Problem #1

Trade and Cash Discount Calculations

On June 1, 2022, Eleno Buray Jr. sold merchandise with a P120,000 list price.

List Price Trade Discount Invoice Price Credit Terms Date Paid Sales DiscountCash Received
₱120,000.00 30% ₱84,000.00 2/10, n/30 June 8 ₱1,680.00 ₱82,320.00
₱120,000.00 40% ₱72,000.00 1/10, n/30 June 15 - ₱72,000.00
₱120,000.00 - ₱120,000.00 2/10, n/30 June 11 ₱2,400.00 ₱117,600.00
₱120,000.00 20% ₱96,000.00 1/15, n/30 June 14 ₱960.00 ₱95,040.00
₱120,000.00 40% ₱72,000.00 n/30 June 28 - ₱72,000.00

Required:

For each of the sales terms, determine the following:

1. the amount recorded as a sale. 2. the amount of cash received.

a. ₱ 84,000.00 a. ₱82,320.00
b. ₱ 72,000.00 b. ₱72,000.00
c. ₱ 120,000.00 c. ₱117,600.00
d. ₱ 96,000.00 d. ₱95,040.00
e. ₱ 72,000.00 e. ₱72,000.00
sh Received
Problem #3
Cash Discount and Remittance Calculations

For each of the following Mary Paz Abad Retailers purchases, assume that credit terms are 2/10, n/30 and that any credit
memorandum was issued and known before Mary Paz Abad Retailers made the payments.
Available
Net
Purchases Credit Memo Cash Shipping Terms
Purchases
Discount
a. ₱12,000.00 ₱3,000.00 ₱9,000.00 ₱180.00 FOB Shipping Point
b. ₱24,000.00 ₱2,000.00 ₱22,000.00 ₱440.00 FOB Destination
c. ₱28,000.00 ₱4,000.00 ₱24,000.00 ₱480.00 FOB Shipping Point
d. ₱40,000.00 ₱40,000.00 ₱800.00 FOB Shipping Point

Required:

1. Determine the cash discount available. 2. Determine the cash remitted if the payment is made within the discoun
a. ₱ 180.00 a. ₱9,820.00
b. ₱ 440.00 b. ₱21,560.00
c. ₱ 480.00 c. ₱23,520.00
d. ₱ 800.00 d. ₱42,200.00
 e 2/10, n/30 and that any credit
s.
Prepaid
Cash to be
Freight (by
Remitted
seller)
₱1,000.00 ₱9,820.00
₱2,400.00 ₱21,560.00
₱23,520.00
₱3,000.00 ₱42,200.00

yment is made within the discount period.

Problem #4
Point of Recognition

Edgel Abear Car Repairs Shop purchases a large amount of auto parts for its business.
The following table summarizes selected transaction data:
recognizes
recognizes
Order Date ShippedDate Received Amount purchases when
purchases when
A June 26 July 5 ₱30,000.00 orders are
₱30,000.00
B July 10 15 ₱75,000.00 ₱75,000.00 ₱75,000.00
C 16 22 ₱40,000.00 ₱40,000.00 ₱40,000.00
D 23 30 ₱60,000.00 ₱60,000.00 ₱60,000.00
E 27 August 1 ₱75,000.00 ₱75,000.00
F August 3 7 ₱50,000.00
₱250,000.00 ₱205,000.00
Required:

Determine the July total purchases under each of the following assumptions:

1. The entity recognizes purchases when orders are shipped.

2. The entity recognizes purchases when orders are received.
Problem #5
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 after
Purchase
List Price Trade DiscountInvoice Price Returns and Purchase Credit Terms
Discount
Allowances Returns and
₱224,000.00 30% ₱156,800.00 ₱21,000.00 ₱135,800.00 2/10, n/30 ₱2,716.00
₱126,000.00 20% ₱100,800.00 - ₱100,800.00 1/10, n/30 ₱1,008.00
₱90,000.00 - ₱90,000.00 ₱7,000.00 ₱83,000.00 2/10, n/30 ₱1,660.00
₱41,000.00 25% ₱30,750.00 ₱9,000.00 ₱21,750.00 n/30 -
₱357,000.00 20% ₱285,600.00 ₱24,000.00 ₱261,600.00 3/10, n/30 ₱7,848.00

Required:

Using the table above, calculate the amount needed to settle each purchases.
. The entity observes the
es are paid within the
Amount to
Transportati
Net Purchases Settle
on In
Purchases
₱133,084.00 ₱4,000.00 ₱137,084.00
₱99,792.00 ₱99,792.00
₱81,340.00 ₱2,000.00 ₱83,340.00
₱21,750.00 ₱1,000.00 ₱22,750.00
₱253,752.00 ₱253,752.00
Problem #8
Purchase Transaction

Several purchase transactions of the Joey Beringuela Pharmacy are presented below.
The credit terms of the entity are 3/10, n/30.

Oct. 6 Purchased merchandise for cash, P200,000; FOB shipping point.

12 Purchased merchandise on account, P700,000.
15 Returned merchandise purchased on account, P50,000.
17 Paid supplier the amount due.
19 Paid freight charges of P7,000 on merchandise acquired last Oct. 6.

Required:

Prepare the journal entries.

Joey Beringuela Pharmacy

Journal Entries
Month of October
Date Accounts Debit Credit
Oct 6 Purchases ₱200,000.00
Cash ₱200,000.00

12 Purchases ₱700,000.00
Accounts Payable ₱700,000.00

15 Accounts Payable ₱50,000.00

Purchase Returns and Allowances ₱50,000.00

17 Accounts Payable ₱650,000.00

Cash ₱630,500.00
Purchase Discounts ₱19,500.00

19 Transportation-In ₱7,000.00
Cash ₱7,000.00
Problem #9

On Mar. 10, 2022, Rey Rabago Fruits purchased P18,000 worth of merchandise from Marcos Gener Castillo; terms
On Mar 12, Rabago paid P360 freight on the shipment.
On Mar. 15, Rabago returned P2,000 of merchandise for credit.
Final Payment was made to Castillo on Mar. 19.
Rey Rabago Fruits uses the periodic inventory system.

Required:

1. Prepare the journal entries for Rey Rebago Fruits.

2. Prepare the journal entries assuming that the terms are F.O.B. destination.

1) F.O.B. Shipping Point 2) F.O.B. Destination

Rey Rabago Fruits Rey Raba
Journal Entries Journa
Month of March Month o
Date Accounts Debit Credit Date Accounts
Mar 10 Purchases ₱18,000.00 Mar 10 Purchases
Accounts Payable ₱18,000.00

12 Transportation-In ₱360.00 12 Transportation-In

Cash ₱360.00

15 Accounts Payable ₱2,000.00 15 Accounts Payable

Purchase Returns and Allowances ₱2,000.00

19 Accounts Payable ₱16,000.00 19 Accounts Payable

Purchase Discounts ₱160.00
Cash ₱15,840.00
e from Marcos Gener Castillo; terms 1/10, n/30, F.O.B. shipping point.

F.O.B. Destination
Rey Rabago Fruits
Journal Entries
Month of March
Accounts Debit Credit
Purchases ₱18,000.00
Accounts Payable ₱18,000.00

Transportation-In ₱360.00
Cash ₱360.00

Accounts Payable ₱2,000.00

Purchase Returns and Allowances ₱2,000.00

Accounts Payable ₱15,640.00

Purchase Discounts ₱160.00
Cash ₱15,480.00
Problem # 11
Transportation Costs

On June 16, 2022, Ilano sold merchandise to Pascual for P6,000, terms 2/10, n/30. Shipping costs were P600.
Pascual received the goods and Ilano's Invoice on June 17.
On June 24, Pascual sent the payment to Ilano, which Ilano received on June 25.
Both Ilano and Pascual use the periodic inventory system.
The following are several arrangements regarding the shipping costs:

a. Shipping terms are F.O.B. shipping point, freight collect. Pascual paid the shipping costs on June 17 and

Required:

1. Prepare the entries for Ilano to record the sale and the cash receipt.
2. Prepare the entries for Pascual to record the purchase, the payment of shipping costs, and the cash remittance.

Ilano Pascual
Date Accounts Debit Credit Date Accounts
2022 2022
June 16 Accounts Receivable ₱6,000.00 June 17 Purchases
Sales ₱6,000.00

June 25 Cash ₱5,880.00 Transportation-In

Sales Discounts ₱120.00
Accounts Receivable ₱6,000.00
June 24 Accounts Payable

b. Shipping terms are F.O.B, destination, freight prepaid. Ilano paid the shipping costs on June 16. Pascual

Required:

1. Prepare the entries for Ilano to record the sale, the payment of shipping costs, and the cash receipt.
2. Prepare the entries for Pascual to record the purchase and the cash remittance.

Ilano Pascual
Date Accounts Debit Credit Date Accounts
2022 2022
June 16 Accounts Receivable ₱6,000.00 June 17 Purchases
 Sales ₱6,000.00

Transportation-Out ₱600.00 June 24 Accounts Payable

Cash ₱600.00

June 25 Cash ₱5,880.00

Sales Discounts ₱120.00
Accounts Receivable ₱6,000.00

c. Shipping terms are F.O.B, shipping point, freight prepaid. Ilano paid the shipping costs on June 16 and a
cost to the invoice sent to Pascual. Pascual remitted ₱6,480.00 on June 24.

Required:

1. Prepare the entries for Ilano to record the sale and freight payment, and the cash receipt.
2. Prepare the entries for Pascual to record the purchase (with shipping costs added to the invoice from Ilano) and

Ilano Pascual
Date Accounts Debit Credit Date Accounts
2022 2022
June 16 Accounts Receivable ₱6,000.00 June 17 Purchases
Sales ₱6,000.00

Accounts Receivable ₱600.00 Transportation-In

Cash ₱600.00

June 25 Cash ₱6,480.00 June 24 Accounts Payable

Sales Discounts ₱120.00
Accounts Receivable ₱6,600.00

from the amount owed to Ilano. A copy of freight bill to Ilano was provided with the June 24 cash remittanc
₱ 5,280 on June 24.

Required:

1. Prepare the entries for Ilano to record the sale and cash receipt.
2. Prepare the entries for Pascual to record the purchase, the freight payment, and the cash remittance.

Ilano Pascual
Date Accounts Debit Credit Date Accounts
2022 2022
June 16 Accounts Receivable ₱6,000.00 June 17 Purchases
Sales ₱6,000.00

Transportation-Out ₱600.00 Accounts Payable

Accounts Receivable ₱600.00

June 25 Cash ₱5,280.00 June 24 Accounts Payable

Sales Discounts ₱120.00
Accounts Receivable ₱5,400.00
0, n/30. Shipping costs were P600.

aid the shipping costs on June 17 and remitted ₱5,880.00

hipping costs, and the cash remittance.

Pascual
Accounts Debit Credit

Purchases ₱6,000.00
Accounts Payable ₱6,000.00

Transportation-In ₱600.00
Cash ₱600.00

Accounts Payable ₱6,000.00

Cash ₱5,880.00
Purchase Discounts ₱120.00

e shipping costs on June 16. Pascual remitted ₱5,880.00 o

costs, and the cash receipt.

Pascual
Accounts Debit Credit

Purchases ₱6,000.00
 Accounts Payable ₱6,000.00

Accounts Payable ₱6,000.00

Cash ₱5,880.00
Purchase Discounts ₱120.00

the shipping costs on June 16 and added the ₱600.00

e 24.

he cash receipt.
ts added to the invoice from Ilano) and the cash remittance.

Pascual
Accounts Debit Credit

Purchases ₱6,000.00
Accounts Payable ₱6,000.00

Transportation-In ₱600.00
Accounts Payable ₱600.00

Accounts Payable ₱6,600.00

Cash ₱6,480.00
Purchase Discounts ₱120.00

ided with the June 24 cash remittance. Pascual remitted

ent, and the cash remittance.

Pascual
Accounts Debit Credit
Purchases ₱6,000.00
Accounts Payable ₱6,000.00

Accounts Payable ₱600.00

Cash ₱600.00

Accounts Payable ₱5,400.00

Cash ₱5,280.00
Purchase Discounts ₱120.00