Exercises – Accounting for Purchases and Sales of Merchandise

1. Record the following selected transactions of MAS Store:

2021
Jan. 10 - Purchased goods from AYO Co Corp. for P 10,000. Terms: less 10% and 5%, 2/10, 1/20, n/60.
12 - An allowance was granted by AYO Co corp. due to wrong specification, P 500.
18 - Paid the account in full.

2021
Jan. 1 Purchases P 8, 550
0
Account payable P 8, 550
Term: 2/10, 1/20. n/60

1 Account payable 500

2
Purchase Returns and Allowance 500
Allowance for wrong specification.

1 Account Payable 8, 050

8
Purchase Discount 161
Cash 7,889
Full payment to Ayo Co Corp.

2. Record the following selected transactions:

2021
Aug. 2 - Purchased merchandise from VFE Enterprises, P 15,000. Terms: 2/10, n/30.
4 - Returned unsatisfactory merchandise to VFE Enterprises and received a credit memo for P 800.
22 - Paid the account in full.
2021
Aug. 2 Purchases P 15,000
Account payable P 15, 000
Terms: 2/10, n/30

4 Account Payable 800

Purchase Returns and Allowance 800
Returned unsatisfactory merchandise

2 Account Payable 14, 200

2
Cash 14, 200
Full payment to VFE Enterprise

3. Record the following selected transactions of No deal Department Store, a merchandising concern
owned and managed by Miss Tina Go:
2021
Oct. 5- Purchased merchandise for P 5,000 from Glad Earth Commercial. Terms: 1/20, n/60.
6- Purchased merchandise from Southern Trading Inc. for P 2,800. Terms: less 10%, n/30.
7- Purchased merchandise from Shaliman Enterprises for P 5,000. Terms: 20% down
payment, balance, n/60.
8- Paid freight on the above purchases, P 150 cash.
9- Returned unsatisfactory merchandise to Shaliman Enterprises and received a credit memo
for P200
 11- Purchased a cash register from Far East Equipment company for P 5,500. Terms: less
10%, 1/10, n/30.
12- Paid freight on the above purchases, P 100 cash.
15- Paid account with Glad Earth Commercial in full.
21- Paid account with Far East Equipment company in full.
23- Miss Tina Go withdrew cash of P 500 and merchandise acquired at a cost of P 500 and
priced to sell for P 850.
25 Purchased merchandise from Elite Commercial for P 3,250. Terms: cash.
27 Purchased wrapping papers and twine for P 1,000 from Ace Commercial. Terms: C.O.D.

2021
Oct. 5 Purchases P 5, 000
Account Payable P 5, 000
Glad Earth Commercial. Terms: 1/20, n/60.

6 Purchases 2, 520
Account Payable 2, 520
Southern Trading Inc. Terms: less 10%, n/30.

7 Purchases 5,000
Cash 1,000
Account Payable 4,000
Shaliman Enterprises Terms: 20% down, n/60.

8 Freight-Out 150
Cash 150
Paid freight on purchases

9 Account Payable 200

Purchase Returns and Allowance 200
Allowance for unsatisfactory merchandise.

11 Cash Register 4, 950

Account Payable 4, 950
Terms: less 10%, 1/10, n/30.

12 Cash Register 100

Cash 100
Paid freight on equipment

15 Account Payable 5,000

Purchase Discount 50
Cash 4, 950
Full payment on Glad Earth Commercial

21 Account Payable 4. 950

Cash Register 49 50
Cash 4, 900 50

23 Mrs. Tina Go, Withdrawals 1, 000

Cash 500
Purchases 500
Owner’s withdrawal of cash and merchandise
 25 Purchases 3, 250
Cash 3, 250
Purchased merchandise – Terms: Cash

27 Wrapping papers and Twine

Account Payable
Purchased supplies, Terms: C.O.D

4. Record the following selected transactions of Visayan Fish Products:

2021
July 2 - Sold merchandise to Sabina Poutry for P 5,000/ Terms: 2/5, n/30.
3 - Sold merchandise to Sta, Clara Cooperative for P 10,000. Terms: a 30-12% note.
5 - Sold merchandise for cash, P 2,250.
6 - Sold an old equipment for P 2,500 cash. The equipment was acquired at a cost of P 4,000
and has a net book value of P 2,100.
7 - Collected in full the account of Sabina Poultry.
11 - Sold merchandise to Sarmineto Fish Traders for P 6,000. Terms: 50% down, balance,
2/10, n/30.
12 - Paid freight on the above sale, P 200.
15 - Gave a cash refund of P 250 for returns from cash customers.
21 - Collected the account of Sarmiento Fish Traders in full.
Aug. 2 - Collected the note from Sta. Clara in full.

2021
July 2 Account Receivable P 5, 000
Sales P 5, 000
Sabina Poutry, Terms: 2/5, n/30

3 Account Receivable 10, 000

Sales 10, 000
Sta, Clara Cooperative, Terms: a 30-12%
note.

5 Cash 2, 250
Sales 2, 250
To record sales.

6 Cash 2, 500
Accumulated Depreciation 1, 900
Equipment 4, 000
Gain on sale equipment 400
Sale of old equipment

7 Cash 4, 900
Sales discount 100
Account Receivable 5, 000
Full collection of account receivables

1 Cash 3, 000
1
Account Receivable 3, 000
Sales 6, 000
Sarmineto, Terms: 50% down, 2/10, n/30.
 1 Freight-Out 200
2
Cash 200
Paid freight on the above sale.

1 Sales returns and allowances 250

5
Cash 250
Allowances for sales return.

2 Cash 2, 880
1
Sales Discount 120
Account Receivable 3, 000

Aug. 2 Cash 10, 000

Account receivable 10, 000
Full collection on Sta Clara Cooperative

5. Record the following selected transactions of Emerald Trading:

2021
June Purchases merchandise for cash, P 4,500.
1
3 - Sold merchandise for cash, P 2,250.
4 - Purchased merchandise from Deluxe Novelties for P 5,000. Terms: 2/10, n/30.
5 - Received a cash refund of P 150 for defective merchandise returned to supplier on purchase of
June 1st.
7 - Purchased office furniture from Cresta Furnitures for P 2,500. Terms: on account.
10 - Purchased office supplies for cash, P 350.
11 - Sold merchandise to DEF Company for P 3,000. Terms: n/30.
12 - Paid freight on the above sale, P 200.
14 - Paid Deluxe Novelties in full of account.
16 - Received a cash refund of P 50 for office supplies returned ti supplier due to wrong
specifications.
17 - Paid Cresta Furnitures in full of account.
20 - Sold merchandise to Century Trading for P 10,000. Terms: 20% downpayment, a 30-10% note
for P 5,000, balance 1/10, n/30.
21 - Purchased merchandise from AL’s Trading, P 8,000. Terms: 2/10, n/30.
22 - Paid freight on the above purchases, P 250.
27 - The owner, Mr. Cruz, withdrew merchandise purchased at a cost of P500 and priced to sell at P
780.

2021
June 1 Purchases P 4, 500
Cash P 4, 500
Purchased merchandise.

3 Cash 2, 250
Sales 2, 250
To record sales

4 Purchases 5, 000
Account payable 5, 000
Deluxe Novelties, Terms: 2/10, n/30
5 Account Payable 150
Purchase Returns and Allowance 150
Allowances for defective merchandise

7 Office Furniture 2, 500

Account payable 2, 500
Cresta Furniture, Terms: on account

1 Office Supplies 350

0
Cash 350
Purchased office supplies

1 Cash 3, 000
1
Sales 3, 000
DEF Company. Terms: n/30.

1 Freight-Out 200
2
Cash 200
Paid freight cost.

1 Account Payable 5, 000

4
Purchase Discount 100
Cash 4, 900
Full payment on account, Deluxe Novelties

1 Cash 50
6
Purchase returns and allowances 50
Allowance for office supplies returned.

1 Account Payable 2, 500

7
Cash 2, 500
Full payment on account, Cresta Furniture

2 Cash 2, 000
0
Account receivable 3,000
Notes Receivable 5,000
Sales 10, 000
Century Trading. Terms: 20% down payment,
a
30-10% note for P 5,000, balance 1/10, n/30.

2 Purchases 8, 000
1
Account Payable 8, 000
AL’s Trading, Terms: 2/10, n/30
 2 Freight-Out 250
2
Cash 250
Paid Freight cost.

2 Mr. Cruz, Withdrawal 500

7
Purchases 500
Owner’s withdrawal of merchandise

Exercise:
Required. Prepare journal entries for the month of August, 2021 in the books of:
a) MMK Services b) RRG Trading

August, 2021
3 – MMK Services issued a 120-day, 20% note for P 15,000 to RRG Trading in full settlement of its
account with them
6 - MMK Services rendered services to RRG Trading for P 10,000. Terms: P 2,000 down,
balance on account.
11 – MMK received a 15-day, 18% note from RRG in full settlement of account.
23 – MMK paid the note due to RRG including interest due thereon.
26 – RRG paid its note due today including the interest due thereon.

MMK SERVICES
2021
Aug. 3 Account Payable P 15, 000
Note Payable P 15, 000
To record issued a 120-day, 20% note

6 Cash 2, 000
Account Receivable 8, 000
Service Revenue 10, 000
Terms: P 2,000 down, balance on account.

11 Notes Receivable 8, 000

Account Receivable 8, 000
Received 15-day, 18% note in lieu of account
receivable

23 Note Payable 15,000

Interest Expense 1,000
Cash 16, 000
To record paid note and interest due to RRG.

26 Cash 8,060
Notes Receivable 8,000
Interest Income 60
Full collection of note and interest.

RRG TRADING
2021
Aug. 3 Note Receivable P 15, 000
Account Receivable P 15, 000
 To record account receivable

6 Miscellaneous Expense 10, 000

Cash 2,000
Account Payable 8,000
To record expense for services rendered.

1 Account Payable 8, 000

1
Notes Payable 8, 000
Issued 15-day, 18% note in lieu of account
payable

2 Cash 16,000
3
Notes Receivable 15,000
Interest Income 1,000
Full collection of note and interest.

2 Note Payable 8, 000

6
Interest Expense 60
Cash 8, 060
Full payment in lieu with Notes payable