Accounting Merchandising Business Type Sample Problem
The following transactions pertain to the purchases of MASIPAGMAG-ARAL Company for the current year, its
1 Purchase of merchandise at an invoice price of P4,750,000 excluding freight. Terms are 2/10, n/30
2 Freight paid, P250,000. The freight is allocated to each purchase
3 Cash payment on purchases, P3,717,000, of which P1,617,000 was paid within the discount period
4 It is expected that all discounts on unpaid accounts payable will be lost
5 On December 31, one fifth of the merchandise remains on hand
Required:
a. Prepare journal entries to record the transactions
b. Compute inventory and cost of sales
1 PURCHASES 4,750,000.00
ACCOUNTS PAYABLE 4,750,000.00
2 FREIGHT IN 250,000.00
CASH 250,000.00
3 ACCOUNTS PAYABLE 3,750,000.00
PURCHASE DISCOUNTS 33,000.00
CASH 3,717,000.00
4 NO ENTRY GROSS METHOD
5 ENDING INVENTORY 1,000,000.00
INCOME SUMMARY 1,000,000.00
The following transactions pertain to the purchases of MASIPAGMAG-ARAL Company for the current year, its
1 Purchase of merchandise at an invoice price of P4,750,000 excluding freight. Terms are 2/10, n/30
2 Freight paid, P250,000. The freight is allocated to each purchase
3 Cash payment on purchases, P3,717,000, of which P1,617,000 was paid within the discount period
4 It is expected that all discounts on unpaid accounts payable will be lost
5 On December 31, one fifth of the merchandise remains on hand
Required:
a. Prepare journal entries to record the transactions
b. Compute inventory and cost of sales
1 PURCHASES 4,750,000.00
ACCOUNTS PAYABLE 4,750,000.00
2 FREIGHT IN 250,000.00
CASH 250,000.00
3 ACCOUNTS PAYABLE 3,750,000.00
PURCHASE DISCOUNTS 33,000.00
CASH 3,717,000.00
4 NO ENTRY GROSS METHOD
5 ENDING INVENTORY 1,000,000.00
INCOME SUMMARY 1,000,000.00
