ACCOUNTING 2

REVIEW
Give the appropriate journal
entry for the following
transactions:
Billed customers for service
rendered, Php5,000.
Billed customers for service
rendered, Php5,000.

Accounts Receivable 5,000

Service Income 5,000
Bought office supplies on cash
basis, Php500.
Bought office supplies on cash
basis, Php500.

Office Supplies 500

Cash 500
Purchased delivery equipment
worth Php70,000, on account.
Purchased delivery equipment
worth Php70,000, on account.

Delivery Equipment 70,000

Accounts Payable 70,000
 JOURNALIZING
MERCHANDISING
TRANSACTIONS
There are two ways of
journalizing merchandising
transactions, namely:

1. By using Simple Journal, and

2. By using Special Journals
By Using Simple Journal
 or also called the “General
Journal”
commonly used in journalizing
any business transactions
 this kind of journal has only two
(2) money column.
 the kind of journal that is used to
record service business
transactions.
 Recording Purchases,
Purchase Returns and
Allowances, and Purchase
Discount.
When purchasing goods or
merchandise for resale, the buyer
can either pay cash or purchase it
on credit.
The entry to record the purchase of
merchandise is debit to Purchases
account, and credit to Cash (if on
cash basis), Accounts Payable (if
on account) & Notes Payable (if
supported by promissory note).
Example:

A. Marquez Co., purchased

merchandise worth Php15,000, on
cash basis
 PERIODIC INVENTORY
GENERAL JOURNAL
Page No. 1
ACCOUNT TITLES &
DATE EXPLANATIONS F DEBIT CREDIT
 2015                         
 A  Purchases     15000            
      Cash                 15000  
    To record the merchandise                       
     purchased on cash basis.                       
                           
                           
 PERPETUAL INVENTORY
GENERAL JOURNAL
Page No. 1
ACCOUNT TITLES &
DATE EXPLANATIONS F DEBIT CREDIT
 2015                         
 A  Merchandise Inventory     15000            
      Cash                 15000  
    To record the merchandise                       
     purchased on cash basis.                       
                           
                           
Example:

B. Purchased goods from Puregold

Store, Php20,000, on account.
 PERIODIC INVENTORY
GENERAL JOURNAL
Page No. 1
ACCOUNT TITLES &
DATE EXPLANATIONS F DEBIT CREDIT
 2015                         
 B  Purchases     20000            
      A/P – Puregold Store                 20000  
    To record the merchandise                       
     purchased on account.                       
                           
                           
 PERPETUAL INVENTORY
GENERAL JOURNAL
Page No. 1
ACCOUNT TITLES &
DATE EXPLANATIONS F DEBIT CREDIT
 2015                         
 B  Merchandise Inventory     20000            
      A/P – Puregold Store                 20000  
    To record the merchandise                       
     purchased on account.                       
                           
                           
Example:

C. AIC Store purchased

merchandise from Coca-Cola Co.
by issuing a promissory note worth
Php30,000.
 PERIODIC INVENTORY
GENERAL JOURNAL
Page No. 1
ACCOUNT TITLES &
DATE EXPLANATIONS F DEBIT CREDIT
 2015                         
  C  Purchases     30000            
      N/P – Coca-Cola Co.                 30000  
    To record the merchandise                       
     purchased by issuing a                       
     promissory note.                       
                           
 PERPETUAL INVENTORY
GENERAL JOURNAL
Page No. 1
ACCOUNT TITLES &
DATE EXPLANATIONS F DEBIT CREDIT
 2015                         
  C  Merchandise Inventory     30000            
      N/P – Coca-Cola Co.                 30000  
    To record the merchandise                       
     purchased by issuing a                       
     promissory note.                       
                           
Example:

D. T. Lee bought Php25,000

merchandise by paying Php15,000
down payment, and the balance is
on account.
 PERIODIC INVENTORY
GENERAL JOURNAL
Page No. 1
ACCOUNT TITLES &
DATE EXPLANATIONS F DEBIT CREDIT
 2015                         
  D  Purchases     25000            
      Cash                 15000  
    Accounts Payable                 10000  
    To record the merchandise                       
      purchased by giving a                       
      down payment and the                       
    balance is on account.                       
 PERPETUAL INVENTORY
GENERAL JOURNAL
Page No. 1
ACCOUNT TITLES &
DATE EXPLANATIONS F DEBIT CREDIT
 2015                         
  D  Merchandise Inventory     25000            
      Cash                 15000  
    Accounts Payable                 10000  
    To record the merchandise                       
      purchased by giving a                       
      down payment and the                       
    balance is on account.                       
Example:

E. DBTC bought Php85,000

merchandise by paying Php50,000
down payment, and issued a
promissory note for the balance.
 GENERAL JOURNAL
Page No. 1
ACCOUNT TITLES &
DATE EXPLANATIONS F DEBIT CREDIT
 2015                         
  E  Purchases     85000            
      Cash                 50000  
    Notes Payable                 35000  
    To record the merchandise                       
      purchased by giving a                       
      down payment and the                       
    balance is supported by a                       
    promissory note.                       
Example:

F. D. Dy purchased Php50,000
worth of merchandise. He gave a
down payment of Php15,000,
issued a Php20,000 promissory
note and promised to pay the
balance within ten days.
 GENERAL JOURNAL
Page No. 1
ACCOUNT TITLES &
DATE EXPLANATIONS F DEBIT CREDIT
 2015                         
  F  Purchases     50000            
      Cash                 15000  
    Accounts Payable                 15000  
    Notes Payable                 20000  
    To record the merchandise                       
      purchased by giving a                       
    down payment and promis-                       
    sory note and the balance                       
      is on account.                       
 GENERAL JOURNAL
Page No. 1
ACCOUNT TITLES &
DATE EXPLANATIONS F DEBIT CREDIT
 2015                         
  F  Merchandise Inventory     50000            
      Cash                 15000  
    Accounts Payable                 15000  
    Notes Payable                 20000  
    To record the merchandise                       
      purchased by giving a                       
    down payment and promis-                       
    sory note and the balance                       
      is on account.                       
Example:

G. Purchased merchandise worth

Php45,000 by giving 50% down
payment and the balance is on
account.
 GENERAL JOURNAL
Page No. 1
ACCOUNT TITLES &
DATE EXPLANATIONS F DEBIT CREDIT
 2015                         
  G  Purchases     45000            
      Cash                 22500  
    Accounts Payable                 22500  
    To record the merchandise                       
      purchased by giving a                       
      down payment and the                       
    balance is on account.                       
                           
                           
 GENERAL JOURNAL
Page No. 1
ACCOUNT TITLES &
DATE EXPLANATIONS F DEBIT CREDIT
 2015                         
  G  Merchandise Inventory     45000            
      Cash                 22500  
    Accounts Payable                 22500  
    To record the merchandise                       
      purchased by giving a                       
      down payment and the                       
    balance is on account.                       
                           
                           
Purchase Returns and Allowances
When goods delivered to the buyer are
of inferior quality, not within the
purchase order specification, defective,
or are damaged and the buyer is not
responsible for such damages, the
seller allows the buyer to return the
goods and makes the corresponding
deductions from the customer’s
account.
Purchase Returns and Allowances
Or in case of cash purchases, a
corresponding cash refund is given.
Sometimes the buyer is not required to
return the goods, and the seller in that
case make the necessary deductions
on his account which is called
allowance.
Example:
K. Jang returned Php1,500 worth of
defective goods he purchased on cash
basis.
 GENERAL JOURNAL
Page No. 1
ACCOUNT TITLES &
DATE EXPLANATIONS F DEBIT CREDIT
 2015                         
  Cash     1500                 
      Purchase Ret. & Allow.                       1500  
    To record the defective  
    merchandise returned.                       
                          
                          
                          
                           
                           
 GENERAL JOURNAL
Page No. 1
ACCOUNT TITLES &
DATE EXPLANATIONS F DEBIT CREDIT
 2015                         
  Cash     1500                 
      Merchandise Inventory                       1500  
    To record the defective  
    merchandise returned.                       
                          
                          
                          
                           
                           
If the purchase is on account basis,
the seller allows a reduction in the
invoice price, thus, reducing the
liability of the buyer.
Example:
On July 19, A. de Leon returned
Php5,000 of the damaged goods he
purchased on credit.
 GENERAL JOURNAL
Page No. 1
ACCOUNT TITLES &
DATE EXPLANATIONS F DEBIT CREDIT
 2015                         
Jul  19 Accounts Payable     5000                 
      Purchase Ret. & Allow.                       5000  
    To record the defective  
    merchandise returned.                       
                          
                          
                          
                            
                            
 GENERAL JOURNAL
Page No. 1
ACCOUNT TITLES &
DATE EXPLANATIONS F DEBIT CREDIT
 2015                         
Jul  19 Accounts Payable     5000                 
      Merchandise Inventory                       5000  
    To record the defective  
    merchandise returned.