SHORT PROBLEMS TO BE ANSWERED ON OR BEFORE MARCH 20,2020

1. Using the following information, what is the amount of cost of merchandise sold?

Purchases P32,000 Purchases discounts P960

Merchandise inventory 5,700 Merchandise inventory 6,370
September 1 September 30
Sales returns and 910 Sales 63,000
allowances
Purchases returns and 1,200 Freight In 1,040
allowances

ANSWER :
Merchandise Inventory September 1 P5,700
Purchase P32,000
Less: Purchase Allowances & Return P1,200
Purchase Discount 960 2,160
Net Purchases 29,840
Add: Freight In 1,040
Cost of Merchandise purchase 30,880
Merchandise for sale 36,580
Less: Merchandise Inventory September 30 6,370
Cost of Merchandise Sold P30,210

2. Using the following information, what is the amount of gross profit?

Purchases P32,000 Purchases discounts P960
Merchandise inventory 5,700 Merchandise inventory 6,370
September 1 September 30
Sales returns and 910 Sales 63,000
allowances
Purchases returns and 1,200 Freight In 1,040
allowances

ANSWER:
Sales P63,000
Less: Sales Return & Allowance 910
Net Sales 62,090
Cost of Merchandise Inventory 30,210
Gross Profit P31,880

3. Using the following information, what is the amount of net sales?

Purchases P32,000 Purchases discounts P960

Merchandise inventory 5,700 Merchandise inventory 6,370
September 1 September 30
Sales returns and 910 Sales 63,000
allowances
Purchases returns and 1,200 Freight In 1,040
allowances
ANSWER:
Sales P63,000
Less: Sales Return & Allowance 910
Net Sales P62,090

4. Using the following information, what is the amount of merchandise available for sale?

Purchases P32,000 Purchases discounts P960

Merchandise inventory 5,700 Merchandise inventory 6,370
September 1 September 30
Sales returns and 910 Sales 63,000
allowances
Purchases returns and 1,200 Freight In 1,040
allowances

ANSWER :
Merchandise Inventory September 1 P5,700
Purchase P32,000
Less: Purchase Allowances & Return P1,200
Purchase Discount 960 2,160
Net Purchases 29,840
Add: Freight In 1,040
Cost of Merchandise purchase 30,880
Merchandise for sale P36,580

5. Dorman Co. sold merchandise to Smith Co. on account, P18,000, terms 2/15, net 45. The cost
of the merchandise sold is P15,500. Dorman Co. issued a credit memo for P1,750 for merchandise
returned that originally cost P1,400. The Smith Co. paid the invoice within the discount period. What
is amount of net sales from the above transactions?

Answer: P15, 925 Net Sales

(Sales P18,000 – Sales Return & Allowances P1,750 – Sales Discount P325 = Net Sales P15,925)

6. A sales invoice included the following information: merchandise price, P5,000; freight, P900;
terms 1/10, n/eom, FOB shipping point. Assuming that a credit for merchandise returned of P700 is
granted prior to payment and that the invoice is paid within the discount period, what is the amount of
cash that should be received by the seller?

ANSWER:

Merchandise 5000 – Return 700 – Discount 43 + Freight 900 = 5,157 Cash

7. Complete the following data taken from the condensed income statements for merchandising
Companies X, Y, & Z.

Company X Company Y Company Z

Net income or (loss) 220 ??? (70)
Sales ??? 1,315 890
Gross Profit 435 ??? 465
Operating Expenses ??? 565 ???
Cost of merchandise sold 330 775 ???

ANSWER:
Company X Company Y Company Z
Net income or (loss) 220 25 (70)
Sales 765 1,315 890
Gross Profit 435 540 465
Operating Expenses 215 565 535
Cost of merchandise sold 330 775 425
PTS: 1 DIF: Difficult OBJ: 06-02
NAT: AACSB Analytic | AICPA FN-Measurement | ACBSP-APC-09-Financial Statements

8. Using the following data taken from Martinez Inc., prepare the cost of merchandise sold
section of the income statement for the year ended May 31, 2011.
Merchandise inventory, June 1, 2010 P393,250
Merchandise inventory, May 31, 2011 380,100
Purchases 1,579,600
Purchases returns and allowances 81,200
Purchases discounts 16,500
Sales 2,060,000
Freight in 59,250
ANS:
PTS: 1 DIF: Difficult OBJ: 06-02
NAT: AACSB Analytic | AICPA FN-Measurement | ACBSP-APC-09-Financial Statements

ANSWER:
Merchandise Inventory June 1, 2010 P393,250
P1,579,60
Purchase 0
Less: Purchase Allowances & Return P81,200
Purchase Discount 16,500 97,700
Net Purchases 1,481,900
Add: Freight In 59,250
Cost of Merchandise purchase 1,541,150
Merchandise for sale 1,934,400
Less: Merchandise Inventory May 31, 2011 380,100
P1,554,30
Cost of Merchandise Sold 0
9. Prepare (a) a single-step income statement, (b) a statement of owner's equity, and (c) a balance
sheet in report form from the following data for Kooper Co., taken from the ledger after adjustment on
December 31, 2010 the end of the fiscal year.

Accounts Payable P  97,200

Accounts Receivable 64,300
Accumulated Depreciation - Office Equipment 72,750
Accumulated Depreciation - Store Equipment 162,100
Administrative Expenses 56,500
Maeve Kooper, Capital 81,750
Cash 53,000
Cost of Merchandise Sold 121,700
Maeve Kooper, Drawing 52,000
Interest Expense 12,000
Merchandise Inventory 93,250
Note Payable, Due 2012 154,000
Office Equipment 149,750
Prepaid Insurance 6,500
Rent Revenue 17,500
Salaries Payable 28,700
Sales (net) 365,500
Selling Expenses 41,500
Store Equipment 325,000
Supplies 4,000

ANSWER:

A.
Kooper Co
Income Statement
For the year ended December 31, 2010
Revenues:
Net Sales P365,500
Rent Revenue 17,500
Total Revenues P383000
Expenses:
Cost of Merchandise Sold P121,700
Selling Expense 41,500
Administrative Expenses 56,500
Interest Expense 12,000
Total Expenses 231,700
Net Income P151,300

B.
 Kooper Co.
Statement of Owner's Equity
For the year ended December 31, 2010
Maeve Kooper, Capital P81,750
P151,30
Net Income for the year 0
Less: Withdrawals 52,000
Increase in owner's equity 99,300
Maeve Kooper, Capital, December 31, 2010 P181,050

C.
Kooper Co
Balance Sheet
December 31, 2010
Asset
Current Asset:
Cash P53,000
Account Receivable 64,300
Merchandise Inventory 93,250
Supplies 4,000
Prepaid Insurance 6,500
Total current assets P221,050
Property, Plant and Equipment:
Store Equipment P325,000
Less: Accumulated Depreciation - Store Equipment 162,100 P162,90
0
Office Equipment P149,750
Less: Accumulated Depreciation - Office Equipment 72,750 77,000
Total property, plant and equipment 239,900
Total Asset P460,950

Liabilities
Current Liabilities:
Accounts Payable P97,200
Salaries Payable 28,700
Total Current Liabilities P125,900
Long term Liabilities :
Note Payable (final payment due 2012) 154,000
Total Liabilities P279,900
Owner's Equity
Maeva Kooper, Capital 181,050
Total Liabilities and owner's equity P460,950
10. Using the perpetual inventory system, journalize the entries for the following selected
transactions:

(a) Sold merchandise on account, for P12,000. The cost of the merchandise sold was P6,500.
(b) Sold merchandise to customers who used MasterCard and VISA, P9,500. The cost of the
merchandise sold was P5,300.
(c) Sold merchandise to customers who used American Express, P2,900. The cost of the
merchandise sold was P1,700.
(d) Paid an invoice from First National Bank for P385, representing a service fee for processing
MasterCard and VISA sales.
(e) Received P4,325 from American Express Company after a P115 collection fee had been
deducted.

ANSWER

a Account Receivable 12000

Sales 12000

Cost of Merchandise sold 6500

Merchandise Inventory 6500

b Accounts Receivable 9500

Sales 9500

Cost of Merchandise sold 5300

Merchandise Inventory 5300

c. Account Receivables 2900

Sales 2900

Cost of Merchandise sold 1700

Merchandise Inventory 1700

Credit Card Expense 438

Cash 438

e Cash 4325
Accounts Receivable 4325
11. Journalize the following transactions:

July 3 Sold merchandise on account P3,750. The cost of the merchandise sold was
P2,000.
July 5 Issued credit memo for P1,050 for merchandise returned from sale on July 3rd.
The cost of the merchandise returned was P610.
July 12 Received check for the amount due for sale on July 3rd less return on July 5th.
July 17 Sold merchandise for P7,000 plus 6% sales tax to cash customers. The cost of the
merchandise sold was P3,830.

ANSWER:

Journal
Post
Date Description Ref Debit Credit
July 3 Accounts Receivable 3,750
Sales 3,750

Cost of Merchandise Sold 2,000

Merchandise Inventory 2,000

July 5 Sales Return and Allowances 1,050

Accounts Receivable 1,050

Merchandise Inventory 610

Cost of Merchandise Sold 610

July 12 Cash 2,700

Accounts Receivable 2,700

July 17 Cash 7,420

Sales Tax Liability 420
Sales 7,000

Cost of Merchandise Sold 3,830

Merchandise Inventory 3,830

12. Record the following transactions for Sparky’s Pet Shop using the general journal form provided
below. Assume Sparky’s uses a perpetual inventory system. Omit transaction descriptions from entries:

Date Transaction
August 1 Purchased P6,000 of merchandise on account, terms 2/10, n/30.
August 3 Returned P1,500 of merchandise purchased on August 1 due to defects.
August 7 Recorded cash sales for the first week of August P9,750; cost of the
merchandise was P4,000.
August 10 Sale on account made to a local breeder for P500, terms 1/10 net 30; cost of
the merchandise was P200.
August 11 Paid for the merchandise purchased on August 1, less return.
August 20 Received payment from sale of August 10. The customer took the discount.
ANSWER:

Date Accounts Debit Credit

August 1 Merchandise Inventory 6,000
Accounts Payable 6,000

August 3 Accounts Payable 1,500

Purchase Returns and Allowance 1,500

August 7 Cash 9,750

Sales 9,750

Cost of Merchandise Sold 4,000

Merchandise Inventory 4,000

August 10 Accounts Receivable 500

Sales 500

Cost of Merchandise Sold 200

Merchandise Inventory 200

August 11 Accounts Payable 4,500

Purchase Discount 90
Cash 4,410

August 20 Cash 495

Sales Discount 5
Accounts Receivable 500