Chapter 7

Problem 1 Trade and Cash Discount Calculations

Trade discount Credit Terms Date Paid Sale Cash

a. 30% 2/10, n/30 Jun-08 ₱ 84,000.00 ₱ 82,320.00
b. 40% 1/10, n/30 Jun-15 ₱ 72,000.00 72,000.00
c. 0 2/10, n/30 Jun-11 ₱ 120,000.00 117,600.00
d. 20% 1/15, n/30 Jun-14 ₱ 96,000.00 95,040.00
e. 40% n/30 Jun-28 ₱ 72,000.00 72,000.00
₱ 444,000.00 ₱ 438,960.00

Required:
1 Amount of Sale ₱ 444,000.00
2 Cash received ₱ 438,960.00
Chapter 7
Problem 2

Required: Prepare the journal entries for Guzon Book Distributors

May-15 Purchases (108k x .85) ₱ 91,800.00

Accounts Payable ₱ 91,800.00

May-20 Accounts Payable 91,800.00

Purchase Discount 1,836.00
Cash 89,964.00
Chapter 7
Problem 3 Cash Discount and Remittance Calculations

Purchases Shipping Terms Prepaid Freight (by seller) Credit Memo

a. 12,000.00 FOB shipping 1,000.00 3,000.00
b. 24,000.00 FOB destination 2,400.00 2,000.00
c. 28,000.00 FOB shipping - 4,000.00
d. 40,000.00 FOB shipping 3,000.00 -

Required:
1 Determine the cash discount available
2 Determine the cash remitted if the payment is made within the discount period
 Cash Discounts Amount to be paid
180.00 9,820.00
440.00 21,560.00
480.00 23,520.00
800.00 42,200.00
₱ 1,900.00 ₱ 97,100.00

₱ 1,900.00
hin the discount period ₱ 97,100.00
Chapter 7
Problem 4 Point of Recognition

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.

Order Date Shipped Date Received Amount Shipped purchases

A Jun-26 Jul-05 30,000.00 -
B Jul-10 Jul-15 75,000.00 75,000.00
C Jul-16 Jul-22 40,000.00 40,000.00
D Jul-23 Jul-30 60,000.00 60,000.00
E Jul-27 Aug-01 75,000.00 75,000.00
F Aug-03 Aug-07 50,000.00 -
₱ 250,000.00
umptions:

Received purchases
30,000.00
75,000.00
40,000.00
60,000.00
75,000.00
-
₱ 280,000.00
Chapter7
Problem 5

Calculate the amount needed to settle each purchase.

List Price FOB Terms Freight Charges Purchase Returns & Allowances
₱ 224,000.00 Shipping ₱ 4,000.00 ₱ 21,000.00
126,000.00 Destination 9,000.00 -
90,000.00 Shipping 2,000.00 7,000.00
41,000.00 Shipping 1,000.00 9,000.00
357,000.00 Destination 14,000.00 24,000.00
Credit Terms Trade Discount Invoice Price Discount Accounts Payable
2/10, n/30 30% ₱ 156,800.00 ₱ 2,716.00 ₱ 137,084.00
1/10, n/30 20% ₱ 100,800.00 ₱ 1,008.00 ₱ 99,792.00
2/10, n/30 - ₱ 90,000.00 ₱ 1,660.00 ₱ 83,340.00
n/30 25% ₱ 30,750.00 - ₱ 22,750.00
3/10, n/30 20% ₱ 285,600.00 ₱ 7,848.00 ₱ 253,752.00
Chapter 7
Problem 6 Sales Transactions

Prepare the journal entries

June 1 Cash ₱ 180,000.00

Sales ₱ 180,000.00

4 Accounts Receivable 650,000.00

Sales 650,000.00

7 Sales Returns and Allowances 90,000.00

Accounts Receivable 90,000.00

10 Accounts Receivable 560,000.00

Cash 560,000.00
Chapter 7
Problem 7

Prepare the journal entries for Beatriz Onate Curtains.

June 8 Accounts Receivable ₱ 16,000.00

Sales ₱ 16,000.00

12 Sales Return & Allowances 4,000.00

Accounts Receivable 4,000.00

18 Cash 11,760.00
Sales Discount 240.00
Accounts Receivable 12,000.00
Chapter 7
Problem 8 Purchase Transactions

Prepare the journal entries.

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

Purchases Returns & Allowances 50,000.00

17 Accounts Payable 650,000.00

Purchase Discount 13,000.00
Cash 637,000.00

19 Freight-in 6,000.00
Cash 6,000.00
Chapter 7
Problem 9

Required:
1. Prepare the journal entries for Rey Rabago Fruits
2. Prepare the journal entries assuming that the terms are FOB Destination

FOB Shipping Point

March 10 Purchases 18,000.00 March
Accounts Payable 18,000.00

12 Freight-in 360.00
Cash 360.00

15 Accounts Payable 2,000.00

Purchase Returns & Allowances 2,000.00

19 Accounts Payable 16,000.00

Purchase Discount 160.00
Cash 15,840.00
 FOB Destination
10 Purchases 18,000.00
Accounts Payable 18,000.00

12 Accounts Payable 360.00

Cash 360.00

15 Accounts Payable 2,000.00

Purchase Returns & Allowances 2,000.00

19 Accounts Payable 15,640.00

Purchase Discount 156.40
Cash 15,483.60
Chapter 7
Problem 10 Purchase Transactions

Required:

1. Purchase of merchandise with cash:

a. Purchases ₱ 35,000.00
Cash ₱ 35,000.00
b. Purchases 45,000.00
Cash 45,000.00

2. Purchase of merchandise on account with credit terms:

a. Purchases 40,000.00
Accounts Payable 40,000.00
b. Purchases 28,000.00
Accounts Payable 28,000.00
c. Accounts Payable 40,000.00
Purchases Discount 800.00
Cash 39,200.00
d. Accounts Payable 28,000.00
Cash 28,000.00

3. Purchase of merchandise on account with return of merchandise:

a. Purchases 56,000.00
Accounts Payable 56,000.00
b. Accounts Payable 6,000.00
Purchases Returns & Allowances 6,000.00
c. Accounts Payable 50,000.00
Purchase Discount 1,000.00
Cash 49,000.00

4. Purchase of merchandise with Transportation-In

a. Purchases 38,000.00
Transportation-In 800.00
Accounts Payable 38,800.00
b. Accounts Payable 38,800.00
Cash 38,800.00
 CASH
Dr Cr
1-a 35,000.00
1-b 45,000.00
2-c 39,200.00
2-d 28,000.00
3-c 49,000.00
4-b 38,800.00
Bal. -235,000.00

ACCOUNTS PAYABLE
Dr Cr
2-c 40,000.00 2-a 40,000.00
2-d 28,000.00 2-b 28,000.00
3-b 6,000.00 3-a 56,000.00
3-c 50,000.00 4-a 38,800.00
4-b 38,800.00

Bal. 0.00

ACCOUNTS PAYABLE
Dr Cr
2-c 40,000.00 2-a 40,000.00
2-d 28,000.00 2-b 28,000.00
3-b 6,000.00 3-a 56,000.00
3-c 50,000.00 4-a 38,800.00
4-b 38,800.00

Bal. 0.00

PURCHASES
Dr Cr
1-a 35,000.00
1-b 45,000.00
2-a 40,000.00
2-b 28,000.00
3-a 56,000.00
4-a 38,000.00
Bal. 242,000.00

PURCHASES RETURNS & ALLOWANCES

Dr Cr
3-b 6,000.00
 Bal. 6,000.00

PURCHASES DISCOUNTS
Dr Cr
2-c 800.00

Bal. 800.00

TRANSPORTATION-IN
Dr Cr
4-a 800.00

Bal. 800.00
Chapter 7
Problem 11 Transportation Costs

a. Shipping terms are FOB Shipping Point, freight collect. Pascual paid the shipping costs on June 17 and remitted P5,8

Ilano's Entries
June 16 Accounts Receivable 6,000.00
Sales 6,000.00
25 Cash 5,880.00
Sales Discount 120.00
Accounts Receivable 6,000.00

Pascual's Entries
June 17 Purchases 6,000.00
Freight-In 600.00
Cash 600.00
Accounts Payable 6,000.00
24 Accounts Payable 6,000.00
Purchase Discount 120.00
Cash 5,880.00

b. Shipping terms are FOB Destination, freight prepaid. Ilano paid the shipping costs on June 16. Pascual remitted P5,8

Ilano's Entries
June 16 Accounts Receivable 6,000.00
Freight-Out 600.00
Cash 600.00
Sales 6,000.00
25 Cash 5,880.00
Sales Discount 120.00
Accounts Receivable 6,000.00

Pascual's Entries
June 17 Purchases 6,000.00
Accounts Payable 6,000.00
24 Accounts Payable 6,000.00
Purchases Discount 120.00
Cash 5,880.00

c. Shipping terms are FOB Shipping Point, freight prepaid. Ilano paid the shipping costs on June 16 and added the 600 c

Ilano's Entries
June 16 Accounts Receivable 6,600.00
Cash 600.00
Sales 6,000.00
25 Cash 6,480.00
Sales Discount 120.00
Accounts Receivable 6,600.00
Pascual's Entries
June 17 Purchases 6,000.00
Freight-In 600.00
Accounts Payable 6,600.00
24 Accounts Payable 6,600.00
Purchase Discount 120.00
Cash 6,480.00
d. Shipping terms are FOB Destination, freight collect. Pascual paid the shipping costs on
June 17 and deducted the P600 from the amount owed to Ilano. A copy of the freight bill to
Ilano was provided with the June 24 cash remittance. Pascual remitted P5,280 on June 24

Ilano's Entries
June 16 Accounts Receivable 6,000.00
Sales 6,000.00
25 Freight-Out 600.00
Sales Discount 120.00
Cash 5,280.00
Accounts Receivable 6,000.00

Pascual's Entries
June 17 Purchases 6,000.00
Cash 600.00
Accounts Payable 5,400.00
24 Accounts Payable 5,400.00
Purchase Discount 120.00
Cash 5,280.00
n June 17 and remitted P5,880 on June 24.

ne 16. Pascual remitted P5,880 on June 24.

June 16 and added the 600 costs cost to the invoice sent to Pascual remitted P6,480 on June 24.
Chapter 7
Probloem 12 Journalizing Merchandising Transactions

Prepare the journal entries.

June 2 Purchases ₱ 600,000.00

Accounts Payable ₱ 600,000.00
4 Freight-In 8,000.00
Cash 8,000.00
5 Purchases 360,000.00
Accounts Payable 360,000.00
6 Freight-In 5,000.00
Cash 5,000.00
7 Accounts Payable 90,000.00
Purchases Returns & Allowances 90,000.00
11 Accounts Payable 510,000.00
Purchase Discount 5,100.00
Cash 504,900.00
13 Accounts Receivable 630,000.00
Sales 630,000.00
22 Cash 623,700.00
Sales Discount 6,300.00
Accounts Receivable 630,000.00
30 Accounts Payable 360,000.00
Cash 360,000.00
Chapter 7
Problem 13 Journalizing Merchandising Transactions

Prepare the journal entries.

October 7 Accounts Receivable 30,000.00

Sales 30,000.00
8 Purchases 60,000.00
Accounts Payable 60,000.00
9 Freight-In 2,540.00
Cash 2,540.00
10 Purchases 90,000.00
Freight-In 6,000.00
Accounts Payable 96,000.00
13 Office Supplies 24,000.00
Accounts Payable 24,000.00
14 Accounts Receivable 24,000.00
Sales 24,000.00
14 Accounts Payable 6,000.00
Purchase Return & Allowances 6,000.00
17 Cash 30,000.00
Accounts Receivable 30,000.00
18 Accounts Payable 6,000.00
Office Supplies 6,000.00
19 Cash 18,000.00
Sales 18,000.00
21 Accounts Payable 54,000.00
Cash 54,000.00
24 Sales Return & Allowances 2,000.00
Accounts Receivable 2,000.00
Chapter 7
Problem 14 Journalizing and Merchandising Transactions

Prepare the journal entries.

August 1 Accounts Receivable ₱ 21,000.00

Sales ₱ 21,000.00

3 Purchases 38,000.00
Accounts Payable 38,000.00

5 Freight-In 290.00
Cash 290.00

6 Store Supplies 6,360.00

Accounts Payable 6,360.00

8 Purchases 36,000.00
Freight-In 200.00
Accounts Payable 36,200.00

12 Accounts Payable 6,000.00

Purchase Return & Allowances 6,000.00

15 Accounts Receivable 12,000.00

Sales 12,000.00

16 Accounts Payable 2,000.00

Store Supplies 2,000.00

17 Cash 10,000.00
Sales 10,000.00

18 Sales Return & Allowances 2,000.00

Accounts Receivable 2,000.00

24 Accounts Payable 32,000.00

Cash 32,000.00

25 Cash 19,000.00
Accounts Receivable 19,000.00
Chapter 7
Problem 15 Journalizing and Merchandising Transactions

Prepare the journal entries

December 7 Accounts Receivable ₱ 30,000.00

Sales ₱ 30,000.00

8 Purchases 60,000.00
Accounts Payable 60,000.00

9 Freight-In 254.00
Cash 254.00

10 Purchases 95,400.00
Freight-In 600.00
Accounts Payable 96,000.00

13 Office Supplies 24,000.00

Accounts Payable 24,000.00

14 Accounts Receivable 24,000.00

Sales 24,000.00

14 Accounts Payable 6,000.00

Purchases Return & Allowances 6,000.00

17 Cash 30,000.00
Accounts Receivable 30,000.00

18 Accounts Payable 4,000.00

Office Supplies 4,000.00

19 Cash 18,000.00
Sales 18,000.00

20 Accounts Payable 96,000.00

Cash 96,000.00

21 Accounts Payable 54,000.00

Cash 54,000.00

24 Sales Return & Allowanc 2,000.00

Accounts Receivable 2,000.00
Chapter 7
Problem 16 Journalizing Sales and Purchase- Related Transactions

1. Prepare the journal entries for Ramos Distributors.

May 4 Accounts Receivable 162,000.00

Sales 162,000.00
Freight-Out 2,000.00
Accounts Payable 2,000.00

5 Accounts Receivable 710,000.00

Sales 710,000.00

6 No entry

7 Sales Return & Allowances 12,000.00

Accounts Receivable 12,000.00

9 Cash 147,000.00
Sales Discount 3,000.00
Accounts Receivable 150,000.00

10 Accounts Receivable 2,000.00

Cash 2,000.00

12 Cash 695,800.00
Sales Discount 14,200.00
Accounts Receivable 710,000.00

18 Accounts Receivable 150,000.00

Sales 150,000.00

21 No entry

23 Cash 147,000.00
Sales Discount 3,000.00
Accounts Receivable 150,000.00

2. Prepare the journal entries for Cammayo Retailers.

May 4 Purchases 162,000.00

Accounts Payable 162,000.00
Accounts Receivable 2,000.00
Cash 2,000.00

5 Purchases 710,000.00
Accounts Payable 710,000.00
6 Freight-In 8,000.00
Cash 8,000.00

7 Accounts Payable 12,000.00

Purchase Return & Allowances 12,000.00

9 Accounts Payable 150,000.00

Purchase Discount 3,000.00
Cash 147,000.00

10 Cash 2,000.00
Accounts Receivable 2,000.00

12 Accounts Payable 710,000.00

Purchase Discount 14,200.00
Cash 695,800.00

18 Purchases 150,000.00
Accounts Payable 150,000.00

21 Freight-In 3,000.00
Cash 3,000.00

23 Accounts Payable 150,000.00

Purchase Discount 3,000.00
Cash 147,000.00
Chapter 7
Problem 17 Journalizing Merchandising Transactions

Prepare the journal entries.

March 2 Purchases ₱ 74,000.00

Accounts Payable ₱ 74,000.00

3 Accounts Receivable 10,000.00

Sales 10,000.00

5 Cash 7,000.00
Sales 7,000.00

6 Purchases 42,000.00
Accounts Payable 42,000.00

7 Freight-In 570.00
Accounts Payable 570.00

9 Accounts Receivable 38,000.00

Sales 38,000.00

10 Purchases 26,500.00
Freight-In 500.00
Accounts Payable 27,000.00

11 Freight-Out 291.00
Accounts Payable 291.00

12 Accounts Payable 74,000.00

Purchase Discount 1,480.00
Cash 72,520.00

13 Cash 9,900.00
Sales Discount 100.00
Accounts Receivable 10,000.00

14 Accounts Payable 21,000.00

Purchase Discount 420.00
Cash 20,580.00

15 Accounts Payable 3,000.00

Purchase Return & Allowances 3,000.00

16 Office Supplies 4,780.00

 Accounts Payable 4,780.00

17 Cash 18,810.00
Sales Discount 190.00
Accounts Receivable 19,000.00

18 Accounts Payable 27,000.00

Purchase Discount 470.00
Cash 26,530.00

19 Accounts Receivable 7,800.00

Sales 7,800.00

20 Accounts Payable 1,280.00

Office Supplies 1,280.00

22 Sales Return & Allowances 1,800.00

Accounts Receivable 1,800.00

25 Accounts Payable 3,500.00

Cash 3,500.00

26 Accounts Payable 861.00

Cash 861.00

27 Cash 5,880.00
Sales Discounts 120.00
Accounts Receivable 6,000.00

28 Accounts Payable 21,000.00

Cash 21,000.00

31 Cash 9,730.00
Sales 9,730.00
Chapter 7
Problem 18

Prepare the cost of goods sold section of the income statement of the year ended Dec. 31, 2021

Leopoldo Valdez School Chairs

Cost Goods Sold
December 31, 2021

Merchandise Inventory, 1/1/2021 ₱ 1,200,000.00

Add:
Purchases ₱ 4,300,000.00
Transportation-In 172,000.00 4,472,000.00
Less:
Purchases Returns and Allowances ₱ 129,000.00
Purchases Discounts 215,000.00 344,000.00
Merchandise Inventory, 12/31/2021 1,900,000.00
Cost of Goods Sold ₱ 3,428,000.00
Chapter 7
Problem 19 Determining Ending Merchandise Inventory

Compute the value of the lost merchandise.

Merchandise Inventory, 1/1/2021 ₱ 300,000.00

Add:
Purchases 1,320,000.00
Transportation-In 39,600.00 1,359,600.00
Less:
Purchases Returns and Allowances 46,200.00
Purchase Discounts 26,400.00 72,600.00
Cost of Goods Available for Sale ₱ 1,587,000.00
Less: Cost of Goods Sold 1,260,000.00
Total lost merchandise ₱ 327,000.00
Chapter 7
Problem 20 Determining the missing Elements of the Income Statement

Replace the lettered blanks with the appropriate amounts.

1 2 3 4
Net Sales a. d. 250,000.00 290,000.00
Merchandise Inventory, 1/1/2021 b. 50,000.00 70,000.00 j.
Net Cost of Purchases 80,000.00 e. g. 160,000.00
Goods Available for Sale 110,000.00 160,000.00 h. k.
Merchandise Inventory 1/31/2021 40,000.00 f. 30,000.00 70,000.00
Cost of Goods Sold c. 140,000.00 230,000.00 l.
Gross Profit 50,000.00 40,000.00 i. 160,000.00

b. Goods Available for Sale ₱ 110,000.00

Less: Net Cost of Purchases 80,000.00
Merchandise Inventory, 1/1/2021 ₱ 30,000.00

c. Goods Available for Sale ₱ 110,000.00

Less: Merchandise Inventory 1/31/20 40,000.00
Cost of Goods Sold ₱ 70,000.00

a. Gross Profit ₱ 50,000.00

Add: Cost of Goods Sold 70,000.00
Net Sales ₱ 120,000.00

d. Gross Profit ₱ 40,000.00

Add: Cost of Goods Sold 140,000.00
Net Sales ₱ 180,000.00

e. Goods Available for Sale ₱ 160,000.00

Less: Merchandise Inventory 1/1/202 50,000.00
Net Cost of Purchases ₱ 110,000.00

f. Goods Available for Sale ₱ 160,000.00

Less: Cost of Goods Sold 140,000.00
Merchandise Inventory 1/31/2021 ₱ 20,000.00

h. Merchandise Inventory 1/31/2021 ₱ 30,000.00

Add: Cost of Goods Sold 230,000.00
Goods Available for Sale ₱ 260,000.00

g. Goods Available for Sale ₱ 260,000.00

Less: Merchandise Inventory 1/1/202 50,000.00
Net Cost of Purchases ₱ 210,000.00

i. Net Sales ₱ 250,000.00

Less: Cost of Goods Sold 230,000.00
Gross Profit ₱ 20,000.00

l. Net Sales ₱ 290,000.00

Less: Gross Profit 160,000.00
Cost of Goods Sold ₱ 130,000.00

k. Cost of Goods Sold ₱ 130,000.00

Add: Merchandise Inventory 1/31/20 70,000.00
Goods Available for Sale ₱ 200,000.00

j. Goods Available for Sale ₱ 200,000.00

Less: Net Cost of Purchases 160,000.00
Merchandise Inventory, 1/1/2021 ₱ 40,000.00

m. Merchandise Inventory, 1/1/2021 ₱ 120,000.00

Add: Net Cost of Purchases 390,000.00
Goods Available for Sale ₱ 510,000.00

n. Goods Available for Sale ₱ 510,000.00

Less: Cost of Goods Sold 380,000.00
Merchandise Inventory 1/31/2021 ₱ 130,000.00

o. Net Sales ₱ 400,000.00

Less: Cost of Goods Sold 380,000.00
Gross Profit ₱ 20,000.00
 5 1 2 3
400,000.00 Net Sales ₱ 120,000.00 ₱ 180,000.00 ₱ 250,000.00
120,000.00 Merchandise Inventory, 1/1/2021 30,000.00 50,000.00 70,000.00
390,000.00 Net Cost of Purchases 80,000.00 110,000.00 210,000.00
m. Goods Available for Sale 110,000.00 160,000.00 260,000.00
n. Merchandise Inventory 1/31/2021 40,000.00 20,000.00 30,000.00
380,000.00 Cost of Goods Sold 70,000.00 140,000.00 230,000.00
o. Gross Profit ₱ 50,000.00 ₱ 40,000.00 ₱ 20,000.00
 4 5
₱ 290,000.00 ₱ 400,000.00
40,000.00 120,000.00
160,000.00 390,000.00
200,000.00 510,000.00
70,000.00 130,000.00
130,000.00 380,000.00
₱ 160,000.00 ₱ 20,000.00
Chapter 7
Problem 21

Replace the lettered blanks with the appropriate amounts.

1 2 3 4
Net Sales 100,000.00 d. 200,000.00 240,000.00
Beginning Inventory 15,000.00 12,000.00 g. 30,000.00
Net Cost of Purchases 55,000.00 e. 125,000.00 95,000.00
Goods Available for Sale a. f. 145,000.00 j.
Ending Inventory 10,000.00 25,000.00 h. k.
Cost of Goods Sold b. 40,000.00 i. l.
Gross Profit c. 90,000.00 85,000.00 130,000.00

a. Beginning Inventory ₱ 15,000.00

Net Cost of Purchases 55,000.00
Goods Available for Sale ₱ 70,000.00

b. Goods Available for Sale ₱ 70,000.00

Less: Ending Inventory 10,000.00
Cost of Goods Sold ₱ 60,000.00

c. Net Sales ₱ 100,000.00

Cost of Goods Sold 60,000.00
Gross Profit ₱ 40,000.00

d. Cost of Goods Sold ₱ 40,000.00

Add: Gross Profit 90,000.00
Net Sales ₱ 130,000.00

e. Goods Available for Sale ₱ 65,000.00

Less: Beginning Inventory 12,000.00
Net Cost of Purchases ₱ 53,000.00

f. Ending Inventory ₱ 25,000.00

Add: Cost of Goods Sold 40,000.00
Goods Available for Sale ₱ 65,000.00

g. Goods Available for Sale ₱ 145,000.00

Less: Net Cost of Purchases 125,000.00
Beginning Inventory ₱ 20,000.00

h. Goods Available for Sale ₱ 145,000.00

Less: Cost of Goods Sold 115,000.00
Ending Inventory ₱ 30,000.00
i. Net Sales ₱ 200,000.00
Less: Gross Profit 85,000.00
Cost of Goods Sold ₱ 115,000.00

j. Beginning Inventory ₱ 30,000.00

Add: Net Cost of Purchases 95,000.00
Goods Available for Sale ₱ 125,000.00

k. Goods Available for Sale ₱ 125,000.00

Less: Cost of Goods Sold 110,000.00
Ending Inventory ₱ 15,000.00

l. Net Sales ₱ 240,000.00

Less: Gross Profit 130,000.00
Cost of Goods Sold ₱ 110,000.00
 1 2 3 4
Net Sales ₱ 100,000.00 ₱ 130,000.00 ₱ 200,000.00 ₱ 240,000.00
Beginning Inventory 15,000.00 12,000.00 20,000.00 30,000.00
Net Cost of Purchases 55,000.00 53,000.00 125,000.00 95,000.00
Goods Available for Sale 70,000.00 65,000.00 145,000.00 125,000.00
Ending Inventory 10,000.00 25,000.00 30,000.00 15,000.00
Cost of Goods Sold 60,000.00 40,000.00 115,000.00 110,000.00
Gross Profit ₱ 40,000.00 ₱ 90,000.00 ₱ 85,000.00 ₱ 130,000.00
Chapter 7
Problem 22 Effects of Inventory Errors

If the following errors were made, compute the correct cost of goods sold for each period:

Period Error in Ending Inventory Adjusted Inventory

1 Overstated by P4,000 ₱ 36,000.00
2 Understated by P6,000 ₱ 36,000.00
3 Overstated by P2,000 ₱ 44,000.00
od:
PERIOD
1 2 3 4
Beginning Inventory ₱ 50,000.00 ₱ 40,000.00 ₱ 30,000.00 ₱ 46,000.00
Net Cost of Purchases 90,000.00 110,000.00 100,000.00 90,000.00
Goods Available for Sale 140,000.00 150,000.00 130,000.00 136,000.00
Ending Inventory 40,000.00 30,000.00 46,000.00 32,000.00
Cost of Goods Sold ₱ 100,000.00 ₱ 120,000.00 ₱ 84,000.00 ₱ 104,000.00

PERIOD
1 2 3 4
Beginning Inventory ₱ 50,000.00 ₱ 36,000.00 ₱ 36,000.00 ₱ 44,000.00
Net Cost of Purchases 90,000.00 110,000.00 100,000.00 90,000.00
Goods Available for Sale 140,000.00 146,000.00 136,000.00 134,000.00
Ending Inventory 36,000.00 36,000.00 44,000.00 32,000.00
Cost of Goods Sold ₱ 104,000.00 ₱ 110,000.00 ₱ 92,000.00 ₱ 102,000.00
Chapter 7
Problem 23 Comprehensive Problem

JOURNAL ENTRIES

Discount Term
February 1 Cash ₱ 113,000.00
Accounts Receivable ₱ 113,000.00

2 Accounts Payable 64,000.00

Purchases Discounts 1,920.00
Cash 62,080.00

4 Purchases 170,000.00 3/10, n/10

Accounts Payable 170,000.00

5 Accounts Receivable 270,000.00 2/10, n/30

Sales 270,000.00

7 Advertising Expense 6,000.00

Cash 6,000.00

7 Cash 250,000.00
Sales 250,000.00

8 Accounts Payable 170,000.00

Purchases Discounts 5,100.00
Cash 164,900.00

9 Transportation-In 4,000.00
Cash 4,000.00

10 Sales Returns & Allowanc 70,000.00

Accounts Receivable 70,000.00

12 Cash 196,000.00
Sales Discount 4,000.00
Accounts Receivable 200,000.00

14 Interest Expense 26,000.00

Cash 26,000.00

15 Salaries Expense 51,000.00

Cash 51,000.00

16 Accounts Receivable 392,000.00 2/10, n/30

Sales 392,000.00
18 Transportation-Out 4,000.00
Cash 4,000.00

19 Supplies 21,000.00
Cash 21,000.00

20 Purchases 125,000.00 3/10, n/30

Accounts Payable 125,000.00

22 Miscellaneous Expense 7,000.00

Cash 7,000.00

23 Cash 384,160.00
Sales Discounts 7,840.00
Accounts Receivable 392,000.00

24 Purchases 373,000.00 3/10, n/30

Accounts Payable 373,000.00

24 Transportation-In 9,000.00
Cash 9,000.00

25 Accounts Receivable 420,000.00 2/10, n/30

Sales 420,000.00

26 Sales Returns & Allowanc 71,000.00

Accounts Receivable 71,000.00

28 Buenaflor, Withdrawal 400,000.00

Cash 400,000.00

28 Accounts Payable 25,000.00

Purchase Returns & Allowances 25,000.00
 Delivery

FOB Shipping

FOB Shipping

FOB Destination
FOB Destination

FOB Shipping

FOB Shipping
PROBLEM 23
Ledger Accounts

ASSETS: LIABILITIES:
CASH 110 ACCOUNTS PAYABLE
Dr Cr Balance Dr
33,000.00 62,080.00 64,000.00
113,000.00 6,000.00 170,000.00
250,000.00 164,900.00 25,000.00
196,000.00 4,000.00
384,160.00 26,000.00
51,000.00 ₱ 259,000.00
4,000.00
21,000.00 SALARIES PAYABLE
7,000.00 Dr
9,000.00
400,000.00
₱ 976,160.00 ₱ 754,980.00 ₱ 221,180.00 ₱ -

ACCOUNTS RECEIVABLE 120 MORTGAGE PAYABLE

Dr Cr Balance Dr
192,000.00 113,000.00
270,000.00 70,000.00
392,000.00 200,000.00 ₱ -
420,000.00 392,000.00
71,000.00
₱ 1,274,000.00 ₱ 846,000.00 ₱ 428,000.00 CAPITAL:
BUENAFLOR, CAPITAL
MERCHANDISE INVENTORY 130 Dr
Dr Cr Balance 400,000.00
413,000.00 413,000.00
397,000.00
₱ 810,000.00 ₱ 413,000.00 ₱ 397,000.00 ₱ 400,000.00

SUPPLIES 140 BUENAFLOR, DRAWINGS

Dr Cr Balance Dr
51,000.00 58,000.00 400,000.00
21,000.00
₱ 400,000.00
₱ 72,000.00 ₱ 58,000.00 ₱ 14,000.00
INCOME SUMMARY
PREPAID INSURANCE 150 Dr
Dr Cr Balance 413,000.00
48,000.00 2,000.00 1,059,840.00
288,180.00
₱ 48,000.00 ₱ 2,000.00 ₱ 46,000.00

LAND 160 ₱ 1,761,020.00

 Dr Cr Balance REVENUES:
460,000.00
SALES
₱ 460,000.00 ₱ - ₱ 460,000.00 Dr
1,332,000.00
BUILDING 170
Dr Cr Balance
1,750,000.00

₱ 1,750,000.00 ₱ - ₱ 1,750,000.00 ₱ 1,332,000.00

ACCUMULATED DEP. - BLDG. 175 SALES RETURNS & ALLOW.

Dr Cr Balance Dr
350,000.00 70,000.00
9,000.00 71,000.00
₱ - ₱ 359,000.00 ₱ 359,000.00 ₱ 141,000.00

EQUIPMENT 180 SALES DISCOUNTS

Dr Cr Balance Dr
2,310,000.00 4,000.00
7,840.00
₱ 2,310,000.00 ₱ - ₱ 2,310,000.00
₱ 11,840.00
ACCUMULATED DEP. - BLDG. 185
Dr Cr Balance
630,000.00
12,000.00
₱ - ₱ 642,000.00 ₱ 642,000.00
 EXPENSES:
ACCOUNTS PAYABLE 210 PURCHASES
Cr Balance Dr Cr
108,000.00 170,000.00 668,000.00
170,000.00 125,000.00
125,000.00 373,000.00
373,000.00
₱ 668,000.00 ₱ 668,000.00
₱ 776,000.00 ₱ 517,000.00
PURCHASES RETURNS & ALLOW.
SALARIES PAYABLE 220 Dr Cr
Cr Balance 25,000.00 25,000.00
51,000.00
₱ 25,000.00 ₱ 25,000.00
₱ 51,000.00 ₱ 51,000.00
PURCHASES DISCOUNTS
MORTGAGE PAYABLE 230 Dr Cr
Cr Balance 7,020.00 1,920.00
2,600,000.00 5,100.00
₱ 7,020.00 ₱ 7,020.00
₱ 2,600,000.00 ₱ 2,600,000.00
TRANSPORTATION IN
Dr Cr
4,000.00 13,000.00
UENAFLOR, CAPITAL 310 9,000.00
Cr Balance ₱ 13,000.00 ₱ 13,000.00
1,569,000.00
288,180.00

₱ 1,857,180.00 ₱ 1,457,180.00

UENAFLOR, DRAWINGS 320

Cr Balance
400,000.00

₱ 400,000.00 ₱ -

INCOME SUMMARY 330

Cr Balance
397,000.00
1,364,020.00

₱ 1,761,020.00 ₱ -
 SALES 410
Cr Balance
270,000.00
250,000.00
392,000.00
420,000.00

₱ 1,332,000.00 ₱ -

LES RETURNS & ALLOW. 420

Cr Balance
141,000.00

₱ 141,000.00 ₱ -

SALES DISCOUNTS 430

Cr Balance
11,840.00

₱ 11,840.00 ₱ -
 510 SALARIES EXPENSE 610
Balance Dr Cr Balance
51,000.00 102,000.00
51,000.00
₱ 102,000.00 ₱ 102,000.00 ₱ -

₱ - SUPPLIES EXPENSE 620

Dr Cr Balance
520 58,000.00 58,000.00
Balance
₱ 58,000.00 ₱ 58,000.00 ₱ -

₱ - INSURANCE EXPENSE 630

Dr Cr Balance
530 2,000.00 2,000.00
Balance
₱ 2,000.00 ₱ 2,000.00 ₱ -

₱ - DEPRECIATION EXPENSE - BLDG. 640

Dr Cr Balance
540 9,000.00 9,000.00
Balance
₱ 9,000.00 ₱ 9,000.00 ₱ -

₱ - DEPRECIATION EXPENSE - EQUIP. 650

Dr Cr Balance
12,000.00 12,000.00

₱ 12,000.00 ₱ 12,000.00 ₱ -

TRANSPORTATION OUT 660

Dr Cr Balance
4,000.00 4,000.00

₱ 4,000.00 ₱ 4,000.00 ₱ -

ADVERTISING EXPENSE 670

Dr Cr Balance
6,000.00 6,000.00

₱ 6,000.00 ₱ 6,000.00 ₱ -

INTEREST EXPENSE 680

Dr Cr Balance
 26,000.00 26,000.00

₱ 26,000.00 ₱ 26,000.00 ₱ -

MISCELLANEOUS EXPENSE 690

Dr Cr Balance
7,000.00 7,000.00

₱ 7,000.00 ₱ 7,000.00 ₱ -
PROBLEM 23
ADJUSTING ENTRIES

a. Salaries Expense ₱ 51,000.00

Salaries Payable ₱ 51,000.00

b. Insurance Expense 2,000.00

Prepaid Insurance 2,000.00

c. Depreciation Expense - Bldg. 9,000.00

Depreciation Expense - Equip. 12,000.00
Accumulated Depreciation - Bldg. 9,000.00
Accumulated Depreciation - Equip. 12,000.00

d. Supplies Expense 58,000.00

Supplies 58,000.00

e. Income Summary 413,000.00

Mechandise Inventory 413,000.00

Merchandise Inventory 397,000.00

Income Summary 397,000.00
PROBLEM 23
WORK SHEET

TERESITA BUENAFLOR SHOES TERESITA BUENA

Trial Balance Adjusting Tra
February 28, 2021 February 28
Debit Credit
Cash 221,180.00
Accounts Receivable 428,000.00
Merchandise Inventory 413,000.00 e.
Supplies 72,000.00
Prepaid Insurance 48,000.00
Land 460,000.00
Building 1,750,000.00
Accumulated Depreciation - Bldg. 350,000.00
Equipment 2,310,000.00
Accumulated Depreciation - Equip. 630,000.00
Accounts Payable 517,000.00
Salaries Payable -
Mortgage Payable 2,600,000.00
Buenaflor, Capital 1,569,000.00
Buenaflor, Withdrawals 400,000.00
Income Summary - e.
Sales 1,332,000.00
Sales Return & Allowances 141,000.00
Sales Discounts 11,840.00
Purchases 668,000.00
Purchases Returns & Allowances 25,000.00
Purchases Discounts 7,020.00
Transportation In 13,000.00
Salaries Expense 51,000.00 a.
Supplies Expense - d.
Insurance Expense - b.
Depreciation Expense - Bldg. - c.
Depreciation Expense - Equip. - c.
Transportation Out 4,000.00
Advertising Expense 6,000.00
Interest Expense 26,000.00
Miscellaneous Expense 7,000.00
Total ₱ 7,030,020.00 ₱ 7,030,020.00
TERESITA BUENAFLOR SHOES TERESITA BUENAFLOR SHOES
Adjusting Transactions Adjusted Trial Balance
February 28, 2021 February 28, 2021
Debit Credit
Cash
Accounts Receivable
397,000.00 e. 413,000.00 Merchandise Inventory
d. 58,000.00 Supplies
b. 2,000.00 Prepaid Insurance
Land
Building
c. 9,000.00 Accumulated Depreciation - Bldg.
Equipment
c. 12,000.00 Accumulated Depreciation - Equip.
Accounts Payable
a. 51,000.00 Salaries Payable
Mortgage Payable
Buenaflor, Capital
Buenaflor, Withdrawals
413,000.00 e. 397,000.00 Income Summary
Sales
Sales Return & Allowances
Sales Discounts
Purchases
Purchases Returns & Allowances
Purchases Discounts
Transportation In
51,000.00 Salaries Expense
58,000.00 Supplies Expense
2,000.00 Insurance Expense
9,000.00 Depreciation Expense - Bldg.
12,000.00 Depreciation Expense - Equip.
Transportation Out
Advertising Expense
Interest Expense
Miscellaneous Expense
₱ 942,000.00 ₱ 942,000.00 Total
ENAFLOR SHOES
Trial Balance
ry 28, 2021
Debit Credit
221,180.00
428,000.00
397,000.00
14,000.00
46,000.00
460,000.00
1,750,000.00
359,000.00
2,310,000.00
642,000.00
517,000.00
51,000.00
2,600,000.00
1,569,000.00
400,000.00
16,000.00
1,332,000.00
141,000.00
11,840.00
668,000.00
25,000.00
7,020.00
13,000.00
102,000.00
58,000.00
2,000.00
9,000.00
12,000.00
4,000.00
6,000.00
26,000.00
7,000.00
₱ 7,102,020.00 ₱ 7,102,020.00
PROBLEM 23
FINANCIAL STATEMENTS

TERESITA BUENAFLOR SHOES

Income Statement
For the month ended February 28, 2021

Sales
Less: Sales Discounts 11,840.00
Sales Returns & Allowances 141,000.00
Net Sales
Less: Cost of Goods Sold
Beginning Inventory ₱ 413,000.00
Add: Net Purchases
Purchases ₱ 668,000.00
Transportation In 13,000.00
Less: Purchases Discounts ₱ 7,020.00
Purchases Returns & Allowances 25,000.00 32,020.00 648,980.00
Less: Ending Inventory 397,000.00
Gross Profit
Less: Expenses
Salaries Expense ₱ 102,000.00
Supplies Expense 58,000.00
Insurance Expense 2,000.00
Depreciation Expense - Bldg. 9,000.00
Depreciation Expense - Equip. 12,000.00
Transportation Out 4,000.00
Advertising Expense 6,000.00
Interest Expense 26,000.00
Miscellaneous Expense 7,000.00
NET INCOME
 TERESITA BUENAFLOR SHOES
Statement of Changes in Equity
For the month ended February 28, 2021
₱ 1,332,000.00
Buenaflor, Capital, February 1 ₱ 1,569,000.00
Add: Net Income 288,180.00
152,840.00 Less: Withdrawals 400,000.00
₱ 1,179,160.00 Buenaflor, Capital, February 28 ₱ 1,457,180.00

664,980.00
₱ 514,180.00

226,000.00
₱ 288,180.00
 TERESITA BUENAFLOR SHOES
Balance Sheet
February 28, 2021

ASSETS

Current:
Cash ₱ 221,180.00
Accounts Receivable 428,000.00
Merchandise Inventory 397,000.00
Supplies 14,000.00
Prepaid Insurance 46,000.00 ₱ 1,106,180.00

Non-Current:
Land ₱ 460,000.00
Building ₱ 1,750,000.00
Less: Depreciation 359,000.00 1,391,000.00
Equipment ₱ 2,310,000.00
Less: Depreciation 642,000.00 1,668,000.00 3,519,000.00
TOTAL ASSETS ₱ 4,625,180.00

LIABILITIES

Current Liabilities:
Accounts Payable ₱ 517,000.00
Salaries Payable 51,000.00 ₱ 568,000.00

Non-Current Liabilities:
Mortgage Payable 2,600,000.00
TOTAL LIABILITIES ₱ 3,168,000.00

EQUITY
Buenaflor, Capital, February 28 1,457,180.00
TOTAL LIABILITIES & EQUITY ₱ 4,625,180.00
PROBLEM 23
CLOSING ENTRIES

February 28 Sales ₱ 1,332,000.00

Purchases Returns & Allowances 25,000.00
Purchases Discounts 7,020.00
Income Summary ₱ 1,364,020.00

28 Income Summary ₱ 1,059,840.00

Sales Returns and Allowances ₱ 141,000.00
Sales Discounts 11,840.00
Purchases 668,000.00
Transportation In 13,000.00
Salaries Expense 102,000.00
Supplies Expense 58,000.00
Insurance Expense 2,000.00
Depreciation Expense - Bldg. 9,000.00
Depreciation Expense - Equip. 12,000.00
Transportation Out 4,000.00
Advertising Expense 6,000.00
Interest Expense 26,000.00
Miscellaneous Expense 7,000.00

28 Income Summary ₱ 288,180.00

Buenaflor, Capital ₱ 288,180.00

28 Buenaflor, Capital ₱ 400,000.00

Buenaflor, Withdrawals ₱ 400,000.00
 TERESITA BUENAFLOR SHOES
Post-Trial Balance
February 28, 2021
Debit Credit
Cash ₱ 221,180.00
Accounts Receivable 428,000.00
Merchandise Inventory 397,000.00
Supplies 14,000.00
Prepaid Insurance 46,000.00
Land 460,000.00
Building 1,750,000.00
Accumulated Depreciation - Bldg. 359,000.00
Equipment 2,310,000.00
Accumulated Depreciation - Equip. 642,000.00
Accounts Payable 517,000.00
Salaries Payable 51,000.00
Mortgage Payable 2,600,000.00
Buenaflor, Capital 1,457,180.00
Buenaflor, Withdrawals -
Income Summary -
Sales -
Sales Return & Allowances -
Sales Discounts -
Purchases -
Purchases Returns & Allowances -
Purchases Discounts -
Transportation In -
Salaries Expense -
Supplies Expense -
Insurance Expense -
Depreciation Expense - Bldg. -
Depreciation Expense - Equip. -
Transportation Out -
Advertising Expense -
Interest Expense -
Miscellaneous Expense -
Total ₱ 5,626,180.00 ₱ 5,626,180.00