Basic Accounting - Q6

I.
Identification
___________________1. It is an account whose normal balance is opposite the balance of the account it
reduces.
___________________2. The term of shipment wherein the buyer incurs all transportation costs after
the merchandise is loaded on a railroad car or truck at the point of shipment.
___________________3. The excess of net sales over the cost of goods sold.
___________________4. It is a business of buying and selling products rather than services.
___________________5. It is a deduction from the gross invoice price that the buyer can take only if the
invoice is paid within a specified period of time.
___________________6. Term of shipment wherein the seller ships the goods to their destination
without charge to the buyer.
___________________7. It is the amount of the merchandise returned by a buyer that is considered a
cancellation of a sale.
___________________8. When the seller pays the freight at the time of shipment.
___________________9. A document prepared by the seller of merchandise and sent to the buyer that
contains the details of a sale, such as the number of units, unit price, total
price billed, terms of sale, and manner of shipment.
___________________10. It is the cost to the seller of the goods sold to customers.
___________________11. When the buyer pays the freight bill upon the arrival of the goods.
___________________12. A document sent from the purchasing department to a supplier requesting that
merchandise or other items be shipped to the purchaser.
___________________13. It is the account used to record freight costs incurred in the acquisition of
merchandise.
___________________14. It is a note issued by the seller to the buyer indicating the amount and the
reason for which the customer’s accounts is to be credited.
___________________15. It provides an accounting record that continuously discloses the amount of
inventory.
___________________16. Under this inventory system, the ending merchandise inventory is determined
by making a physical measurement of the goods on hand at the end of the
period.
___________________17. It is a deduction from the list price given by the seller to encourage the buyer
to buy more.
___________________18. A contra account to purchase that reduces the recorded gross invoice cost of
the purchase to the price actually paid.
___________________19. This document evidences the receipt of cash by the seller.
___________________20. It is a document issued by the carrier (ex. Trucking, Shipping or Airline
Compnay).
II. Complete the missing amounts
Invoic List Freight Freight Purchase Credit Trade

e Date Price Terms Charges Return and Terms Discount Date Paid
Allowances
Page 1 of 3
July 1 P448,00 FOB Shipping 8,000 P48,000 2/10, 20% July 8
0 Point, n/30
Freight Prepaid
July 4 252,000 FOB 18,000 0 1/10, 25% July 15
Destination, n/30
Freight Collect
July 2 180,000 FOB Shipping 4,000 14,000 3/10, 30% Juy 11
Point, n/30
Freight Collect
July 3 92,000 FOB 2,000 18,000 2/10, 40% July 14
Destination, n/30
Freight Prepaid
Required:
Calculate the following for each cases. (Show your computation)
1. Accounts Payable
2. Amount of Purchase Discount
3. Amount of Cash Paid
III. Complete the missing amounts (Show your computation)
Case 1 Case 2 Case 3 Case 4

Sales P200,000 P300,000 P500,000
Merchandise Inventory, Beginning 50,000 50,000 150,000
Purchases 150,000 100,000 350,000
Transportation In 5,000 5,000 10,000 10,000
Purchase discount 2,000 2,000 5,000 5,000
Goods available for sale 253,000 110,000
Merchandise Inventory, Ending 53,000 75,000
Gross Profit 83,000 50,000
Operating Expense 20,000 60,000
Operating Profit (27,000) 25,000 (40,000)
IV. Journal Entries
Aguinaldo Company purchased merchandise with a list price of P60,000, FOB Shipping Point,
freight prepaid, from Del Pilar Company on August 15, 2018. Trade discounts of 20% were
allowed, and credit terms were 2/10, n/30. Del Pilar Company paid freight charges of P750 on
August 15, 2018. Aguinaldo Company requested a purchase allowance of P1,410 because
some of the merchandise had been damaged in transit. On August 20, Del Pilar granted the
allowance. Payment was made on the last day of the discount period.
Required:
Record all the entries required on the books of both the buyer and the seller.
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Basic Accounting - Q6

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I.

II. Complete the missing amounts

Invoic List Freight Freight Purchase Credit Trade

III. Complete the missing amounts (Show your computation)

Case 1 Case 2 Case 3 Case 4

IV. Journal Entries

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