Required: Prepare the journal entry for each transaction using periodic method and perpetual method.

Merchandising Transactions (part 1)

1. ABC Company purchased merchandise inventory amounting to P1,000,000 on account.
2. ABC Company purchased merchandise inventory amounting to P600,000. The company paid a
freight charges amounting to P3,000.
3. ABC company sold merchandise for P1,200,000 on account. The cost of merchandise inventory
is P800,000.
4. ABC company sold merchandise for P500,000. The cost of sales ratio is 60%. The company paid
freight charges amounting to P2,500.

Required: Prepare the journal entry for each transaction using periodic method and perpetual method.
Merchandising Transactions (part 2)
5. ABC Company purchased merchandise inventory amounting to P700,000. Terms of payment:
60% down payment, balance payable after 30 days. The company paid a freight charges
amounting to P5,000.
6. ABC Company returned P15,000 worth of defective inventory and received a debit memo from
its supplier.
7. ABC company sold merchandise for P550,000. Terms of payment: P200,000 down payment and
the balance is payable after 30 days. The company received a promissory note for the balance.
The gross profit rate is 40% based on sales. The company paid freight charges amounting to
P3,500.
8. A customer returned P20,000 worth of goods to ABC Company.

Required: Prepare the journal entry for each transaction using periodic method and perpetual method.
Merchandising Transactions (part 3)
9. ABC Company purchased merchandise inventory with a list price of P1,000,000. The company
received a trade discount of 5%. The company paid a freight charges amounting to P8,000.
10. ABC company sold merchandise with a list price of P750,000. The customers received a trade
discount of 5% and 2%. The gross profit rate is 40% based on cost. The company paid freight
charges amounting to P3,000.

Required: Prepare the journal entry for each transaction using periodic method and perpetual method.
Merchandising Transactions (part 4)
11. ABC Company purchased merchandise inventory amounting to P1,200,000. Terms of payment:
60% down payment, balance payable after 30 days on term of 2/10, N/30. The company paid a
freight charges amounting to P8,000.
12. The company paid the balance 9th day after the date of purchase.
13. Assuming the company paid the balance on the 30th day.
14. ABC company sold merchandise for P875,000. Terms of payment: P200,000 down payment and
the balance is payable after 30 days on term of 5/15, 1/20, N/30. The gross profit rate is 40%
based on sales. The company paid freight charges amounting to P5,500.
15. The company received the balance 12th day after the date of purchase.
16. Assuming the company received the balance on the 30th day.
Required: Prepare the journal entry for each transaction using periodic method and perpetual method.
Merchandising Transactions (part 5)
17. ABC Company purchased merchandise inventory amounting to P300,000 from XYZ Company.
The freight cost is P5,000 under the terms: 2/15, N/30, FOB Shipping point, Freight Collect.
18. ABC Company purchased merchandise inventory amounting to P400,000 from XYZ Company.
The freight cost is P7,500 under the terms: 2/15, N/30, FOB Shipping point, Freight prepaid.
19. ABC Company purchased merchandise inventory amounting to P500,000 from XYZ Company.
The freight cost is P10,500 under the terms: 2/15, N/30, FOB Destination, Freight Collect.
20. ABC Company purchased merchandise inventory amounting to P600,000 from XYZ Company.
The freight cost is P2,500 under the terms: 2/15, N/30, FOB Destination, Freight prepaid.
*the gross profit rate of XYZ Company is 40%.
Required: Prepare the journal entry of buyer and seller for each transaction using periodic method and
perpetual method.

Merchandising Transactions (part 6)

21. ABC Company purchased merchandise inventory with a list price of P1,000,000 from XYZ
Company. ABC Company received a 10%, 5% and 2% trade discount from XYZ Company The
freight cost is P5,000 under the terms: 2/15, N/30, FOB Shipping point, Freight Collect. Terms of
payment: 20% down payment and the balance is payable after 30 days.

Required: Prepare the journal entry for each transaction using periodic method and perpetual method.

COMPUTATION OF PURCHASES/ COST OF SALES/ SALES/ GROSS PROFIT

HOWK’s BODYBAG Store sells two brands of BODYBAG: Black and Gray. Purchases for the month
of October consisted of 30 Black brand units at P1,500 each and 20 Gray units at P1,800 each. At the
end of the month an inventory count showed that 12 Black brand units and 5 Gray brand units were still
on hand.

Required:
22. Compute for each brand: purchases, merchandise inventory at the end of October and cost of
sales.
23. Assume a Black brand sells for P2,400 and a Gray brand sells for P2,750. Compute for each
brand: sales revenue and gross profit on sales.

Still using the following information. Assume that in the following month another 25 Black brand
units and 20 Gray brand units were purchased from the suppliers at the same prices. And at the
end of the month only 18 Black brand units and 10 Gray units were on hand.
24. Compute for each brand: cost of purchases, total goods available for sale, merchandise inventory
end of November and the cost of sales.
25. Assuming the same sales prices, compute for each brand: sales revenue and the gross profit on
sales.
During the year MICHAEL Home and Garden purchased potteries, plants, dried flowers, candles and
other home and garden decors at a total cost of P300,000. For each of the following cases, calculate
the Total Goods Available for Sale(A) and the Cost of Sales(B):

Case Case 1 Case 2 Case 3 Case 4 Case 5

Beginning Inventory P0 P150,000 P780,360 P110,000 P0
Freight-In 15,000 0 40,000 27,000 25,900
Returns and Allowances 5,560 25,720 0 21,600 11,090
Discounts 0 45,900 0 0 19,550
Ending Inventory 0 0 750,348 75,500 85,000
A (26) (28) (30) (32) (34)
B (27) (29) (31) (33) (35)

The ledger accounts of the Christine SUSAN Bags for the year ended Dec. 31, 2018 are as follows:

Ac c u. De p re c ia tio n-O ff.Bld g . 150,000.00 No te s Pa ya b le d ue in 2 yrs. 200,000.00

Ac c u. De p re c ia tio n-O ff.Eq u ip t. 150,000.00 O ffic e Build ing 1,600,000.00
Ac c o unts Re c e iv a b le 136,000.00 O ffic e Eq uip me nt 570,000.00
Ac c o unts Pa ya b le 74,000.00 O ffic e Sup p lie s 42,000.00
C a sh 72,000.00 Pre p a id Ad v e rtising 75,000.00
Tra n sp o rta tio n In 72,000.00 Purc ha se s Disc o unts 172,000.00
In su ra nc e Exp e nse 75,000.00 Purc ha se s Re ts. & Allo w . 133,000.00
In te re st Exp e nse 208,000.00 Purc ha se s 2,643,000.00
SUSAN, C a p ita l 1,510,000.00 Sa la rie s Exp e nse 862,000.00
SUSAN, With d ra w a ls 200,000.00 Sa le s Disc o unts 161,000.00
La nd 400,000.00 Sa le s Re turns & Allo w . 187,000.00
M e rc ha nd ise Inv e nto ry 598,000.00 Sa le s 4,600,000.00
M o rtg a g e Pa ya b le 1,100,000.00 Tra v e l e xp e nse 188,000.00

Additional information:

a. Office supplies consumed during the year amounted to P17,000

b. Advertising Expense in the amount of P25,000 has expired during the year.
c. Salaries of P21,000 have accrued as at Dec. 31, 2018.
d. Depreciation on the office building and on the office equipment amounted P15,000 and P20,000,
respectively.
e. The Dec. 31, 2018 ending inventory is P723,000.

Required:
Prepare the worksheet.
Prepare the financial statements.
Prepare the adjusting and closing entries

COMPREHENSIVE PROBLEM

H. ACCOUNTING CYCLE FOR MERCHANDISE BUSINESS

The account of NOQUIT COMPANY as at December 1, 2018 are listed below:

Cash 214,000
Accounts receivable 338,000
Merchandise Inventory 426,000
Short-Term Investment 500,000
Office supplies 31,000
Prepaid insurance 48,000
Land 370,000
Building 900,000
Accum. depreciation – bldg 250,000
Equipment 800,000
Accum. depreciation – equip. 200,000
Accounts payable 172,000
Mortgage payable 1,200,000
NOQUIT Capital _______ 1,805,000
3,627,000 3,627,000

The following transactions occurred during the month of December 2018:

Dec. 1 Settled the accounts payable of P115,000 less 2% discount.

3 Collected the accounts receivable of P180,000 less 3% discount.
4 Sold merchandise on account to PAPACOY SUPPLIES, P210,000. Terms: FOB destination,
3/10, n/30. PAPACOY SUPPLIES paid the freight for P3,000.
5 Received returns from PAPACOY SUPPLIES, P25,000.
7 Purchased merchandise from OSTIQUE PRODUCTS, P232,000. Terms: FOB shipping point,
2/10, n/30. NOQUIT COMPANY paid P2,000 for the transportation cost.
9 Returned goods to OSTIQUE PRODUCTS, P12,000 acquired on December 7.
10 Paid interest on mortgage payable, P8,000.
11 Received payment from PAPACOY SUPPLIES for the amount due.
12 Sold merchandise to OANI SHOPPERS, P330,000. Terms: FOB shipping point, 3/10, n/30.
18 Received payment from OANI SHOPPERS from the December 12 sales.
19 Sold merchandise to NAVALES SHOP, P242,000. Term: FOB shipping point, 3/10, n/30.
NOQUIT COMPANY paid P5,000 for the freight.
20 Paid P9,000 for representation expense.
29 Received from NAVALES SHOP returned merchandise in the amount of P18,000 from the
December 19 sales.
30 The owner, Genevieve, withdraw merchandise for personal use. Cost – P20,000; Selling price –
P30,000.
Additional information
1. Salaries in the amount of P73,000 have accrued on December 31.
2. Insurance coverage with premium of P2,000 has expired at month-end.
3. Depreciation on the building and on the equipment for the month amounted to P3,000 and
P4,500, respectively.
4. Office supplies on hand at month-end amounted to P7,000.
5. There’s an accrued interest of P 2,800.
6. Short-term investment earned an unrecorded investment income amounting P 15,000.
7. A count of the inventory amounted to P453,000 on December 31, 2018.

REQUIRED

1. Post the Beginning Balances to the ledger (use T-account)

2. Journalize the transactions during December 2018. (Use periodic inventory system)
3. Post the journal to the T-account.
4. Prepare the Unadjusted Trial Balance
5. Prepare the adjusting journal entries
6. Prepare Worksheet reflecting the adjusted trial balance
7. Prepare Functional form Income Statement, Statement of Changes in Owner’s Equity and
Statement of Financial Position.
8. Prepare the closing entries.
9. Prepare the Post-Closing Trial Balance