PURCHASING ACTIVITY (BUYER)

Transaction For Cash On Account

1. Purchase of merchandise. Purchases xx Purchases xx
Input Tax xx Input Tax xx
Cash xx Accounts Payable xx

2. Return of merchandise to Cash xx Accounts Payable xx

supplier. Purchase Returns & Allo. xx Purchase Returns & Allo. xx
Input Tax xx Input Tax xx

3. Payment of account within Accounts Payable xx

the discount period. Purchase Discount xx
NA Input Tax xx
Cash xx

3. Payment of account NA Accounts Payable xx

beyond the discount period. Cash xx

4. Incurrence of shipping Freight In xx Freight In xx

costs. Input Tax xx Input Tax xx
Cash xx
Accounts Payable xx

SELLING ACTIVITY (SELLER)

Transaction For Cash On Account
1. Sale of merchandise. Cash xx Accounts Receivable xx
Sales xx Sales xx
Output Tax xx Output Tax xx

2. Return of merchandise Sales Returns &Allo. xx Sales Returns &Allo. xx

from customer. Output Tax xx Output Tax xx
Cash xx Accounts Receivable xx

3. Collection of account Sales Discount xx

within the discount period. Output Tax xx
NA Cash xx
Accounts Receivable xx

3. Collection of account Cash xx

beyond the discount period. NA Accounts Receivable xx

4. Incurrence of shipping Freight Out xx Freight Out xx

costs. Input Tax xx Input Tax xx
Cash xx Accounts Payable xx

COMPUTATION:

VAT EXCLUSIVE (Vat is billed separately) VAT INCLUSIVE (Vat is billed not separately)

Gross Amount x .12 = VAT Invoice Price ÷ 1.12 = Gross Amount (100%)
x .12_
VAT
CLOSING ENTRY:

Output tax xx
Input Tax xx
VAT Payable xx

Output tax xx
Prepaid Tax xx
Input Tax xx

SEATWORK : PROBLEM 17, JOURNAL ENTRIES (NON-VAT)

SELLER BUYER

1. FOB Shipping Point, Freight Collect No entry Freight In xx

Cash xx

2. FOB Shipping Point, Freight Prepaid Accounts Receivable xx Freight In xx

Cash xx Accts. Payable xx

3. FOB Destination, Freight Collect Freight Out xx Accts. Payable xx

Accts. Receivable xx Cash xx

4. FOB Destination, Freight Prepaid Freight Out xx NO ENTRY

Cash xx
 SELLER BUYER
CASE 1: FOB, DESTINATION, FREIGHT PREPAID
Nov. 25 Accounts Receivable 17,000 Purchases 17,000
Sales 17,000 Accounts Payable 17,000

Freight Out 1,900

Cash 1,900

Dec. 5 Cash 16,660 Accounts Payable 17,000

Sales Discount 340 Cash 16,660
Accounts Receivable 17,000 Purchase Discount 340

Dec. 6 Cash 17,000 Accounts Payable 17,000

Accounts Receivable 17,000 Cash 17,000

CASE 2: FOB, SHIPPING POINT, FREIGHT COLLECT

Nov. 25 Accounts Receivable 17,000 Purchases 17,000
Sales 17,000 Accounts Payable 17,000

Freight Out 1,900

Cash 1,900

Dec. 5 Cash 16,660 Accounts Payable 17,000

Sales Discount 340 Cash 16,660
Accounts Receivable 17,000 Purchase Discount 340

Dec. 6 Cash 17,000 Accounts Payable 17,000

Accounts Receivable 17,000 Cash 17,000

CASE 3: FOB, DESTINATION, FREIGHT COLLECT

Nov. 25 Accounts Receivable 17,000 Purchases 17,000
Sales 17,000 Accounts Payable 17,000

Freight Out 1,900 Accounts Payable 1,900

Accounts Receivable 1,900 Cash 1,900

Dec. 5 Cash (15,100 – 340) 14,760 Accounts Payable 15,100

Sales Discount (17,000 x 2%) 340 Cash 14,760
Accounts Receivable (17,000 – 1,900) 15,100 Purchase Discount 340

Dec. 6 Cash 15,100 Accounts Payable 15,100

 Accounts Receivable 15,100 Cash 15,100

CASE 4: FOB, SHIPPING POINT, FREIGHT PREPAID

Nov. 25 Accounts Receivable 17,000 Purchases 17,000
Sales 17,000 Accounts Payable 17,000

Accounts Receivable 1,900 Freight In 1,900

Cash 1,900 Accounts Payable 1,900

Dec. 5 Cash (18,900 – 340) 18,560 Accounts Payable 18,900

Sales Discount (17,000 x 2%) 340 Cash 18,560
Accounts Receivable (17,000 – 1,900) 18,900 Purchase Discount 340

Dec. 6 Cash 18,900 Accounts Payable 18,900

Accounts Receivable 18,900 Cash 18,900

PROBLEM 11

CASE A: FOB, SHIPPING POINT, FREIGHT COLLECT

ILANO (SELLER) PASCUAL (BUYER)
June 16 Accounts Receivable 6,000 Purchases 6,000
Sales 6,000 Accounts Payable 6,000

Freight In 600
Cash 600

June 24 Cash 5,880 Accounts Payable 6,000

Sales Discount (6,000 x 2%) 120 Cash 5,880
Accounts Receivable 6,000 Purchase Discount 120