ACC 1 – FINANCIAL ACCOUNTING AND REPORTING

DRILL NO. 8 – Accounting Cycle of a Merchandising Business (Journalizing)

“Integrity is doing the right thing, even when no one is watching.” – C.S. Lewis

On February 2018, Angel Merchandising had the following transactions:

Feb. 1 Purchased various merchandise on credit from the following suppliers:
 Greater Marketing, ₱180,000. Terms: 5, 2/10, n/30; FOB shipping point, freight prepaid,
₱1,500.
 Smaller Distributor, ₱200,000. Terms: 15/5, 5/10, n/30; FOB shipping point; freight
prepaid, ₱2,000.
3 Paid purchases made on January 27, ₱40,000. Terms: 2/10, n/30.
5 Received debit memo amounting to ₱2,000 from customer who purchased last January 30
for a total of ₱45,000. Terms: 10, 10/10, 5/15, n/30.
6 Issued debit memo to Greater Marketing, ₱2,000.
Received credit memo from Smaller Distribution, ₱1,500.
8 Paid the supplies purchased last January 25, 2018 amounting to ₱4,000.
Sold merchandise to the following customers:
 Cash basis, ₱60,000.
 On account with 10%, 30-day notes, ₱50,000. Terms: 5, 2/10, n/30, FOB destination,
freight collect, ₱1,400.
 On open account, ₱60,000. Terms: 10/15, 5/20, n/30; FOB destination, freight prepaid,
₱2,000.
 The business maintains a gross profit of 20% on all sales
12 Paid utilities incurred on January 2018, ₱5,000.
Received full payment from Smaller Distributor.
115 Paid salaries of the staff for the month, ₱24,000.
Paid the 3-month cash advance of one worker, ₱18,000. Asset method is used.
1420 Sold merchandise on cash to Brown Merchandising, ₱35,000. Freight paid amounted to
₱1,800.
23 Received full payment of the account on February 8 sale.
25 Refunded Brown for merchandise return, ₱1,200.
28 Received full payment of the notes, including interest, of February 8.
Sold merchandise to various customers:
 Cash basis, ₱30,000. Freight paid, ₱1,000.
 On account, ₱50,000. Terms: 2/10, n/30; FOB shipping point, freight prepaid, ₱1,400.

Required: Record the transactions in a two-column general journal under the following inventory
systems:
1. Perpetual inventory system
2. Periodic inventory system
---END OF DRILL NO.8---
“When mediocrity becomes the accepted norm, excellence dies a painful death.” -- Rashida Rowe

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