INCOME STATEMENTS

SERVICE BUSINESS VS MERCHANDISING BUSINESS

Fees Revenue 100,000.00 Net Sales

Operating expenses (65,000.00) Cost of sales

Net income 35,000.00 Gross profit

Operating expense

Net income
400,000.00

(280,000.00)

120,000.00

(90,000.00)

30,000.00
SERVICE BUSINESS

SOURCE DOCUMENTS → SPECIAL JOURNALS

OFFICIAL RECEIPTS → CASH RECEIPTS JOURNAL
CHECK VOUCHERS → CASH DISBURSEMENTS JOURNAL
JOURNAL VOUCHERS → GENERAL JOURNAL
MERCHANDISING BUSINESS

SOURCE DOCUMENTS → SPECIAL JOURNALS

COLLECTION RECEIPTS → CASH RECEIPTS JOURNAL
CHECK VOUCHERS → CASH DISBURSEMENTS JOURNAL
JOURNAL VOUCHERS → GENERAL JOURNAL
SALES INVOICE → SALES JOURNAL
RECEIVING REPORT → PURCHASE JOURNAL
 Periodic
Trade discounts

Purchases
Cash
Credit
Cash discounts - to encourage prompt payment

Freight/Transportation cost

Purchase returns and allowances SUPPLIER A

SP 85/kg
Purchasing Actual 75/kg 10/kg

10,000 kgs

10,000 75 750,000
PERIODIC METHOD

Nov-02 PURCHASES 750,000

CASH 750,000
TO RECORD PURCHASE OF 10,000KGS OF MANGOES

Nov-02 PURCHASES 1,200,000

ACCOUNTS PAYABLE 1,200,000
TO RECORD PURCHASE ON ACCOUNT

FREIGHT IN/TRANSPORTATION IN 50,000

CASH/ACCOUNTS PAYABLE 50,000
TO RECORD FREIGHT

CASH 750
PURCHASE RETURNS 750
TO RECORD RETURN OF "LATA" MANGOES 10 KGS SUPPLIER A

ACCOUNT PAYABLE 1,000

PURCHASE ALLOWANCES 1,000
TO RECORD PURCHASE ALLOWANCE ON 100KG. SUPPLIER B

N0V 10 ACCOUNTS PAYABLE 1,199,000

PURCHASE DISCOUNT (cash discount) 23,980
 CASH 1,175,020
TO RECORD PAYMENT WITHIN DISCOUNT PERIOD

Nov-05 CASH 14,000

SALES 14,000
(100 KGS X 140)

Nov-06 ACCOUNTS RECEIVABLE (CUSTOMER A) 750,000

SALES 750,000
(5,000 KG X 150) n/15

Nov-08 ACCOUNT RECEIVABLE (CUSTOMER B) 1,800,000

SALES 1,800,000
(12,000 KG X 150) 1/10; n/15

Nov-12 CASH 290,000

SALES 290,000
(2,000 kg X 145)

Nov-07 SALES ALLOWANCE 2,000

ACCOUNTS RECEIVABLE (cust A) 2,000
(100 KG X 20)

Nov-20 CASH 748,000

ACCOUNTS RECEIVABLE 748,000
TO RECORD PAYMENT OF CUSTOMER A

Nov-18 CASH 1,782,000

SALES DISCOUNTS (cash discount) 18,000
ACCOUNTS RECEIVABLE 1,800,000
TO RECORD COLLECTION FROM CUST B WITHIN DISCOUNT PERIOD

Nov-07 FREIGHT OUT/TRANSPORTATION OUT/DELIVERY EXPENS 5,000

CASH 5,000
TO RECORD DELIVERY EXPENSE
Perpetual

850,000
750,000
100,000 TRADE DISCOUNT - TO ENTICE SALES/ TO ENTICE THE BUYER TO BUY

TERMS 30 DAYS
2/10

PAYABLE
ALLOWANCE
ADJUSTED PAYABLE
CASH DISCOUNT
PAYMENT

KGS

peso amount kgs

PURCHASES 1,950,000 25,000 78
FREIGHT IN 50,000 -
2,000,000 25,000 80
PURCHASE RETURNS (750) (10)
PURCHASE ALLOWANCE (1,000) -
PURCHASE DISCOUNT (23,980) -
TOTAL GOODS AVAILABLE FOR SALE 1,974,270 24,990 79.00
NET SALES PESO KGS
SALES 2,854,000 19,100
SALES ALLOWANCE (2,000) -
SALES DISCOUNTS (18,000) -
2,834,000 19,100

COST OF SALES/ COST OF GOODS SOLD

PURCHASES 1,950,000 25,000
FREIGHT IN 50,000 -
2,000,000 25,000
PURCHASE RETURNS (750) (10)
PURCHASE ALLOWANCE (1,000) -
PURCHASE DISCOUNT (23,980) -
TOTAL GOODS AVAILABLE FOR SALE 1,974,270 24,990 79.00
INVENTORY, END (465,310) (5,890) PHYSICAL COUNT/INVENTORY COUN
1,508,960 19,100 -

GROSS PROFIT 1,325,040

OPERATING EXPENSES
DELIVERY EXPENSES/FREIGHT OUT (5,000)
RENTAL XXXXX
UTILITIES xxxXX
supplies
Trade discounts

Sales
Cash
Credit
Cash discounts

Sales returns and allowances

SUPPLIER B

SP 80/KG
ACTUAL 80/KG

15,000 KGS

N/30 CASH DISCOUNTS

1,200,000
(1,000)
1,199,000 100%
(23,980) 2%
1,175,020 98%
 PURCHASE COST PER KILO
PHYSICAL COUNT/INVENTORY COUNT

1,325,040