,000
19. C Sales P72,000

Cost and expenses:
Cost (6 x P7,200) P43,200
Freight (P4,800 x 6/10) 2,880
Cartage (P600 x 6/10) 360
Advertising 3,600
Delivery and installation 2,400
Commission (15% x P72,000) 10,800 63,240
Consignment income P 8,760

Consignee charges, excluding the 15% commission
(P4,500 + P3,000 + P750) 8,250
Sum of remittances and charges P76,500
85%
Sales price of 6 refrigerators P90,000
21. A Sales P90,000

Cost of sales (6 x P9000) 54,000
Expenses:
Commission (P90,000 x 15%) P13,500
Freight-out (P6,000 x 6/10) 3,600
Marketing expense 4,500
Delivery and installation 3,000
Cartage (P750 x 6/10) 450 25,050
Net profit from the sale of consigned goods P10,950
22. D P90,000 x 15% = P13,500
23. A Sales collected [(2 x P1,500) + (1 x P1,800 x 25%)] P3,450

Commission (P3,450 x 15%) 720
Remittance P2,730
24. C Sales P4,800

Cost of sales ( 3 x P800) 2,400
Gross profit P2,400
Expenses:
Freight (P200 x 3/5) P120
Delivery 170
Commission 720 _____
Profit resulting from consignment P1,390
25. C Sales P21,000

Cost (7 x P2,000) 14,000
Gross profit P 7,000
Expenses:
Advertising P1,000
Commission 4,200
Freight (P600 x 7/10) 420 5,620
Net income on the consignment P 1,380
26. B ( 3 x P2,000) + (P600 x 3/10) = P6,180

Charges by consignor
Cost (P3,840 x 30/48) P2,400
Freight and handling (P1,000 x 30/48) 625
Freight and handling charged by consignee 75 3,100
Net income P 650
28. C T-shirts:
Cost (P3,840 x 18/48) P1,440
Freight and handling (P1,000 x 18/48) 375 P1,815
Baby dresses:
Cost (P2,400 x 4/24) P 400
Freight and handling (P540 x 4/24) 90 490
Cost of the inventory in the hands of consignee P2,305
29. B Sales P84,000

Cost of sales (P90,000 x 7/10) 63,000
Expenses:
Freight (P3,000 x 7/10) P2,100
Commission 8,400
Cartage-in (P1,050 x 7/10) 735 11,235
Profit on consignment of TV sets P 9,765
30. D TV sets (P94,050 x 3/10) P28,215

DVD sets (P84,450 x 2/5) 33,780
Cost of inventory in the hands of consignee P61,995
31. A P3,375 / 15% = P22,500 / P1,500 15 units

32. B Sales (15 x P1,500) P22,500

Less: Advertising P2,250
Delivery expense 1,125
Commission 3,375
Advances (150 x P900 x 60% x 15/150) 8,100 14,850
Remittance P 7,650
33. A Sales P22,500

Less Cost (15 x P900) P13,500
Expenses (P2,250 + P1,125 + P3,375) 6,750 20,250
34. A Sales P10,800

Less: Cost (P8,400 x 9/12) P6,300
Freight-out (P720 x 9/12) 540
Delivery 450
Commission 2,160
Advertising 500 3,650
Net income P 850
35. B P10,800 P450 P2,160 P500 = P7,690
36. C P8,400 + P720 = P9,120 x 3/12 = P2,280
37. B Net income P 426

Expenses:
Freight (P240 x 6/10) P 144
Advertising 150
Commission 480 774
Gross profit P1,200
Less Sales 2,400
Cost of goods sold P1,200
38. B Cost per unit (P1,200 / 6 units) P200

Unsold units x 4
Total cost of unsold units P800
Inventoriable cost freight (P240 x 4/10) 96
Total cost P896
39. C Remittance P3,165

Charges: Advertising P120
Delivery 75 195
Total proceeds from sales, net of 20% commission P3,360
80%
Total sales price of the 7 handbags P4,200
40. B Cost (3 x P300) P 900

Freight (3/10 x P150) 45
Inventory of unsold handbags P 945
41. A Sales P4,200

Cost of sales (7 x P300) 2,100
Gross profit P2,100
Expenses:
Freight ( 7/10 x P150) P 105
Commission (4,200 x 20%) 840
Advertising 120
Delivery 75 1,140
Net income on the consignment P 960
42. B Sales (80 x P1,500) P120,000

Charges:
Cost of returning defective units P 100
Transportation 350
Insurance 200
Commissions (P120,000 x 20%) 24,000
Reconditioning cost 150 24,800
Balance P 95,200
Advances (80 + 10) x P300 27,000
Remittance P 68,200

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CHAPTER 5

2. Consignee Receivable (P24,000 x 130%) 31,200

3. Cost of Consignment Goods Sold 24,000

4. Merchandise Inventory 66,000

5. Commission Expense (P31,200 x 10%) 3,120

Req.1. Consignment profits calculated separately

1. Received 10 sets of electric fan from Ledesma (Memo)

Req. .2Consignment profits not calculated separately

1. Shipped merchandise to Amoranto, a consignee, (Memo)

3. Goods on Consignment 4,200

4. Purchases (P6,000 P1,500 commission) 4,500

*Cost of goods sold P420,000 /1.25 = P336,000

Consignment Out 30,000

Consignment Out 15,120

Freight Out 30,000

Goods on Consignment 177,120

CCB Industries 10,000

CCB Industries 368,000

Req. No. 4 Consignors financial statements:

Statement of Financial Position Assets section

* Number of units returned = Cost of returned units / Cost per unit

3. TV sets P54,000 + (P10,800 6/24 = P2,700) = P56,700

2. Cost (100 x P600) P60,000

Req. 1 Books of consignor; consignment profits not calculated separately

April Memo entry for the shipment of merchandise on cons.

Goods on Consignment 22,650

May Cash 10,000

Goods on Consignment 11,325

Req. 1. Books of consignee; consignment sales merged with regular sales

April Memo entry for the receipt of shipment on cons.

CCM Corp. 1,750

CCM Corp. 5,000

May Accounts Receivable 18,000

CCM Corp. 10,000

Req. 2 Books of consignor; consignment profits calculated separately

Consignment Out 4,900

May Cash 10,000

Consignment Out 3,675

April Memo entry for the receipt of shipment on cons.

Consignment In. 1,750

Accounts Receivable 24,000

Consignment In. 18,250

May Accounts Receivable 18,000

Consignment In. 15,000

3. Charge and Profit analysis

2. Consignment Out 750

4. Merchandise Shipment on Consignment 4,000

5. Consignment Out 5,700

2. Accounts Receivable 32,000

4. Returned four (4) defective cordless phones.

Account sales Alejo

2. Correcting entry to bring accounts with Alejo up to date

Account sales Burgos

Correcting entry to bring accounts with Burgos up to date

Entries to bring account with Domingo up to date

3. Merchandise in Transit 1,600

Entries to bring account with Estrella up to date

3. Merchandise on Consignment 4,800

4. Merchandise on Consignment 1,700

Entries to bring account with Fajardo up to date

1. Operating Expenses 960

3. Merchandise in Transit 1,280

2. Income Tax 61,902