POST TRANSACTIONS (PT), PREPARE TRIAL BALANCE (PTB)

PREPARE FINANCIAL REPORTS (PFR), REVIEW INTERNAL CONTORL SYSTEM (RICS)

Trainer: Miss Sweetzel A. Precinio
Qualification Title: Bookkeeping (BKP) NC Level: III Total Training Hours: 292
Name of TVI: Angelita V. Del Mundo Foundation (AVM Foundation) Inc.
Competencies to be Achieved Post Transactions
and Learning Outcomes LO1 Prepare ledger
LO2 Transfer journal entries
LO3 Summarize ledger
Learning Activities/ Tasks 1. Ledger for the list of asset, liability, and equity account titles are prepared in accordance with
the Chart of Accounts
2. Ledger for the list of income and expense account titles are prepared in accordance with the
Chart of Accounts
Training Period / Duration Prelim Period
Training Method Blended Learning (Online & Modular - Print)
Method of Assessment Written test, Practical/performance test & Interview
References CBLM in Bookkeeping NC III & Tesda Training Regulations - TR

INFORMATION SHEET 2.1-2

ACCOUNTING FOR MERCHANDISING
PART 2

After studying this chapter, you should be able to:

1. Describe and illustrate the accounting for merchandise transactions including:
 sale of merchandise
 purchase of merchandise
 transportation costs, sales taxes, trade discounts
 dual nature of merchandising transactions

Merchandising engages in two transactions to generate profit/sales.

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Purchase of Merchandise on Account
• On May 1, the Sporting Store bought merchandise on account P2,000. Terms. 2/10, n/30.

Periodic Inventory System

May 1 Purchases P 2,000

Accounts Payable P 2,000
To record purchase merchandise on acct.

Perpetual Inventory System

May 1 Merchandise Inventory P 2,000

Accounts Payable P 2,000
To record purchase merchandise on acct.

Recording Purchase Returns and Allowances

• Assume that on May 4 a P100 worth of item was returned prior to payment of the invoice.

Periodic Inventory System

May 4 Accounts Payable P 100

Purchase Returns & Allowances P 100
To record merchandise return on acct.

Perpetual Inventory System

May 4 Accounts Payable P 100

Merchandise Inventory P 100
To record merchandise return on acct.

Purchase Discounts
• May 9, Sporting Store paid the account in full from May 1 transaction.

Take Note:
On May 1, Sporting Store bought merchandise on account with terms 2/10, n/30.
• 2/10, n/30, meaning that a discount of 2% is allowed if the invoice is paid within 10 days; otherwise the full (net) amount is due within
30 days.

• The 2% discount (P 38) is deducted from the amount due (P 1,900) and P 1,862 is remitted.
2,000 - amount due on May 1
(100) - amount of returns on May 4
1,900 - amount due to pay on May 9
x .02 - terms 2/10, n/30
38 - 2% discount
1,900
(38)
amount of cash to pay - 1,862

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 Periodic Inventory System

May 9 Accounts Payable P 1,900

Purchase Discount P 38
Cash 1,862
To record full payment of account.

Perpetual Inventory System

May 9 Accounts Payable P 1,900

Merchandise Inventory P 38
Cash 1,862
To record full payment of account.

Recording Transportation Costs

• Assume that on May 10 the Sporting Store paid P150 for freight on purchase.
Periodic Inventory System

May 10 Freight In P 150

Cash P 150
To record payment for freight.

Perpetual Inventory System

May 10 Merchandise Inventory P 150

Cash P 150
To record payment for freight.

Sale of Merchandise on Cash Basis

• Assume that on May 12 the store sold merchandise P2,600. The cost of merchandise sold was P1,800.

Take Note:
The amount a business earns from selling merchandise is called sales.
Inventory that has been sold to customers is called cost of goods sold
Periodic Inventory System

May 12 Cash P 2,600

Sales P 2,600
To record sold merchandise.

Perpetual Inventory System

May 12 Cash P 2,600

Sales P 2,600
To record sold merchandise.

Cost of Goods Sold 1,800

Merchandise Inventory 1,800
To record cost of goods sold.

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Sale of Merchandise on Account
• On May 15, the store sold to Maria Gym P5,000 worth of merchandise with a cost of P3,000 terms 2/10, n/30.

Invoice

Maria Gym Terms 2/10, N/30

Total P 5,000

Periodic Inventory System

May 15 Accounts Receivable P 5,000

Sales P 5,000
To record sold merchandise on account.

Perpetual Inventory System

May 15 Accounts Receivable P 5,000

Sales P 5,000
To record sold merchandise on account.

Cost of Goods Sold 3,000

Merchandise Inventory 3,000
To record cost of goods sold.

Sales Returns and Allowances

• On May 17, Maria Gym returned P1,500 worth of goods that cost P 900.

Periodic Inventory System

May 17 Sales Returns & Allowances P 1,500

Accounts Receivable P 1,500
To record received return merchandise..

Perpetual Inventory System

May 17 Sales Returns & Allowances P 1,500

Accounts Receivable P 1,500
To record received return merchandise..

Merchandise Inventory 900

Cost of Goods Sold 900
To record return cost of goods sold.

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Sales Discount
• On May 20, the store received a full payment from Maria Gym.
5,000 - receivable on May 15
(1,500) - credit on returns on May 17
3,500
x .02 - terms 2/10, n/30
70
3,500
(70) Discount
amount of cash to collect - 3,430

Periodic Inventory System

May 20 Cash P 3,430

Sales Discount 70
Accounts Receivable P 3,500
To record full collection.

Perpetual Inventory System

May 20 Cash P 3,430

Sales Discount 70
Accounts Receivable P 3,500
To record full collection.

Recording Transportation Costs

• Assume that on May 25 the Sporting Store paid P100 for freight on sales.

Periodic Inventory System

May 25 Freight Out P 100

Cash P 100
To record payment for freight.

Perpetual Inventory System

May 25 Freight Out P 100

Cash P 100
To record payment for freight.