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ACC111 Activity 31

The document provides sample journal entries for various purchase and sale transactions for General Pharmacy and two case studies involving transactions between companies. For General Pharmacy, it records purchases of inventory on account and for cash, sales for cash and on account, returns, and payment of accounts. The case studies provide additional examples of purchases on account with terms, returns, and payment of accounts. Sample journal entries are provided for the transactions from the perspective of both companies involved.

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Cali Siobhan
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69 views4 pages

ACC111 Activity 31

The document provides sample journal entries for various purchase and sale transactions for General Pharmacy and two case studies involving transactions between companies. For General Pharmacy, it records purchases of inventory on account and for cash, sales for cash and on account, returns, and payment of accounts. The case studies provide additional examples of purchases on account with terms, returns, and payment of accounts. Sample journal entries are provided for the transactions from the perspective of both companies involved.

Uploaded by

Cali Siobhan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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ANSWER KEY ACTIVITY 31

Activity 31. In this activity you are going to apply the learning that you get from the essential
knowledge. Prepare the correct journal entries of the following transactions.

CASE 1
General Pharmacy a business engaged in buying and selling of medicines and other related
products has the following transactions for the month of March 2020. The entity buys
merchandise on credit with a terms of 3/10, n/45 and sell merchandise on credit terms of 1/5,
n/30. But there are also cases where the entity buy and sell merchandise in cash. The company
uses the periodic system of recording inventory.

March 4- Purchased medicines and other related products from Ipil-ipil Pharmaceutical
Company on credit for P120,000. FOB Shipping point. Paid Allied Services for the freight
amounting to P2,500.
JOURNAL ENTRY
MAR. 4 PURCHASES P120,000
ACCOUNTS PAYABLE- Ipil-ipil Pharm Co. P120,000
Terms: FOB S.P. 3/10, N/45
#
FREIGHT IN P2,500
CASH P2,500
PAYMENT OF FREIGHT CHARGES

March 5- Sold merchandise (MDSE) to various customers for cash P 36,000.


JOURNAL ENTRY
MAR. 5 CASH P 36,000
SALES P 36,000
Sold MDSE for cash
#

March 6- Returned defective MDSE to Ipil-ipil amounting to P10,000. Received returned from
customer on March 5 for wrong specification and refunded the amount paid P1,200.
JOURNAL ENTRY
Mar 6 ACCOUNTS PAYABLE – Ipil-ipil Pharm Co P10,000
PURCHASE RETURNS AND ALLOW P10,000
Returned of defective MDSE to supplier
#
SALES RETURNS & ALLOW P1,200
CASH P1,200
Returned MDSE from customer
March 7- Bought MDSE from Barato Company in cash P60,000.
JOURNAL ENTRY:
Mar 7 Purchases P60,000
Cash P60,000
Purchased MDSE in cash

March 9- Sold MDSE on credit to Laguna Corporation amounting to P72,000.


JOURNAL ENTRY:
Mar 9 Accounts Receivable -Laguna Corp P72,000
Sales P72,000
Terms: 1/5 n/30

March 10- Paid in full account with Ipil-ipil Pharmaceutical Company.


JOURNAL ENTRY:
Mar 10. Accounts Payable-Ipi-ipil. P110,000
Cash P106,700
Purchase disc. 3,300
Full payment of account.

March 12- Received returned from Laguna Corporation for wrong brand of medicine delivered
on March 9 amounting to P5,000.
JOURNAL ENTRY:
Mar 12. Sales Return & Allowances. . . .. P5,000
Accts. Rec’ble-Laguna P5,000
Returned MDSE from the customer

March 13- Received full payment from Laguna Corporation.


JOURNAL ENTRY:
Mar 13. Cash. . . . . . .. . . . . . P 66,330
Sales Discount. 670
Accts. Rec’ble-Laguna. . . . P67,000
Full collection of account.

CASE 2
On April 2, 2020 Happy Company purchased MDSE from Enjoy Corporation with a list price of
P450,000; less:10% 2/10, n/30. Terms is FOB shipping point freight prepaid. Amount of freight
paid by Enjoy Corporation is P6,500. Happy Company returned to Enjoy Corporation damaged
MDSE worth P10,000 at list price. On April 12, Happy Company paid in full the account with
Enjoy Corporation. Prepare the correct entries to record the above transaction in the books of
Happy Company. Happy uses the periodic system of recording inventory.
April 2, 2020
Purchases . . . . 405,000
A/P-Enjoy Corp. 405,000
Terms: Less: 10%; 2/10, n/30
#
Freight In . . . 6,500
A/P- Enjoy Corp 6,500
Freight cost of MDSE bought
#
A/P- Enjoy Corp 9,000
Purchase returns & Allow . . 9,000
Returned of damaged MDSE
#
APRIL 12
A/P- Enjoy Corp. . . 402,500
Cash . . . . . . . . . . . . . . . . . 394,580
Purchase Discount . .. . . . . 7,920 ( 396,000 x .02)
Payment of account

How much is the cost of the MDSE purchased by Happy Corp.?


Invoice Price . . . 405,000. Purchases. 405,000
Less: Purch ret. 9,000
Purch Disc. 7,920
Net Purchases. 388,080
Add: Freight In. 6,500
Total cost 394,580
If sold at 25% above cost, how much is the selling price? P394,580 x 1.25=P493,225
Selling Price . . . . . . . . . (394,580 x1.25%). P493,225
Cost. 100%. 394,580
Gross profit. 25% 98,645

if sold at 20% of selling price, how much is the selling price? In this case the gross margin is
20% of selling price therefore the selling price is 100% and the cost is 80% so divide the cost
with 80% to get the selling price.
Selling price=. 100% 493,225 (394,580. / .80)
Cost. =. 80% 394,580.
Gross Profit- 20%. 98,645

if sold at 30% of selling price, how much is the selling price?=P563,685.71 (P394,580/.80)
If sold at 40% above cost, how much is the selling price?=P552,412 (P394,590 x 1.40)
CASE 3 Record the transactions in CASE 2 in the books of Enjoy Corporation
April 2, 2020. Enjoy Corp
A/R- Happy Co. . . . . . 405,000
Sales . . . . . . . . . . . . . . . . 405,000
Terms Less: 10% 2/10, n/30

A/R- Happy Corp. 6,500


Cash . . . . . . .. 6,500
Payment for freight charges
#
Sales & Ret & Allow . . 9,000
A/R-Happy Corp. . . . . 9,000
Returned of damaged MDSE.

APRIL 12
Sales discount . . . . . . 7,920
Cash . . . . .. . . . . . . . 394,580
A/R-Happy Corp. . . . . . . 402,500
Collection of account

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