FAR-BASIC ACCOUNTING FUNDAMENTALS

NAME: _________________________ SECTION:__________________DATE:________________

Transactions for the Dignoy Factory for December 2018 is as follows:

December 1 Purchased raw materials used for Gretchen product, on credit From Diago
Enterprises, terms 8/10, n/30, FOB destination, P 19,740,000, VAT exclusive, trade discount inclusive
for 20%. The goods were received December 05, 2018.

December 5 Sold Product Gretchen on Credit to Detoya Company, P 21,850,000 VAT exclusive and
received 35% partial payment, and giving 10% discount on the advanced received. The terms on the
balance amount is 5/10, n/30, FOB Shipping Point. The goods were received by the customer on
January 02, 2019.

December 9 Issued a Credit memo for returned merchandise worth P 550,000 VAT inclusive from
Detoya Company, that was purchased last December 05. The Company accepted only P 350,000 and
Detoya Company agreed to this amount.

December 10 Purchased Raw Materials used for Kris Product, P 8,850,000 inclusive of VAT, and
inclusive of trade discount 15%, term 5/15, n/30 FOB shipping point, paid 50% of the total costs for
which the company received 10% Purchase Discount; freight paid separately for P 25,000 VAT
exclusive. The goods were received midnight of December 31, 2018 at the factory warehouse. Three
Warehouse Staff who received the goods at the warehouse were given meal allowance of P 2,000
each which they purchased from Mcdo, VAT inclusive plus overtime pay equal to 150% of basic pay,
and night differential of 10% which were all charged as Indirect labor, including the employees’ meal.
These Staff receives minimum daily salary of P 500, and it is the policy of the company that overtime
calculations start from 5pm to 8am the following day.

December 15 Received Credit Memo from Diago Enterprise for P 250,000 VAT exclusive, for
returned raw materials worth P 400,000, which Dignoy Factory accepts, and the balance is to be
charged to the Cost of Goods Sold.

December 15 Paid the following salaries for the first half of the month:
Sales Salaries P 1,950,000
Admin Salaries P 460,000
Withholding taxes on Salaries (to be paid next month) P 105,000

December 21 Issued check no. 72, as full payment for Purchases last December 01, 2018, for which
the company received a 5% discount

December 21 Sold Product Kris, P 42,500,000 VAT exclusive for cash and gave 15% discount

December 23 13th Month pay was released to all employees equal to their one month pay per check no. 73

December 24 Christmas Party give away and awards amounting to P 2,555,850.00 were given in
cash to all employees and Staff. This amount was charged to Employees Welfare Benefit Expense
account, exclusive of P 185,000 Input VAT

December 29 Paid 2nd half of the salary, but with additional deduction from employee’s salary as
follows: Philhealth – P 88,500, Pag Ibig-P 185,550; and SSS – P 345,500.

December 30 Paid Rental for Factory Warehouse for one month and 5 months advance totaled P
2,500,000, VAT exclusive; total VAT is recorded in the month of December.
FAR-BASIC ACCOUNTING FUNDAMENTALS
NAME: _________________________ SECTION:__________________DATE:________________

December 31 Billings received for the month of December, which needs to be allocated to 3
Departments as follows: ½ for Factory, ¼ for Selling and ¼ for Administration - Telephone: P 1,985,000;
Light and Power – P 4,150,000; Water-P 1,350,000. All these utilities’ expenses are VAT exclusive;
total VAT is recorded in the month of December

Notes:

1. The Factory is using Perpetual Inventory System

2. Mark-up on cost is 40%
3. The company is using Voucher System, which means that instead of using “Accounts Payable” as
account title, you will use “Voucher Payable” as the account title

Requirement:

1. Journalize the above transactions; use yellow paper, to be submitted on October 11, 2019.