Académique Documents
Professionnel Documents
Culture Documents
ACCOUNTING
PRINCIPLES/
FUNDAMENTALS
OF ACCOUNTING
TEXTBOOK: SIMPLIFIED ACCOUNTING FOR
BUSINESS (INTERNATIONAL EDITION)
AUTHORS: ZENAIDA VERA-CRUZ AND
MARIBEL VERA-CRUZ
TOPIC 4:
PROCESSING
TRANSACTIONS
OF A
MERCHANDISING
BUSINESS
Coverage
Journalizing or recording various
business transactions by applying the
rules of double entry system with the
use of special journals
SERVICING AND
MERCHANDISING BUSINESSES
COMPARED
SERVICING
BUSINESS
MERCHANDISING
BUSINESS
Cash
Phase 1:
Render
Service to
Customers
Phase 2:
Collect
from
Custome
rs
Cash
Phase 1:
Buy
Merchandise
Phase 2:
Sell to
custome
rs on
account
Phase 3:
Collect
from
Custome
rs
NOMINAL ACCOUNTS OF
MERCHANDISING BUSINESS
Selling Activities
Purchasing
Activities
Administrative and
Operating
6
Activities
NOMINAL ACCOUNTS OF
MERCHANDISING BUSINESS
Computation of Cost of Sales
Merchandise Inventory, Jan 1 2014
10,000
Add: Net Purchases:
Purchases
P 75,000
Freight In
2,000
Purchase Returns
( 5,000)
Purchase Allowances
( 1,000)
Purchase Discounts
( 1,000)
70,000
Total Goods Available for Sale
80,000
ACCOUNTS OF A SOLE
PROPRIETORSHIP ENGAGED IN
TRADING
ACCOUNTS OF A SOLE
PROPRIETORSHIP ENGAGED IN
TRADING
15
88,200
98,200
Selling Activities
Selling activities are based on revenue
principle that revenue is recognized when
realized or realizable and earned
In a trading or merchandising business,
revenue is recorded at the point of sale
In selling, the trader or seller usually adds a
markup to the cost of the product he
purchased. This is called the gross profit
Gross profit will cover the business operating
expenses and the residual amount would 34
either be net income or loss
37
Illustration
46
List Price
Terms
P100,000
30, n/30
5 to 10 items
P100,000
More than 10 to 20
items
P100,000
Books
Books
per unit
c) Freight
on purchase, P2,000
e) Units
106,000
P 46,500
40,000
6,500