Exercise 1-1 True or False

1. T
2. F
3. T
4. F
5. F
6. T
7. T
8. T

Exercise 1-2 Multiple Choice

1. B
2. A
3. C
4. A
5. A
6. A
7. A
8. D
9. A

Exercise 1-3

Book of Baligala Co. Book of Te Co.

Purchase 100,000
Jan. 12
Accounts payable 100,000

Accounts payable 20,000

Jan. 15 Accounts
PurchaseReceivable 100,000 20,000
returns & allowances
Sales 100,000

Accounts payable 80,000

Jan. 20 Purchase Discount 1,600
Cash in Bank 78,400
Jan. 12
Sales returns & allowances 20,000
Jan. 15 Accounts Receivable 20,000

Cash in Bank 78,400

Jan. 20 Sales Discount 1,600
Accounts Receivable 80,000
Exercise 1-4

V. Ayuban Company

General Journal Page. 1

2020 Particulars Folio DEBIT CREDIT
Mar 1 Cash in Bank   300,000  
    Furniture & Fixtures   150,000  
    M. Suelan, Capital     450,000
    To record owners investment      
           
  2 Taxes & Licenses   2,400  
    Cash in Bank     2,400
    To record payment of permits      
           
  4 Purchase   250,000  
    Notes Payable-J. Constantino     250,000
     To record equipment purchase      
           
   5 Purchase     15,000  
     Accounts Payable-J. Constantino     15,000
     To record purchase on account      
           
   8 Purchase    75,000  
     Cash in Bank     75,000 
     To record purchase      
           
   10 Cash in Bank    10,000  
     Sales     10,000 
     To record sales      
           
   11  Purchase   25,000  
     Accounts Payable-R. Ybanez Trading     25,000 
     To record purchase on account      
           
   15  Accounts Recievable-P. Pedronio Co.   15,000  
     Sales     15,000
     To record sales on account      
           
   17 Purchase     60,000  
     Cash in Bank     60,000
     To record purchase      
           
     Freight-In   1,000  
     Cash In Bank     1,000
     To record transportation cost      
           
           
General Journal Page. 2
2020 Particulars Folio DEBIT CREDIT
Mar 19 Cash in Bank   20,000  
    Sales   20,000
    To record sales    
         
     Freight-Out   1,500   
  Cash in Bank   1,500
    To record for transportation expense    
         
           
  20 Accounts Payable-R. Ybanez Trading   25,000  
    Purchase Discount     500
    Cash in Bank     24,500
     To record payment of account within discount period      
     
   23 Rent Expense   10,000
    Cash in Bank     10,000 
     To record rent payment      
     
   24 Sales Discount    450
     Cash in Bank   14,550  
     Accounts Receivable-P. Pedronio Co.     15,000 
  To record collection of account within discount period    
         
   26 Purchase     15,000  
     Accounts Payable-C. Poyot Co.     15,000 
     To record purchase on account    
           
     Freight-Out   800  
     Cash in Bank     800
     To record transportation expense    
         
   27 Purchase     19,000  
     Accounts Payable-S. Jabalon Co.     19,000
    To record purchase on account    
         
   28 Cash in Bank    7,840  
     Sales     7,840
    To record sales    
         
   29 Advertising Expense    2,500  
     Cash in Bank     2,500
     To record payment of advertisement      

Problem 1-1
Required: prepare journal entries to record the above transactions using (a) periodic method and (b) perpetual
method.

V. Merchandising
Jul Periodic Inventory System Perpetual Inventory System
5 Purchase 32,000 Merchandise inventory 32,000
Accounts payable 32,000 Accounts payable 32,000

Freight-In 1,500 Merchandise inventory 1,500

Cash in Bank 1,500 Cash in Bank 1,500
6 Purchase 4,250 Merchandise inventory 4,750
Freight-In 500 Accounts payable 4,750
Accounts payable 4,750
7 Purchase 4,590 Merchandise inventory 4,590
Accounts payable 4,590 Accounts payable 4,590

Freight-In 1,500 Merchandise inventory 1,500

Cash in Bank 1,500 Cash in Bank 1,500
15 Accounts payable 32,000 Accounts payable 32,000
Purchase discount 640 Merchandise inventory 640
Cash in Bank 31,360 Cash in Bank 31,360
16 Accounts payable 4,590 Accounts payable 4,590
Purchase discount 91.8 Merchandise inventory 91.8
Cash in Bank 4,498.2 Cash in Bank 4,498.2
31 Accounts payable 4,750 Accounts payable 4,750
Cash in Bank 4,750 Cash in Bank 4,750

Problem 1-2

Required: 1. Provide the journal entries under the Periodic and Perpetual system.
2. Compute for the cost of goods sold under each system. Physical count 44,600 in ending
inventory

Z. Tan Co.
Periodic Perpetual
Purchase 120,000 Merchandise Inventory 120,000
Accounts Payable 120,000 Accounts Payable 120,000
Freight-In 12,000 Merchandise Inventory 12,000
Cash in Bank 12,000 Cash in Bank 12,000
Accounts Payable 2,400 Accounts Payable 2,400
Purchase returns & allowances 2,400 Merchandise Inventory 2,400
Accounts receivable 147,600 Accounts receivable 147,600
Sales 147,600 Sales 147,600

Cost of Goods Sold 98,400

Merchandise Inventory 98,400
Sales returns & allowances 10,800 Sales returns & allowances 10,800
Accounts receivable 10,800 Accounts receivable 10,800

Merchandise Inventory 7,200

 Cost of Goods Sold 7,200
Beg. Inventory 6,200 Merchandise Inventory
Add: Net Purchases
Purchases 120,000 6,200 2,400
Freight-In 12,000 120,000 98,400
Purchase returns (2,400) 129,600 12,000 100,800
& allowances 7,200
Total Goods Available 135,800 145,400
for sale (100,800)
less: Ending Inventory (44,600) 44,600
Cost of Goods Sold 91,200

Problem 1-3

Required:

1. Journalize the transactions using a.) periodic method and b.) perpetual method. (Assume that cost of
sales is 60% of the invoice price.)
2. Prepare income statement for both periodic and perpetual inventory system assuming that the
merchandise inventory end amounts to P20,000 and that there is no beginning inventory.

K. Kho Store
May Periodic Perpetual
1 Purchase 50,000 Merchandise Inventory 50,000
Accounts payable-Dare 50,000 Accounts Payable-Dare 50,000
2 Accounts receivable 75,000 Accounts receivable 75,000
Sales 75,000 Sales 75,000

Cost of Goods Sold 45,000

Merchandise Inventory 45,000
5 Accounts payable-Dare 2,000 Accounts payable 2,000
Purchase returns & allowances 2,000 Merchandise Inventory 2,000
8 Cash in Bank 73,500 Cash in Bank 73,500
Sales Discount 1,500 Sales Discount 1,500
Accounts receivable 75,000 Accounts receivable 75,000

10 Accounts payable 48,000 Accounts payable 48,000

Purchase discount 960 Merchandise Inventory 960
Cash in Bank 47,040 Cash in Bank 47,040
11 Purchase 3,000 Merchandise Inventory 3,000
Cash in Bank 3,000 Cash in Bank 3,000
13 Purchase 25,000 Merchandise Inventory 25,000
Accounts payable 25,000 Accounts payable 25,000
15 Cash in Bank 2,000 Cash in Bank 2,000
Purchase returns & allowances 2,000 Merchandise Inventory 2,000
17 Purchase 19,000 Merchandise Inventory 19,000
Accounts payable 19,000 Accounts payable 19,000
19 Freight-In 2,000 Merchandise Inventory 2,000
Cash in Bank 2,000 Cash in Bank 2,000
24 Cash in Bank 61,000 Cash in Bank 61,000
Sales 61,000 Sales 61,000

Cost of Goods Sold 36,600

Merchandise Inventory 36,600
25 Purchase 29,840 Merchandise Inventory 29,840
Accounts payable 29,840 Accounts payable 29,840
27 Accounts payable-Hark 19,000 Accounts payable-Hark 19,000
Cash in Bank 19,000 Cash in Bank 19,000
28 Sales returns & allowances 1,000 Sales returns & allowances 1,000
Cash in Bank 1,000 Cash in Bank 1,000

Merchandise Inventory 600

Cost of Goods Sold 600
31 Accounts receivable 30,000 Accounts receivable 30,000
Sales 30,000 Sales 30,000

Cost of Goods Sold 18,000

Merchandise Inventory 18,000
Comparative Journal Entries
Merchandise Inventory 20,000 Inventory short or over 4,880
Income & Expense Summary 20,000 Merchandise inventory 4,880
*(24,880-20,000= 4,880)

PERIODIC Inventory System

Kaya Kho Store

Income Statement
For the month ended May, 2020

Net Sales:
Sales P166,000
Sales Returns & Allowances (1,000)
Sales Discount (1,500) 163,500
Cost of Goods Sold:
Net Purchases:
Purchases P126,840
Freight-In 2,000
Purchase Returns & allowances (4,000)
Purchase Discount (960) 123,880
Ending Inventory (20,000) (103,880)
Gross Profit 59,620
 PERPETUAL Inventory System

Kaya Kho Store

Income Statement
For the month ended May, 2020

Net Sales:
Sales P166,000
Sales Returns & Allowances (1,000)
Sales Discount (1,500) 163,500
Cost of Goods Sold: (adjusted)
Cost of Goods Sold P99,000
Inventory short or over 4,880 (103,880)
Gross Profit 59,620

Problem 1-4

2020 Amount Term 2020 Cash Discount Amount Paid

1-05 P100,000 10,5; n/30 2-04 1. P14,500 2. 85,500
1-10 P200,000 2/10, 1/30 2-05 3. 2,000 4. 198,000
1-15 P300,000 1/20, n/30 2-02 5. 3,000 6. 297,000
1-20 P400,000 1/20; EOM 2-25 7. 0 8. 400,000
1-25 9. P475,000 2/10, 1/20 2-12 10. 4,750 P470,250