PURCHASES

It is an account use to record the amount of

merchandise purchased under a periodic
inventory system.

It is recorded by the buyer al invoice price.

Purchases can be done either by paying cash immediately upon purchase o

EXAMPLE
PURCHASES

Menudo Co.purchased merchandise with

an invoice price of P10,000.

Cash purchases
Purchases 10,000
Cash 10,000
Purchases on account/credit
Purchases 10,000
Accounts payable 10,000
 Customer return merchandise because it
is: damaged or defective
of inferior quality and not in accordance
with their specifications.

PURCHASE RETURNS AND

The buyer will receive a credit
ALLOWANCE memorandum from the seller that will
acknowledge the receipt of the goods return
and deducting the same on its account.

lf the sale is made through cash,the seller

will refund the amount to the buyer or will
give a replacement product.

NOEL A.BERGONIA,CPA,MBA

EXAMPLE
PURCHASE RETURNS AND ALLOWANCES
Assume that Menudo Co.returned defective merchandise amounting

Cash purchases
Cash — — -700
Purchase returns and allowances 700

Purchases on account/credit
Accounts payable 700
Purchase returns and allowances 700

NOEL A.BE8GONIA,CPA,MBA
 PURCHASE DISCOUNTS
Menudo Co.purchased merchandise with an invoice price of P15,000 with
a credit term of Rkig,n/30.
Purchases on accounf/credit
Purchases 15,0 00
Accounts payable 15,000
If paid within the discount period:

Accountgpayable 15,000
discounts (P15,000×2%) 300
Cash(P15,000×98%) 14,700

If paid after the discount period:

Accounts payable 15,000
Cash 15,000
NOEL A.BE8GONIA,CPA,MBA

Frce r.board
TRANSPORTATION COST AND
GOODS IN TRANSIT

FOB Shipping Point

FOB Destination
·The buyer ·The seller bears the
/houlders the shipping cost.
shipping cost ·The fitle passes when
Ownership of the g ood a re
goods passes to the receiv e d ythe
buyer when the buyer.
inventory
seller's leaves The seller still owns
the goods while
The buyer already
owns the goods while trans
in transit.

kou A tttcoML (PA,ML