BEING A BUYER

A. Ocho Company purchased P1,200 of merchandise on account and payment was made within
the discount period. The credit terms were 2/10,n/30. Journalize the entries to record the
purchase and payment.
B. Merchandise with a list price of P4,700 is purchased on account, terms FOB shipping point,
1/10, n/30. The seller prepaid transportation costs of P200. Prior to payment, P1,500 of the
merchandise is returned. The correct amount is paid within the discount period. Record the
foregoing transactions of the buyer using perpetual and periodic inventory system.

C. Details of invoices for purchases of merchandise are as follows:

Merchandise Transportation Terms Returns and
Allowances
a. P900 P35 FOB shipping point, 1/10, n/30 P100

b. 5,600 --- FOB destination, n/30 500

c. 2,500 25 FOB shipping point, 2/10, n/30 200

d. 8,000 --- FOB destination, 1/10, n/30

Determine the amount to be paid in full settlement of each of the invoices, assuming that
credit for returns and allowances was received prior to payment and that all invoices were
paid within the discount period.
D. GEO Co. records purchase discounts lost and uses perpetual inventor system.
Prepare journal entries in general journal form for the following:
(a) Purchased merchandise costing P900 with terms 2/10, n/30.
(b) Payment was made thirty days after the purchase.

E. XNO Co. records purchases at net amounts and uses periodic inventories. Prepare
entries for the following:
June 11 Purchased merchandise on account, P5,000, terms 2/10, n/30.
15 Returned part of June 11 purchase, P800, and received credit on account.
30 Prepared the adjusting entry required for financial statements.

F. Accounting for purchase discounts.

SMO Corp. purchased merchandise during 2010 on credit for P300,000; terms 2/10, n/30.
All of the gross liability except P60,000 was paid within the discount period. The remainder
was paid within the 30-day term. At the end of the annual accounting period, December
31, 2010, 90% of the merchandise had been sold and 10% remained in inventory. The
company uses a periodic system.
Instructions
(a) Assuming that the gross method is used for recording purchase discount, prepare
the entries for the purchase and two subsequent payments.
(b) Assuming that the net method is used for recording purchase discount, prepare
the entries for the purchase and two subsequent payments.

G. Journalize the following transactions for Empress Enterprise, post simultaneously to the
suppliers’ cards, open a T account for the accounts payable entries, determine the balance
and reconcile it with the creditors’ ledger balances. The company is VAT exempt.
 Aug 1 Bought goods from Galeria Inc. for P82,500 plus P9,500 for insurance and taxes.
Invoice No.485. Terms: COD, FOB Shipping Point, Freight Collect.
4 Prepared Voucher No.101 for the Galeria Inc. account and Voucher No.102 for
freight upon receipt of the shipment, P4,500.
5 Bought goods from Diana’s Creation for P19,500. Terms: 2/10, 1/15. n/30. Received
charged sales invoice no.859. Discounts are given even on partial payments.
10 Bought an office equipment from EEI for P20,000 plus freight of P500. Terms: 2/10,
n/30.
15 Prepared a cash voucher for P9,800 as partial payment to Diana’s Creation.
18 Received a cash refund of P2,500 on goods returned to Galeria Inc. Issued Official
Receipt No.158.
19 Prepared a voucher and paid EEI’s account.
20 Prepared a voucher and paid the balance due to Diana’s Creation.
22 Ordered goods from Bulacan Jewelry for P45,000. Terms: 3/EOM, n/30. FOB
Shipping Point, Freight Collect P500.
24 Bulacan was paid 50% of the account plus freight upon the receipt of the goods.

BEING A SELLER

H. On February 4, 2019 Nijel Potteries sold ceramic potteries to Savior Marco at a list price of
P15,000. Terms: 50% down, balance n/10. A 2% trade discount was given to Savior Marco.
Nijel paid cash for freight on goods sold, P450. Savior Marco paid promptly after ten days.
Seller is VAT Exempt.
Required: Entries in the books of the seller on date of sale and date of collection.

I. C & E, distributor of educational books, sold to UMAK on July 1 goods listed at a price of
P7,500. Trade discounts of 2% and 1% were granted. UMAK was allowed to pay on terms
2/10, n/30. UMAK paid P5,000 on July 5 and the balance on July 10. Seller is VAT exempt.
Required: Entries in the books of the seller on the date of sale and date of collections

J. The following selected sale transactions are given for the month of June, 2019:
Sold merchandise in cash, for P10,000, 2% trade discount. The cost of the
June 1 merchandise sold was P4,500. Terms of shipment: FOB Destination.

2 Freight paid, P500.

5 Sold merchandise to customers on account, P8,500, 2/10, n/30; FOB Shipping

Point, The cost of the merchandise sold was P4,100.

Freight prepaid for June 5 sales, P350.

8 Customers return P1,000 worth of merchandise on June 1 sales. Cost of the return
merchandise, P450

14 Collected the full payment for June 1 sales.

Required: Journalize the above transactions using perpetual and periodic

inventory system.

K. Using the perpetual and periodic inventory method, journalize the entries for the following
selected transactions on the books of the seller.
 Merchandise with a list price of P3,800 and costing P2,000 is sold on account, subject to
the following terms: FOB destination, 2/10, n/30. The seller prepays the transportation
costs of P50. Prior to payment for the goods, the seller issues a credit memorandum for
P800 to the customer for merchandise costing P500 that is returned. The correct amount
is received within the discount period.

L. Florenz Tugas, distributor of imported magazines, engaged in the following selected

transactions for June.
1 Cash sales amounted to P27,500.
3 Sold to Rolling Bookstore magazines costing P19,000. Terms: P9,000 down,
balance 2/5, 1/10, n/30.
5 Delivered magazines to St. Benilde, P14,000. Terms: COD, FOB Destination,
Freight Prepaid P2,300.
7 A cash customer returned some magazines which were not in their purchase
order and was given a cash credit for P1,250.
13 Rolling Bookstore paid for its account P5,000.
15 Brenda, a regular customer, bought goods worth P8,500 for her bookstore.
Freight of P1,500 was prepaid under the term FOB Shipping Point. Terms: 2/5,
1/10, n/30.
18 Shepherd Voice Publishing House bought books worth P6,000. Terms: P2,000
down, balance 2/10, n/30. FOB Shipping Point. Freight collect P300.
25 Collected the account of Brenda, P5,000.
27 Collected the balance from Rolling Bookstore.

Required:
a) Journalize the above transactions. Assume that the company is VAT Exempt.
b) Open a T account for the accounts receivable, post the entries, and extract the
balance.
c) Open subsidiary ledgers for account customers, post entries, and extract the
balances. Reconcile against the accounts receivable balance.

BEING A BUYER AND A SELLER

M. Based on the information below, journalize the entries for the Seller and the Buyer. Both
use a perpetual inventory system.
(a) Seller sells Buyer on account merchandise costing P2000 for P4500, terms 2/10, net 30,
FOB destination. The transportation charge is P350.
(b) Buyer returns as defective P1000 worth of the P4,500 merchandise received. The
seller's cost is P850.
(c) Buyer pays within the discount period.

N. Journalize the entries to record the following selected transactions with value added tax:
(a) Purchased goods worth P10,000 plus 12% input sales tax.
(b) Sold merchandise on account for P14,000, subject to 12% output sales tax.
(c) Paid the corresponding taxes to the sales tax agency, Bureau of Internal Revenue.

O. The following are selected March transactions of Sweet Comfort, distributor of imported bed
sheets, pillow cases, and comforters. Its credit term is 2/10, n/30, FOB Destination. 12% VAT is
added in all invoices. The company is VAT registered.

4 Purchased an aircon unit from Concepcion Industries at a list price of P9,000 less
5% trade discount, 2/EOM, n/60. Get invoice price and add 12% VAT
 6 Paid P1,200 for the delivery cost of the above purchase.
8 Sold merchandise to Susan Velasco in the amount of P17,000 on account. Delivery
cost paid in cash, P604.80.
10 Purchased 10 comforters from Hong Kong Sleepwell invoiced at 10,000 Hong Kong
Dollars. Hong Kong Sleepwell has a Philippine distributor. Exchange rate is P8 to a
Hong Kong Dollar. Terms: 2/10, 1/20, n/30.
15 Received a check from Susan Velasco in total payment of her purchase.
19 Sold to David Company, on account, 5 Canadian bed sheets at P1,500 each set.
Freight cost paid for the delivery, P336.
20 David reported that an item in the shipment was defective. It was agreed that David
would retain the item but will be credited for P500.
22 Paid Hong Kong Sleepwell for 5 comforters less the agreed discount.
25 Received a check for P5,500 from David Company as partial payment.
28 Paid Concepcion Industries the amount due on the purchase of March 4.

Required:
a) Journalize the above transactions. Open the customer’s and supplier’s cards
b) Post to T accounts the accounts receivable and accounts payable entries. Determine
the balances and reconcile with the balances of the customer’s and supplier’s cards.

P. The following data for the current year ended December 31, 2019 were extracted from the
accounting records of FRO Co.:
Cost of merchandise sold P225,000
Operating expenses 75,000
Net Sales 485,000
Required: Compute the gross profit and net income for the year ended December
31, 2019. Commented [FO2]:

Q. In each of the following cases, supply the missing item(s):

Cost of Operating Net Profit

Case Sales Gross Profit
Sales Expenses (Net Loss)
A P 440,000 P? P215,000 P? P 75,000
B ? 185,000 75,000 105,000 ?
C 870,000 640,000 ? ? (90,000)
D 1,250,000 ? ? 275,000 150,000
E 1,300,500 ? 579,250 ? (95,750)

R. During the year, Garden Beauty purchased potteries, plants, dried flowers, candles, and
other home and garden decors at a total cost of P300,000. In each of the following cases,
calculate the cost of the goods available for sale and the cost of sales:

Case 1 Case 2 Case 3 Case 4 Case 5

Beginning Inventory P 0 P120,000 P50,000 P10,000 P 0
Freight In 25,000 0 40,000 15,000 25,000
Returns and Allowances 5,000 55,000 0 21,000 11,000
Discounts 0 15,000 0 0 18,550
Ending Inventory 0 0 75,000 75,500 85,000
 S. Computation of net purchases and goods available for sale.

Beginning Gross Freight-in Purchases Purchases Goods

Inventory Purchases Returns Discount Available for
& allowances Sale
1 P220,000 P 172,000 0 P8,000 0 ?
2 0 1,600,000 P 1,500 0 P20,000 ?
3 800,000 200,000 ? 75,000 100,000 850,000
4 150,000 250,000 5,000 0 ? 225,000
5 500,000 0 0 25,000 0 ?

T. Computation of net sales, available for sale, costs of goods sold and gross profit.

Sales
Cost of
Returns Sales Beginning Ending Net Gross
Sales Goods
and Discounts Inventory Inventory Purchases Profit
Sold
Allowances
1 700,000 50,000 0 200,000 ? 300,000 400,000 ?
2 ? 40,000 10,000 ? 75,000 25,000 200,000 350,000
3 1,000,000 0 150,000 0 600,000 ? ? 500,000
4 800,000 5,000 55,000 80,000 200,000 420,000 ? ?