ASSIGNMENT 10: MERCHANDISING BUSINESS

A. On January 12, Panglao Commercial bought merchandise from Loboc

Enterprises on credit, P100,000. Term: 2/10, n/30. P 20,000 cost of
merchandise was later returned and was not replaced. The credit memo was
dated January 15. Payment was made on January 20.
Required: Record the above transactions in the books of both buyer and seller.

BOOK OF PANGLAO COMMERCIAL BOOK OF LOBOC ENTERPRISES

Jan. 12__________________________ Jan. 12 ________________________

__________________________ ________________________

Jan. 15__________________________ Jan. 15 ________________________

__________________________ ________________________

Jan. 20__________________________ Jan. 20 ________________________

___________________________ ________________________
___________________________ ________________________

B. Journalize the following selected transactions of Maria Cruz Trading for the
month of July.
Assume______________
Non-Vat Registered VAT Registered

1.Bought merchandise on account _______________ ________________

From Rene Cason Co.,P15,000. _______________ ________________
________________

2. Sold merchandise in cash to Mr. _______________ ________________

Neptalie Ylagan, P20,000. ______________ ________________
________________

3. Bought merchandise for cash from ______________ ________________

Jude Seares Enterprises, P60,000. ______________ ________________
________________

4. Sold merchandise on account to ______________ ________________

Brigette Almario, P75,000. ______________ ________________
________________

5. Paid in full the account with ______________ ________________

Rene Cason Co. ______________ ________________
________________

6. Collected in full the account of ______________ ________________

Ms. Brigette Almario, P75,000. ______________ ________________
________________
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7. Paid freight on purchases of ______________ __________________

Merchandise, P 5,000. ______________ __________________

8. Paid freight on sale of ______________ __________________

Merchandise, P 5,000. ______________ ___________________

9. Bought merchandise for cash and ______________ ___________________

Received a 5% trade discount, ______________ ___________________
P 20,000. ___________________

10. Sold Merchandise for cash and _____________ ___________________

Gave a 2% trade discount, _____________ ___________________
P 50,000. ___________________

C. The following selected account balances were taken from the records of Alex
Ajoc, the owner of Surigao Hardware & Construction Supply for the month of
December 20A. (VAT of 12 % is billed separately.)

Purchases P710,000
Purchase Returns & Allowances 5,000
Purchase Discounts 20,000
Sales 1,020,000
Sales Returns &Allowances 8,000
Sales Discounts 25,000
Required:
1. Compute the input tax _______________
2. Compute the output tax ______________
3. Compute the VAT Payable ____________
4. Entry to close the Input and Output Tax
_________________________________
_________________________________
_________________________________
5. Entry to remit VAT Payable to Bureau of Internal Revenue
____________________________________
____________________________________

D. The following selected account balances were taken from the records of J.
Gucela Company, for the month of January 20B. (VAT of 12% is billed
separately).
Purchases P100,000
Purchase Returns & Allowances 10,000
Purchase Discounts 5,000
Sales 80,000
Sales Returns and Allowances 6,000
Sales Discounts 7,000
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Required:
1. Compute the Input Tax ______________________________
2. Compute the Output Tax _____________________________
3. Compute the Prepaid Tax ____________________________
4. Entry to close the Output Tax to Input Tax
_______________________________________________
_______________________________________________
_______________________________________________
5. Where do we show the Prepaid Tax in the Financial Statements?
________________________________

E. On June 1, 2020, Eleno Buray Forest Products sold merchandise with a

P120,000 list price. Sales Cash
Trade Discount Credit Terms Date Paid Amount Received
a. 30% 2/10, n/30 June 8 __________ ________
b. 40% 1/10, n/30 June 15 __________ ________
c. - 2/10, n/30 June 11 __________ ________
d. 20% 1/15, n/30 June 14 __________ ________
e. 40% n/30 June 28 __________ ________
Required: For each of the sales terms, determine the following:
1. The amount recorded as a sale.
2. The amount of cash received.

F. Renz Aguhob Fireworks engaged in the following purchase transactions during

the month. The entity observes the policy that all returns are made one day after
the goods are received, and that all purchases are paid within the discount period.
Purchase
Freight Returns & Credit Trade Cash
List Price FOB Terms Charges Allowances Terms Discount Payment
P224,000 Shipping pt. P 4,000 P 21,000 2/10,n/30 30% _______
126,000 Destination 9,000 - 1/10,n/30 20% _______
90,000 Shipping pt. 2,000 7,000 2/10,n/30 - _______
41,000 Shipping pt. 1,000 9,000 n/30 25% _______
357,000 Destination 14,000 24,000 3/10,n/30 20% ________
Required:
Using the table above, calculate the amount needed to settle each purchase.

G. The following information pertains to the Leopoldo Valdez School Chairs:

Transportation In P 172,000
Merchandise Inventory, 1/1/2020 1,200,000
Merchandise Inventory, 12/31/2020 1,900,000
Purchases 4,300,000
Purchase Returns and Allowances 129,000
Purchase Discounts 215,000

Required: Prepare the cost of goods sold section of the income statement for the
year ended Dec. 31, 2020.
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H. On Feb. 18, 2020, a fire destroyed the merchandise inventory of Cristina

Santiago Shirts. The following information was available from the entity’s
accounting office:
Cost of Goods Sold P 1,260,000
Transportation In 39,600
Merchandise Inventory, 1/1/2020 300,000
Purchase Discounts 26,400
Purchase Returns and Allowances 46,200
Purchases 1,320,000

Required: Compute the value of the lost merchandise. (Ending Merchandise

Inventory).

I. The partial income statements of five different companies are as follows:

1 2 3 4 5
Net Sales a d 250,000 290,00 400,000
0
Merchandise Inventory,1/1/2020 b 50,000 70,000 j 120,000
Net Cost of Purchases e g 160,00 390,000
80,000 0
Goods Available for Sale 110,00 160,00 h k m
0 0
Merchandise
Inventory,1/31/2020 f 30,000 n
40,000 70,000
Cost of Goods Sold c 140,00 230,000 l 380,000
0
Gross Profit 50,000 i 160,00 o
40,000 0

Required: Replace the lettered blanks with the appropriate amounts.

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