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Journalizing Merchandising Transactions

Troadio Cunanan Tires entered into several transactions in July 2020 involving the purchase and sale of tires. They purchased 1,000 tires on July 2nd for P600 per tire and 600 more tires on July 5th at the same price. They also sold 700 tires from the July 2nd purchase for P900 each on July 13th. Various payments were made for the purchases and transportation, and a credit was received for 150 defective tires returned on July 7th. Journal entries were made to record each of these transactions.

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Marian Augelio Polanco
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437 views

Journalizing Merchandising Transactions

Troadio Cunanan Tires entered into several transactions in July 2020 involving the purchase and sale of tires. They purchased 1,000 tires on July 2nd for P600 per tire and 600 more tires on July 5th at the same price. They also sold 700 tires from the July 2nd purchase for P900 each on July 13th. Various payments were made for the purchases and transportation, and a credit was received for 150 defective tires returned on July 7th. Journal entries were made to record each of these transactions.

Uploaded by

Marian Augelio Polanco
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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NAME: Marian A.

Polanco

Troadio Cunanan Tires entered into the following transactions during the month of July, 2020:

            July   2           Purchased 1,000 tires at a cost of P600 per tire. Terms of payment: 1/10, net 45.
                     4            Paid trucking firm P8,000 to ship the tires purchased on July 2.
                     5            Purchased 600 tires at a cos of P600 per tire. Terms of payment: 2/10,  net 30.
                     6            Paid trucking firm P5,000 to ship the tires purchased on July 5.
                     7            Returned 150 of the tires purchased on July 2 because they were defective.
                                    Received a credit on open account from the seller.
                   11            Paid for tires purchased on July 2.
                   13            Sold 700 tires from those purchased on July 2. The selling price was P900 per
tire. Terms: 1/10, net 30.
                   22            Received cash from sale of tires on July 13.
                   30            Paid for tires purchased on July 5.

Required:  Prepare the journal entries.


Journal Entries

DATE ACCOUNT TITLE DEBIT CREDIT


July 2 Purchases 600,000
Accounts Payable 600,000
To record purchase of Inventory (P600 x 1,000 tires).

4 Transportation In 8,000
Cash 8,000
To record Transportation In.

5 Purchases 360,000
Accounts Payable 360,000
To record purchase of Inventory (P600 x 600 tires).

6 Transportation In 5,000
Cash 5,000
To record Transportation In.

7 Accounts Payable 90,000


Purchase Returns and Allowances 90.000
To record returns of defective purchases from July 2.

11 Accounts Payable 510,000


Cash 504,900
Purchase Discounts 5,100
To record payment of purchases from June 2 with 1% discount.
(P600,000-P90,000 returned purchases).

13 Accounts Receivable 630,000


Sales 630,000
To record sales.

22 Cash 623,700
Sales Discount 6,300
Accounts Receivable 630,000
To record collections from July 13 sales with 1% discount.
(P630,000)

30 Accounts Payable 360,000


Cash 360,000
To record payment of purchases from July 5.

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