Accounts Titles Used in Merchandising

(used in periodic)
Purchases Purchases 10000
is debited whenever we buy merchandise (inventory). A/P 10000

Purchase Returns and Allowances A/P 200

is credited whenever the merchandise bought has PRA 200
damages.

Purchase Discount
is given by the supplier to encourage prompt payment. Cash Discount Trade Discount
2/10, n/30 3/10, n 30 Terms: less 20, less 10, 2/10, n
2% discount will be given if paid within 10 days. 2/10, 1/15, n/45
It is payable within 30 days without discount. 2/10 eom, n/60

Jan 1 - Purchased merchandise on account, P10,000. Terms: 2/10, n/30.

Purchases 10,000
Accounts Payable 10,000

Jan 11 - Paid account on January 1.

Accounts Payable 10,000

Cash 9,800
Purchase Discount 200

Sales A/R 10000

is credited whenever we sell merchandise (inventory). Sales 10000

Sales Returns and Allowances SRA 200

is debited whenever the merchandise sold has A/R 200
damages.
ex. 300 disc. Cash 9700
Sales Discount Sales Discount 300
is given to customers to encourage prompt payment. A/R 10000

Freight In / Transportation In (debit)

Costs in buying merchandise.

Freight Out / Tranportation Out (debit)

Costs in selling merchandise.

Merchandise Inventory
Inventory account used in merchandising.
Merchandise Inventory, beginning
 Merchandise Inventory, Ending

Cost of Goods Sold

FOB Shipping Point - Freight In (costs/expenses) for buyer.

FOB Destination - Freight Out (costs/expenses) for seller.
Free on Board

Seller Buyer
Manila Bulacan Pampanga
Shipping Point Destination

FOB SP no freight cost Freight In

FOB D Freight Out no freight cost

Freight Prepaid - Seller pays freight

Freight Collect - Buyer pays freight
 100000 20000
80000 8000
72000

Trade Discount
Terms: less 20, less 10, 2/10, n/30, FOB Shipping Point, Freight Prepaid
Accounts Titles Used in Merchandising
(used in periodic)
Purchases Purchases 10000
is debited whenever we buy merchandise (inventory). A/P 10000

Purchase Returns and Allowances A/P 200

is credited whenever the merchandise bought has PRA 200
damages.

Purchase Discount
is given by the supplier to encourage prompt payment. Cash Discount Trade Discount
2/10, n/30 3/10, n 30 Terms: less 20, less 10, 2/10, n/
2% discount will be given if paid within 10 days. 2/10, 1/15, n/45
It is payable within 30 days without discount. 2/10 eom, n/60

Jan 1 - Purchased merchandise on account, P10,000. Terms: 2/10, n/30.

Purchases 10,000
Accounts Payable 10,000

Jan 11 - Paid account on January 1.

Accounts Payable 10,000

Cash 9,800
Purchase Discount 200

Sales A/R 10000

is credited whenever we sell merchandise (inventory). Sales 10000

Sales Returns and Allowances SRA 200

is debited whenever the merchandise sold has A/R 200
damages.

Sales Discount
is given to customers to encourage prompt payment.

Freight In / Transportation In (debit)

Costs in buying merchandise.

Freight Out / Tranportation Out (debit)

Costs in selling merchandise.

Merchandise Inventory
Inventory account used in merchandising.
Merchandise Inventory, beginning
 Merchandise Inventory, Ending

Cost of Goods Sold

FOB Shipping Point - Freight In (costs/expenses) for buyer.

FOB Destination - Freight Out (costs/expenses) for seller.
Free on Board

Seller Buyer
Manila Bulacan Pampanga
Shipping Point Destination

FOB SP no freight cost Freight In

FOB D Freight Out no freight cost

Freight Prepaid - Seller pays freight

Freight Collect - Buyer pays freight
Trade Discount
Terms: less 20, less 10, 2/10, n/30, FOB Shipping Point, Freight Prepaid
Merchandise Cost - P10,000
Freight - P1,000

Seller Buyer
Account Receivable 10,000 Purchases 10,000
Sales 10,000 Accounts Payable 10,000

1 FOB Destination, Freight Prepaid

Seller Buyer
Freight Out 1,000 No Entry
Cash 1,000

2 FOB Destination, Freight Collect

Seller Buyer
Freight Out 1,000 Accounts Payable 1,000
Accounts Receivable 1,000 Cash 1,000

3 FOB Shipping Point, Freight Prepaid

Seller Buyer
Accounts Receivable 1,000 Freight In 1,000
Cash 1,000 Accounts Payable 1,000

4 FOB Shipping Point, Freight Collect

Seller Buyer
No entry Freight In 1,000
Cash 1,000

a Merchandise Cost - P20,000, 2/10, n/30

Seller Buyer
Accounts Receivable 20,000 Purchases 20,000
Sales 20,000 Accounts Payable 20,000

b Returned damaged merchandise P2,000

Seller Buyer
Sales Returns and Allowan 2,000 Accounts Payable 2,000
Accounts Receivable 2,000 Purchase Returns and Allowances 2,000

c Accounts paid within discount period.

Seller Buyer
Cash 17,640 Accounts Payable 18,000
Sales Discount 360 Cash 17,640
 Accounts Receivable 18,000 Purchase Discount 360

d Accounts paid within beyond period.

Seller Buyer
Cash 18,000 Accounts Payable 18,000
Accounts Receivable 18,000 Cash 18,000
Merchandise Cost - P10,000
Freight - P1,000

Seller Buyer
Account Receivable 10,000 Purchases 10,000
Sales 10,000 Accounts Payable 10,000

1 FOB Destination, Freight Prepaid

Seller Buyer
Freight Out 1,000 No Entry
Cash 1,000

2 FOB Destination, Freight Collect

Seller Buyer
Freight Out 1,000 Accounts Payable 1,000
Accounts Receivable 1,000 Cash 1,000

3 FOB Shipping Point, Freight Prepaid

Seller Buyer
Accounts Receivable 1,000 Freight In 1,000
Cash 1,000 Accounts Payable 1,000

4 FOB Shipping Point, Freight Collect

Seller Buyer
No entry Freight In 1,000
Cash 1,000

a Merchandise Cost - P20,000, 2/10, n/30

Seller Buyer
Accounts Receivable 20,000 Purchases 20,000
Sales 20,000 Accounts Payable 20,000

b Returned damaged merchandise P2,000

Seller Buyer
Sales Returns and Allowa 2,000 Accounts Payable 2,000
Accounts Receivable 2,000 Purchase Returns and Allowances 2,000

c Accounts paid within discount period.

Seller Buyer
Cash 17,640 Accounts Payable 18,000
Sales Discount 360 Cash 17,640
 Accounts Receivable 18,000 Purchase Discount 360

d Accounts paid within beyond period.

Seller Buyer
Cash 18,000 Accounts Payable 18,000
Accounts Receivable 18,000 Cash 18,000
 Trial Balance
Debit Credit

Cash 87,000
Accounts Receivable 75,000
Allowance for Doubtful Accounts 3,000
Notes Receivable 4,000
Merchandise Inventory, beginning 14,000 Ending- 10,000
Office Supplies 2,000
Prepaid Rent 4,000
Machineries 27,000
Furniture and Fixtures 24,000
Equipment 12,000
Accounts Payable 31,000
Notes Payable 12,000 Phapz Anami
Loan Payable 14,000 Income Statement
Phapz Anami, Capital 119,000 For Year-ended December 31, 2015
Phapz Anami, Drawing 3,000
Sales 320,000 Sales
Sales Returns and Allowances 12,000 Less: Sales Returns and Allowances
Sales Discount 7,000 Sales Discount
Purchases 160,000 Net Sales
Purchase Returns and Allowances 2,000 Less: Cost of Goods Sold
Purchase Discount 3,000 Merchandise Inventory, beginning
Freight In 7,000 Add: Purchases
Salaries Expense 36,000 Add: Freight In
Rent Expense 24,000 Total
Freight Out 3,000 Less: Purchase Returns and
Miscellaneous Expense 3,000 Purchase Discount
Goods Available for Sale
504,000 504,000 Less: Merchandise Inventory, ending
Gross Profit
Less Expenses:
Salaries Expense
Rent Expense
Freight Out
Miscellaneous Expense
Net Income
 Phapz Anami
ncome Statement
nded December 31, 2015

320,000
12,000
7,000 19,000
301,000

ry, beginning 14,000

160,000
7,000 adjunct
167,000
2,000
3,000 162,000
176,000
entory, ending 10,000 166,000
135,000

36,000
24,000
3,000
3,000 66,000
69,000