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Comprehensive Problem - Merchandising Business

Cruz Trading is a retail company owned by Ms. Lucia Cruz that sells general merchandise. In August 2019, Cruz Trading engaged in various merchandise purchases and sales transactions. To calculate net income for the month, one must determine net sales, cost of goods sold, and total expenses using the functional expense method. An income statement for Cruz Trading for August 2019 should be prepared.

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Clarisse Alimot
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90 views

Comprehensive Problem - Merchandising Business

Cruz Trading is a retail company owned by Ms. Lucia Cruz that sells general merchandise. In August 2019, Cruz Trading engaged in various merchandise purchases and sales transactions. To calculate net income for the month, one must determine net sales, cost of goods sold, and total expenses using the functional expense method. An income statement for Cruz Trading for August 2019 should be prepared.

Uploaded by

Clarisse Alimot
Copyright
© © All Rights Reserved
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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Cruz Trading is a retail company owned by Ms. Lucia Cruz.

The business is engaged in selling general merchandise


clients and few VIP customers. The Company is employing periodic inventory system. The following transactions o
2019 (IGNORE VAT):

1-Aug

2-Aug

5-Aug

6-Aug

7-Aug

11-Aug

14-Aug

15-Aug

16-Aug

17-Aug

19-Aug

22-Aug

30-Aug

31-Aug
Requirements:
1)
2)
3)
rading is a retail company owned by Ms. Lucia Cruz. The business is engaged in selling general merchandise to various walk-in
s and few VIP customers. The Company is employing periodic inventory system. The following transactions occurred during August
IGNORE VAT):

Purchased merchandise from RTD Supply Co., P 300,000 under FOB Shipping point (freight prepaid). Freight cost is
P5,000. Terms of the purchase: 2/10, n/30

Bought merchandise from MBT Trading, P200,000

Cash sales from various walk-in customers, P 300,000

Sold merchandise to a VIP customer, Mr. Yap, P 200,000. Terms: 2/10, n/30. Freight cost paid by Cruz Trading is P2,000.

Returned defective goods worth P10,000 to MBT Trading

Paid RTD Supply Co. in full

Collected from Mr. Yap the total amount in full.

Paid various selling and distribution expenses:


Salaries to salesmen, P30,000
Commission to salesmen, P10,000
Rent of stores, P20,000
Store utilities, P5,000

Paid various general & administrative expenses


Office salaries, P30,000
Office rent, P10,000
Office utilities, P5,000

Sold merchandise worth P60,000 to ART Inc., a VIP customer under FOB Destination. Freight cost paid by Cruz Trading is P2,00

Cash sales from various walk-in customers, P100,000

Two walk-in customers returned some goods worth P5,000 bought from Cruz Trading due to wrong specification

Paid the following expenses:


Salaries to salesmen, P30,000
Commission to salesmen, P5,000
Office salaries, P30,000

The following adjustments have to be recorded:


Interest expense of P10,000 has to be accrued
Depreciation of office equipment and furniture, P15,000
Depreciation of store equipment and furniture, P10,000
Merchandise inventory on August 31 after the physical count is P 120,000

Calculate the net sales


Calculate the cost of goods sold
Prepare an Income Statement of Cruz Trading for the month ended August 31, 2019 using the function of expense method
ng is P2,000.

z Trading is P2,000
pense method

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