Credo Company

Credo Company provided the following data:

December 31, 2X15 December 31, 2X16

Accounts receivable 1,200,000 1,350,000
Accounts payable 1,500,000 1,850,000

In 2X16, accounts written off amounted to P100,000. Sales returns totaled P250,000, of which
P50,000 was paid to customers. Cash receipts from customers after P500,000 sales discounts
amounted to P8,000,000. Cash payments to trade creditors totaled P5,000,000 after purchase
discounts of P200,000. Purchase returns amounted to P400,000, of which P100,000 was received
from the supplier.

A. Gross sales

Accounts receivable – 2x16 P 1,350,000

Accounts written off 100,000
Sales return 250,000
Cash receipts from customers 8,000,000
Sales discounts 500,000
Total 10,200,000
Accounts receivable – 2x15 (1,200,000)
Erroneous debit to accounts receivable (50,000)
Gross sales P 8,950,000

B. Net sales

Gross sales P 8,950,000

Less:
Sales return P 250,000
Cash receipts from customers 500,000
Erroneous debit to accounts receivable 50,000 800,000
Net sales P 8,150,000
 C. Gross purchases

Accounts payable – 2x16 P 8,150,000

Purchase returns 400,000
Payment to trade creditors 5,000,000
Purchase discounts 100,000
Total 7,350,000
Accounts payable – 2x15 (1,500,000)
Gross purchases P 5,850,000

D. Net purchases

Gross purchases P 5,850,000

Less: purchase returns 400,000
Net purchases P 5,450,000