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    Cash Discounts & Trade Discounts I. Drill

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    Arny Maynigo
    The document provides information on inventory systems, transportation costs, and cash and trade discounts. It then provides examples to practice the periodic inventory system, including calculating cost of goods sold and ending inventory. Finally, it presents a multi-step accounting problem to practice recording transactions under both perpetual and periodic inventory systems.

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    Cash Discounts & Trade Discounts I. Drill

    Uploaded by

    Arny Maynigo
    53 views3 pages
    The document provides information on inventory systems, transportation costs, and cash and trade discounts. It then provides examples to practice the periodic inventory system, including calculating cost of goods sold and ending inventory. Finally, it presents a multi-step accounting problem to practice recording transactions under both perpetual and periodic inventory systems.

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    Session-34-Students-Copy 2.docx

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    The document provides information on inventory systems, transportation costs, and cash and trade discounts. It then provides examples to practice the periodic inventory system, including calculating cost of goods sold and ending inventory. Finally, it presents a multi-step accounting problem to practice recording transactions under both perpetual and periodic inventory systems.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    53 views3 pages

    Cash Discounts & Trade Discounts I. Drill

    Uploaded by

    Arny Maynigo
    The document provides information on inventory systems, transportation costs, and cash and trade discounts. It then provides examples to practice the periodic inventory system, including calculating cost of goods sold and ending inventory. Finally, it presents a multi-step accounting problem to practice recording transactions under both perpetual and periodic inventory systems.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    ACCOUNTING TURORIAL AND BRIDGING PROGRAM

    SESSION 3: MERCHANDISING I
    OCTOBER 24, 2020

    Inventory Systems
    PERPETUAL INVENTORY SYSTEM
    The inventory account is continuously updated. At the time of sale, the cost
    of sales is determined and recorded by a debit to the cost of sales account
    and a credit to inventory account.
    PERIODIC INVENTORY SYSTEM
    No entries are made to the inventory account as the merchandise is bought and
    sold. When Goods are purchased, a separate set of accounts – purchases,
    purchases discounts, purchases returns and allowances, and transportation in –
    is used to accumulate information on the net cost of the purchases.
    Under this method, you are required to prepare a “Cost of Goods Sold
    Schedule”.

    Transportation Cost
    Commonly used Shipping terms:
    FOB Destination- the seller shoulders the shipping cost
    FOB Shipping Point- the buyer shoulders the shipping cost
    Freight Collect- the buyer pays the shipping cost
    Freight Prepaid- the seller pays the shipping cost
    Cash Discounts & Trade Discounts

    I. Drill (3):
    1. A company using the periodic inventory system has the following account balances: Merchandise Inventory
    at the beginning of the year, 4,000; Transportation-In, 450; Purchases, 12,000; Purchase returns and
    allowances, 2,300; Purchase Discounts, 220.

    1.1. How much is the Cost of Merchandise Purchased?


    1.2. With the given data above, assume that the ending Inventory was 1,300. Compute for the Cost of
    Goods Sold.
    1.3. With the given data above, assume that the Cost of Goods Sold was 12,000. Compute for the ending
    Inventory.

    2. Use the following information to answer the next four questions


    Sales 750,000
    Sales Returns & Allowances 15,000
    Sales Discounts 10,000
    Purchases 170,000
    Purchases Returns & Allowances 20,000
    Transportation-In 30,000
    Selling Expenses 75,000
    General and Administrative Expenses 275,000
    Beginning Merchandise Inventory 55,000
    Ending Merchandise Inventory 35,000

    2.1. Net sales


    2.2. Net Purchases
    2.3. Cost of Goods Sold
    2.4. Profit
    3. Compute for the Accounts Receivable & prepare the Journal Entries (Sale & Collection). Assuming that
    collection of such is within the given terms.

    3.1. Sold merchandise totaling 29,000 FOB destination, freight prepaid; terms 2/10, n/30. Transportation
    Cost, 1,900.

    3.2. Sold merchandise totaling 29,000 FOB shipping point, freight collect; terms 2/10, n/30. Transportation
    Cost, 1,900.

    3.3. Sold merchandise totaling 29,000 FOB destination, freight collect; terms 2/10, n/30. Transportation
    Cost, 1,900.

    3.4. Sold merchandise totaling 29,000 FOB shipping point, freight prepaid; terms 2/10, n/30. Transportation
    Cost, 1,900.
    II. PROBLEM (APPLICATION) :
    Create the following requirements for both Inventory Systems (Perpetual & Periodic Inventory System):
    Journal entries; Post Transactions to the Ledger; 3. Prepare the Trial Balance; 4. Prepare the following
    Financial Statements: a. Balance Sheet; b. Income Statement; c. Statement of Cash flow; d. Statement
    of Changes in Owner’s Equity; 5. Journalize and Post Closing Entries; 6. Prepare Post-Closing Trial
    Balance.

    JEY PYA opened J.P Merchandising Store. The following transactions occurred during the
    month of August 2019:

    Aug 1 Jey invested P128,000 in the business.


    2 Acquired Computer Set for P21,000. Jey paid 5,000 and issued a promissory note for
    the remaining balance.
    2 Acquired supplies for cash, P1,200.
    3 Purchase P81,900 of merchandise from Alpas company on account.
    Terms: FOB Destination, 2/10, n/30.
    5 Sold merchandise to Lalas for P48,600 on account.
    Terms: FOB Destination, 2/10, n/30.
    The cost of merchandise sold was P28,880.
    Paid P550 freight on the same day.
    7 Received collections from customers billed on sales of P48,600 on Aug 5.
    9 Returned merchandise purchased from Alpas Company, P380.
    11 Paid the amount due from Aug 3 transaction.
    13 Purchase merchandise P12,300 and additional supplies P450 for cash.
    15 Paid 15th month salary, P8,000.
    16 Received refund for poor quality of merchandise from a supplier on cash purchase
    made on Aug 13, P870.
    18 Sold merchandise to various customers, P24,300.
    The cost of merchandise is P16,500.
    19 Purchase 15,800 of merchandise from Enola Shop.
    FOB Shipping point, terms, 2/10, n/30.
    23 Receive sales returns, P3,800 from various customers. It's cost is P2,900.
    24 Borrowed money from bank, signed promissory note for P13,500.
    24 Paid freight on Aug 19 purchase, P580.
    26 Sold merchandise on account for P36,800 terms, 2/10, n/30 FOB Destination. The
    Merchandise sold had a cost of P21,300. Freight-out; P230.
    28 Jey Pya withdrew cash from the business, P9,000.
    30 Paid Enola Shop in full.
    31 Paid Salary to employees, P8,000.
    31 Paid GraphPub for 1 month advertisement of the store, P1,580.
    31 Paid Rent and Utilities expenses for the month, P2,800 and P700 respectively.

    ** Inventory count at the end of the month: P43,920

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