MECHANDISING Problems 1 ¥¥2co. recorded the sale at P6000. If the sale was subject to 20K trade dicount and rat terms of 5/10, n/30, the ist price was? 2. What sales price shouldbe recorded when an item having a P90,000 1st prices sold with 15% trade dscount? The sles invoice includes the terms 2/10, n/30 3. On June 3, #960 of goods are sold with credit terms of 1/10,n/30.On June 3, the customer retvened P1200 the goods. How much should the seller expect to receive the buyer pays on June 8? ‘4 Acustomer purchased product that has a catalog pice of P40,000. The terms of the purchase was: 10%, 15% 1/20,0/30 Mow much wl be theiwoice rie ofthe purchase? 5. The following informations avaiable from the accounting records of Buddy Co, Purchases 5,300,000 Purchase Oiscount 100,000 Beginning ventory 4,600,000 Ending Inventory 2,150,000, Freightout ‘30,000 Purchase returns and allowances 50,000 ‘Wow muchisthe cost of goods avalabe forsale? ‘Merchandise ssld on account to customer for P120000, terms FOB shipping point, 2/10/30. The sallr pa the transportation cost of P6000. {5 How much shouldbe debited to the customers account? 7. How much shoud the seller expect to recive customer paid within the dscount period? 8. During the year, Roy Store purchased good worth P150,000. There were 40,000 unsold goods atthe end ofthe year. But old stock brought forward from ast year's purchases ws P20,00, How much was the eos of sales? 9. Company reported ane ss of P4000, netsales was P200.000 and_sross profit was AD% fofrmat sales, How much isthe operating expenses? 120, Net sales amounted to P50,000 with cos of sles representing 75% operating expensesis 10% of sales how much s the net income? 11, If thepprchases total P240,000 and the ending inventory is bigger than the beginning by 10,000, how muchisthe cost of goods sold during the period? ‘tems 13 and 14 are based on the fllowing infrration: Net purchases totalled Goods avalable forsale Gross Prot Ending inventory 12. How muchis the tterchancise| 13, How muchis the Net Sales?ABCCo. had the delowing data forthe period ended cash sales, 400,000 ret sales 280,000 Soles count 25,000 Sales returns 2000 Freight in 15,000 Freight out 16,000 14, How muchis the net sale revenue? 15. Axel Company sold merchandise worth PAS,0. I the goods are marked up at 20% above cos, haw much is the cost of sles? 16, Based onthe data given below, compute the profit or loss forthe period. nsiate opposite your answer ifitis a profit or aloss. Freght-in » 30,000 Freight out 7000 Insurance expense 12,000 Purchases 200,000 Purchase discounts 3,000 Purchase retuns and allowances 6000 Rent expense 20900 Salary expense 61000 Sales discount 8.000 Solsreturns| 13,000 soles 312,000 Beginning merchandise inventory was P42,000 and ending inventory was P63,000. 17, The records of Tria Company forthe month of Api shows the following acount balances Sales P180,000; Sales discounts P2,000; Purchases 20,000; Purchase returns and allowances 30,000; an Freight in P5000. n adtion it has beginning inventory of P0,000 and ending Inventory of P30,000. How much sthe gross profit forthe month? 18, Lesie Merchandising reports nt sales of PBCO.00, gros profit of PS80,000 and profit of 300,000, How much is operating expenses? ‘The flowing information ae taken frm the records of Safran Campany December 32,2016 December 31,2017 Accounts receivable 6,400,000, 4,000,000 ‘Accounts payable 4,632,000 2,621,000 ‘Wages payable 85,000 125,000 ‘Advertising Supplies 35,000 75,000 ‘Advertsing payable 14250 40,000 Prepaid insurance 25,000, 43,000 During the year: ‘+ Amount collected from customers, P10}0000 ‘+ Tota payments to suppliers of me ‘+ wanes paid 3,050,000 + Advertising pad ,P300.000 ‘Insurance premium paid, 125,000 Compute the following for 2017: 19. Total sales 20, Total purchases 21. Wages expense 22, Advertising expense 23. Insurance expensefolowing information pies to Vary Storer the month ol Sapte 20 Advertising expense on teres expense fied imeetteame” em ‘co Soleetune sooo Freight oc Catt god sold Bad det expense Office Salar expense ‘Compute the following Total sting expenses Total enw ond administrate expense The grass profit ™ Themen ‘Thefollowing information were taken fom the records of Burkley Mechandsng Rental Revenue 25000 Interest expense 18000 Salaries and wages ~ Sales #900 Store supplies 10000 Salaries and Wages — Administrative 85900 (ther adminisvative expenses 51,700 Sas 370,000 Freight cut 7,600, Advertsing expanse 15,200 Depreciation expense (70% sling & 30% administrative) 62.000 Sale returns and allowances 9,000 Rent expense (50% seling& SOMadministrative) 20,000 {Cost of goods sold 446,000 Compute for the flowing: 28, Total seling expenses 29. Total administrative expenses 30, The income from operation 32, Alca Company's inventory at June 30, 2014 was 750,000 based on a physical count ot 900d priced al cost end before any necessary yaar ond acjustment relating t the following |ncuced in th physical count were goods ied toa customer FOB shipping point (June 80, 2074. The goods costing 15,000 ware picked up by the carer on July 8 2016 Goods shioped FOB destination on June 28, 2014 from a vendor to Alca was received on July 1, 2014, The invoice cost was 25,000, What amount should Aica report ae inventory on its J position?38. The unadjusted physical inventory of Liberty Company at December 31.2014 wa 3eo0000 Geer efomaton ome “ 2 “Goods war recave and recrca on anuary 22015 wi cost ot 180,000, Peete cecal ta th arm of te shipment is FOB shiping pont ond se (goods wore shppedon December 20,2014 conan ec ithe warehouse costing 240,000 was biled 10 he custome FOS Meranda camber 20,2014 These wore exchdea rom mvenon/ PM hove were shipped on January 3, 2015. low mast shou boty pont as invertoryin ts Decarber 21,7014 sateen of franca poston? {4 Thefotowng oration sppies to Agony Ine. For 2044: Merchancise purchased forsale 400.900 Freightin "ote Freigntout oh 2,000 Purenase returns How much is Agony’s 2014 inventorable cost? 135. On June 1, 2014, Pit Corp. sold merchandise with @ iat price of 50,000 to Bull on Or une tid alowed wade discounts of 20%, 20% and 10%, Credit ors we 25, acc aise was made FOB destratin, Bull pad P2,000 of devery costs ‘on eae ary 204, now much did Pit receive from Bul as ful payment? 26, Tape Company reported te following balance at December 2018 and 2014: Ds 1 5 31,201 ‘December 31, 2014 laventory 72,800,000 2,900,000, ‘Aceounts payable "750,000 "500,000 “tne company paid is suppliers 4,900,000 during the year ended December 31,2015, san eine should Tape report as cost of goods sald ints December 31,2016 statement ‘of comprehensive income? ‘57. Barber Company prepares monthiy income statements. A physical inventory is ken onty Reet er nance, month-end nwentonias must be estimated, Al sales are made on aareat ere rate of markup on costs SO%, The folowing information relates to the ‘month of June: “Accounts receivable, June 1 102,000 ‘Accounts receivabie, June 20 453,000 Collection of accounts receivable during June 255,000 Inventory, June 4 “183,800 Purchases of inventory during June 163,200 How much is the estimated cost of June 20, inventory? se, Te folowing ifoaton is vais for he Cherbim Company forthe hee month ‘ended March 31, 2014: ements Invantory, January 1, 2014 4,200,000 Purchases 4'500,000, Freightin 200,000 Sales 16,400,000 ‘The gross margin was 25% of sales. ‘What isthe estimated inventory balance at March 31, 2014?2, Some ofthe transaction of Tynathy Merchandising daring uy rested Below hty10~ Purchased merchandise on account, P2000, terms 2/10, 0 20— Purchased mero purchases hu 30 P2200 ai ceived TUT eee rcangise on account, P16:000, terms 110.0160 15 Purse Merchandise on acount 70,000, terms 2/10, n/30 28 -Paid invoice of ub35. watts the amount of re purchases for thernonth of 77 a Wat ee alee of accounts payable related tRe 0 purchases? 40, The following data were taken from the records OF polar Merchandising payments to merchandise supplier’ 750,750 Decounts payable January 1, 2017 4125500 ‘Recounts payable, December 32, 2017 92,250 MStave inthe balance of merchandise inventory 30,000 suo muchis the otf sales forthe yar ended December 32 20472MERCHANDISING ‘True or False. Write True if the staternant is correct and Fale incorrect. 1 Adit memorandum represents a authorization to enter purchase dicount inthe accounting records [Apurchase returns documented by the buyer's preparation ofa credit memorandum. Soles cscount i another term for trade discount. ‘he proper time to recognize revenue s when tite tothe merchandise changes hand. ‘The recording of a credit memorandum involves a debit tothe Sales Returns and Allowances The invoice price(s equal to list price minus trade discount. Prepad rights credited to Accounts Payable by the buyer when merchandise fs purchased on ‘acount, FOB Shipping Point 8 Under the periodic inventor system, an ending inventory count must be taken in order to ‘determine the cost of goods sod ‘9, Asa general ule, goods in transit toa buyer at the end of the year belongs tothe seller. 10. Asales returns documented by te seller's preparation ofa credt memorandum. 11. Physical possesion snot required fo legal tile to inventory. 12. Acash discount as no account ofits own and requitesno special accounting entry 13, The use of the perpetual inventory sytem generally results in improved inventory contro 14. The periodic inventory system doesnot utlinea Purchases account. 15, The Sales account is used forthe sales of all asses ‘Multiple Chotce. Select the letter of the best answer. 1. In merchandising operation, the Sales account should include a. Only creit sles of merchandise Only cash sales of merchandise €. Both cash and credit sales of merchandise 4 Sales ofboth merchandise and othe assets ofthe business. 2. Which of the following companies would be ikly to use perpetual system? 2. Drugstore Car desler «Hardware store 4. Sehaol an fice supplies store 13. Ifa seller of merchandise accepts goods returned by credit customer, the seller wil typically issue ’.acredit memorendum € aninvice ba debit memorandum 4.3 purchase order 4, When @ debit memorandum issued, an entry is made to ‘2, debit cash and creditaccount payable b. debit sales and eredit accounts receivable ‘debit accounts payable an credit purchase returns and allowances, and input tax ifvtable 44. dobit sales return andcedit accounts recevable 5. FOB shiping point means: tile passes at shipping pont seller pays transportation cost. ttle passes at shipping point, buyer pays transportation cost «title doesnot pass at shipping point, however, buyer isresponsble forthe transportation ‘none ofthe above. 6. Fora merchandise entity, the purchase account inclaes: 2a allitems aquired for both short term and ong term bs acquistionafitems fr resale acquisition of short term assets 4. acquistion of supplies.7. Which ofthe following discounts has no account of ts own and requires no special accounting entry? ‘a-eash discount sales dicount trade discount 1 purchate discount 8 Which of the followings nota conta account? Sales Discount Purchase returns and allowances Accumulated Depredation Freight in 19, Apurchase discount results from 2 returning of goods to seller receiving a purchase allowance from the seller buying a large enough quantity of merchandise to get the discount €. paying within the discount period. 10, The expression 3/20, /60 means ‘2. The invoice must be paid in3 to 20 days, otherwise, intrest for 60 days wll be charged, ‘LA 3% discounts avaliable the invoice spa in 20 to 60 days; otherwise the total invoice price i due, ‘¢.A3% discounts availabe ifthe invoice is pad within 20 days otherwise the total invoices hue in 60 days 6. 15% (3/4 of 20) discounts available the invoice is pai within 60 days 111 Normally, revenue from sale of goodsis recognized when a. a customer order goods '. order for shipment has been rece ‘cacastomer pays for the goods 4. goods are sold 12 Which ofthe following is fle? 12. The difference between list price and invoice riceis equal othe amount of trae discount. Trade dscountsare a convenient means of reducing ist price to invoice rice. {CTrade discounts are not entered in the accounting records. Trade discounts ae identical to cash discount. 13 ffthecustomer retums goods toa merchandiser, what effect wl the return have onthe Books ofthe merchandiser? {a decrease in sales account a decrease in accounts payable and allowance account. ‘canincrease inthe purchase retur and allowance account ‘an increase in the sles returns and allowance account 44 Sales return and allowances is commonly referred toas: 2. an expense account © acontra revenue account a revenue account 4.a cost of goods sold account 45 Under the perpetual inventory methad, when afr purchases goods on credit, the journal entry will incude a debitto a, Purchases cash come summary inventory 16, Thefollowing entries were made to record one purchase of merchandise: Purchases 27,000 ‘Accounts Payable — Supplier 27900 Freight in 2,900 ‘Accounts Payable~ Supplies 2,800 What ae the shipping terms regaring this transactions? 3. FOB Destination, freight prepaid 'b. FOB Shipping Point, freight prepaid FOR Destination, fight collect 4. FOB Shipping Point, eight colet17, Whichis an adjnet account? a. Froightin b, Soles Accounts Payable 4. Sales Discount 18 Haseller of merchandise accepts goods returned by acredit custrer, seller wil typically sue ‘2. acredit memorandum b,_adebit memorandum 4d. apurchase order 19, Ascompored toa service business income statement, the income statement of merchandising Company '2_ Does not show sales instead of service income revenue. 1. Does not doe the items of income and expense. ‘e Hasanitem called cost of goods sod {4 Has higher net income compared toa service busines. 20, _Anetity that uses special journals acquired merchandise by giving ante payable In which journal would the transaction be recorded? @. lavoice register Sales journal © General Journal 4. Cash lsbursement journal 21. Whenspedial journals are wie which ofthe following statements itr? a. A genera journals nat sed 1 Alsales transactions should be cored inthe sale journal. _Allcash receipts shouldbe recorded in he cash receipts Journal {4 All purchase transaction shouldbe recorded inthe purchase journal, 22. When special journal are wed, asjsting and closing entries are recorded inthe ‘a. Cash dabursement journal. b, Cashreceipts journal Genera journal Purchase journal 23, _fanentity uses special journasin which joural would the sale of merchandise for cash be recorded? 2. Sales journal 1. Cashreceot journal Genera journal 4. Gath disbursement journal 28 Whichisincorrect concerning use of special journal? ‘Only saesof merchandise on aezount is recorded inthe sales journal. 1. Purchases of any item on account ae recorded inthe purchase journal. _Teaneatons that cannot be appropriately recordedin a special journal are recorded inthe general ural 6. Cashpurenaes are recorded inthe cash disbursement jour 25. An exampleof a nominal and conta accounts ‘a. Salesretums 1b Accumulated deprecation Freghtout 4. Freghtin