PRACTICE QUIZ - QUIZ 2

MULTIPLE CHOICE
The journal entry to record the sale of merchandise on account for P 27,500 with freight of P1,250 under freight
terms FOB destination point, collect is:
Answer: debit Accounts Receivable 26,250; debit Freight out 1,250; credit Sales 27,500

Accounts Receivable 27,500

Sales 27,500

Freight Out 1,250

Accounts Receivable 1,250

Alternative:
Accounts Receivable 26,250 27,500 - 1,250
Freight Out 1,250
Sales 27,500

PROBLEM SOLVING
Note: Items in Canvas are shuffled.

1 During the current month, the company completed the transactions listed below.
a. The owner invested P250,000 cash in the business.
b. Purchased delivery equipment for P32,000 on account.
c. Received a bill for P9,600 for equipment repairs that will be paid next month.
d. Performed delivery services for P128,000; received P44,000 in cash immediately and the remainder was on account.
e. Issued check for P5,000 for a newspaper advertisement.
f. Issued check for P7,500 for current month's utilities.
g. The owner withdrew P15,000 cash for personal use.
h. Received P9,000 on account from credit clients.

Determine the balance of Accounts Receivable.

d. Delivery services on account 84,000 128,000 - 44,000

i. Collection of account - 9,000
Accounts Receivable 75,000
2 Determine the balance of Owner’s Equity.

a. Investment 250,000
c. Repair expense - 9,600
d. Service revenue 128,000
e. Advertising expense - 5,000
f. Utilities expense - 7,500
g. Withdrawals - 15,000
Owner's equity 340,900

3 A company records the following journal entry: debit Cash P1,470, debit Sales Discounts P30, and credit
Accounts Receivable P1,500. Determine the percentage of cash discount for early payment. Input the
percentage as a whole number, example if your answer is 5%, just encode 5.

Sales discount 30
Accounts receivable ÷ 1,500
Cash discount % 0.02

4 A company purchased P4,000 worth of merchandise. Transportation costs were an additional P350. The company returned
P250 worth of merchandise and then paid the invoice within the 2% cash discount period. Determine the total cost of
merchandise.

Purchases 4,000
Purchase returns & allowances 250
Purchase discounts 75 - 325 PRA = (4,000 - 250) x 0.02 = 75
Net purchases 3,675
Freight in 350
Net cost of purchases = total cost of merchandise 4,025

5 The following data is for a company which uses a periodic inventory system:
Sales revenue = P600,000 Ending inventory = P 81,000
Freight in = P42,000 Purchases = P 415,000
Beginning inventory = P 77,000 Sales discounts = P 35,000
Purchase discounts = P 9,000 Owner’s, withdrawals = P 71,000
Sales returns and allowances = P 33,000 Purchase returns and allowances = P 39,000
Operating expenses = P 77,000
Determine the total goods available for sale.

Merchandise Inventory, beginning 77,000

Net cost of purchases
Purchases 415,000
Purchase Returns & Allowances 39,000
Purchase Discounts 9,000 - 48,000
Net Purchases 367,000
Freight In 42,000 409,000
Cost of goods available for sale 486,000
6 A company purchased P18,000 of merchandise on July 5 with terms 25% and 15% trade discount, 2/10, n/30. On
July 7, it returned P600 worth of merchandise. Determine the total cash payment assuming that the full
amount due was paid on July 28.

Purchases (on account) 11,475 18,000 x 0.75 x 0.85

Purchase returns & allowances - 600
Cash paid 10,875 No cash discount, since
paid after cash dicsount period

7 A company purchased P20,000 of merchandise on July 5 with terms 20% and 10% trade discount, 2/10, n/30. On
July 7, it returned P1,000 worth of merchandise. Determine the total cash payment assuming that the full
amount due was paid on July 15.

Purchases (on account) 14,400 20,000 x 0.80 x 0.90

Purchase returns & allowances - 1,000
Accounts payable - balance 13,400 Also, Purchases - PRA
Purchase discount - 268 13,400 x .02
Cash paid 13,132

8 A company is a wholesaler that sells merchandise in large quantities. Its catalog indicates a list price of P300 per
unit on a particular product and a 40% trade discount is offered for quantity purchases of 50 units or more. The
cost of shipping the merchandise is P7 per unit under terms FOB shipping point. A customer purchased 100 units
of this product. Determine the sales revenue to be recorded from this transaction.

List price 300

Trade discount - 120 300 x 0.40 [since more than 50]
Invoice price 180
Units sold x 100
Sales 18,000 Freight is not part of Sales

9 On November 1, an entity purchased goods with a list price of P350,000. The seller offered a 10% trade discount
and allowed a credit term of 2/10, n/30. The entity made a partial payment of P200,000 on November 5 and the
last payment was made on November 11. Determine the total payment made on November 11.

Purchases 315,000 350,000 x 0.90

Partial payment - 200,000
Accounts payable - balance 115,000
Purchase discount - 6,300 315,000 x 0.02 [no returns]
Cash paid 108,700
10 A company makes a purchase of P 2,000 of inventory, subject to credit terms of 3/10 n/45 and returns P 500 of
inventory prior to payment. Freight of P400 is on terms FOB Shipping Point, Prepaid. Determine the amount of
the payment assuming payment is made within the discount period.

Purchases 2,000
FOB SP, Prepaid 400
Purchase returns & allowances - 500
Accounts payable - balance 1,900
Purchase discount - 45 Purchases - PRA = (2,000 - 500) x 0.03
Cash paid 1,855

11 A company sold goods for P 10,000 less 10 subject to credit terms of 2/10 n/45. Freight of P800 is on terms FOB
Destination Point, Collect. A credit memo for P2,000 was issued to the customer. Determine the amount of the
cash collected assuming the customer paid made within the discount period.

Sales 9,000 10,000 x 0.90

FOB DP, Collect - 800
Sales returns & allowances - 2,000
Accounts receivable - balance 6,200
Sales discount - 140 Sales - SRA = (9,000 - 2,00) x 0.02
Cash collected 6,060

12 A company sold goods for P 10,000 less 10 subject to credit terms of 2/10 n/45. Freight of P800 is on terms FOB
Shipping Point, Prepaid. A credit memo for P2,000 was issued to the customer. The customer made a partial
payment of P3,000. Determine the amount of the cash collected assuming the customer paid made within
the discount period.

Sales 9,000 10,000 x 0.90

FOB SP, Prepaid 800
Sales returns & allowances - 2,000
Partial collection - 3,000
Accounts receivable - balance 4,800
Sales discount - 140 Sales - SRA = (9,000 - 2,00) x 0.02
Cash collected 4,660

13 FDN Trading recorded the following events involving a recent purchase of merchandise:
Received goods for P20,000, terms 2/10, n/30.
Returned P400 of the shipment for credit.
Paid P100 freight on the shipment
Paid the invoice within the discount
How much is the net cost of purchases?

Purchases 20,000
Purchase returns (400)
Puchase discounts (392) (P20,000 - P400) x .02
Net purchases 19,208
Freight in 100
Net cost of purchases 19,308
14 On August 31, 2020, a company lent money to a customer for P30,000. The customer signed a note with principal
and interest at 9% due in one year. Determine the maturity value of the note.

Principal 30,000
Interest income 2,700 prt = 12,000 x 0.09 [1 year note]
Maturity value 32,700

15 FDN Trading received the following promissory notes from various customers during 2020 in the course of
selling its merchandise:
Six-month 12% note for P50,000
90-day 10% note for P30,000
One-year 20% note for P100,000
All these notes were collected at their maturity dates during the year.

How much is total interest income to be recorded by FDN Trading during 2020?

Principal Rate Term Interest

Note 1 50,000 0.12 6/12 3,000
Note 2 30,000 0.10 90/360 750
Note 3 100,000 0.20 20,000
Interest income 23,750