REVIEW
EXERCISE
MERCHANDISING
CONCERN
Purchase and Sales Transactions
During the month of April 2020, Faith Go Company entered into the
following transactions with Happy Supplies:
April 5 Go purchased merchandise on account from Happy Supplies,
P250,000.
Terms: FOB shipping point: 3/10, n/30. Paid freight charges
amounting
to P5,000.
April 8 Go returned P20,000 of merchandise to Happy from April 5 purchase.
April 10 Go paid Happy the amount due on the April 5 transaction.
Required: Prepare journal entries for Faith Go Company and for Happy
supplies.
Purchase and Sales Transactions
During the month of April 2020, Faith Go Company entered into the
following transactions:
April 5 Go purchased merchandise on account from Happy Supplies,
P250,000.
Terms: FOB shipping point: 3/10, n/30. Paid freight charges
amounting
Faith Go Company
Happy Supplies
to
P5,000.
Date
Particulars
Debit
Credit
Date
April 5 Purchases
250,000
Accounts Payable
Freight In
Cash
250,000
5,000
5,000
Particulars
April 5 Accounts Receivable
Sales
Debit
Credit
250,000
250,000
Purchase and Sales Transactions
April 8 Go returned P20,000 of merchandise to Happy from April 5 purchase.
April 10 Go paid Happy the amount due on the April 5 transaction.
Faith Go Company
Date
Particulars
April 8 Accounts Payable
Happy Supplies
Debit
20,000
Purchase returns
April 10 Accounts Payable
Purchase discount
Cash
Credit
Date
Particulars
April 8 Sales returns
20,000
230,000
223,100
Sales discount
Accounts receivable
Credit
20,000
Accounts receivable
April 10 Cash
6,900
Debit
20,000
223,100
6,900
230,000
Purchase and Sales Transactions
What if the freight charge was paid by Happy Supplies? Still FOB Shipping
Point, but freight prepaid.
Faith Go Company
Date
Particulars
April 5 Purchases
Accounts Payable
Freight In
Accounts Payable
Happy Supplies
Debit
Credit
250,000
Date
Particulars
April 5 Accounts Receivable
250,000
5,000
Cash
Credit
250,000
Sales
Accounts Receivable
5,000
Debit
250,000
5,000
5,000
Purchase and Sales Transactions
April 8 Go returned P20,000 of merchandise to Happy from April 5 purchase.
April 10 Go paid Happy the amount due on the April 5 transaction.
Faith Go Company
Date
Particulars
April 8 Accounts Payable
Happy Supplies
Debit
20,000
Purchase returns
April 10 Accounts Payable
Purchase discount
Cash
Credit
Date
Particulars
April 8 Sales returns
20,000
235,000
228,100
Sales discount
Accounts receivable
Credit
20,000
Accounts receivable
April 10 Cash
6,900
Debit
20,000
228,100
6,900
235,000
Purchase and Sales Transactions
What if the freight term is FOB destination, Freight prepaid?
Faith Go Company
Date
Particulars
April 5 Purchases
Accounts Payable
Happy Supplies
Debit
Credit
250,000
Date
Particulars
April 5 Accounts Receivable
250,000
Debit
250,000
Sales
Freight out
Cash
Credit
250,000
5,000
5,000
Purchase and Sales Transactions
April 8 Go returned P20,000 of merchandise to Happy from April 5 purchase.
April 10 Go paid Happy the amount due on the April 5 transaction.
Faith Go Company
Date
Particulars
April 8 Accounts Payable
Happy Supplies
Debit
20,000
Purchase returns
April 10 Accounts Payable
Purchase discount
Cash
Credit
Date
Particulars
April 8 Sales returns
20,000
230,000
223,100
Sales discount
Accounts receivable
Credit
20,000
Accounts receivable
April 10 Cash
6,900
Debit
20,000
223,100
6,900
230,000
Purchase and Sales Transactions
What if the freight term is FOB destination, Freight collect?
Faith Go Company
Date
Particulars
April 5 Purchases
Accounts Payable
Accounts payable
Cash
Happy Supplies
Debit
Credit
250,000
Date
Particulars
April 5 Accounts Receivable
250,000
5,000
Accounts receivable
Credit
250,000
Sales
Freight out
5,000
Debit
250,000
5,000
5,000
Purchase and Sales Transactions
April 8 Go returned P20,000 of merchandise to Happy from April 5 purchase.
April 10 Go paid Happy the amount due on the April 5 transaction.
Faith Go Company
Date
Particulars
April 8 Accounts Payable
Happy Supplies
Debit
20,000
Purchase returns
April 10 Accounts Payable
Purchase discount
Cash
Credit
Date
Particulars
April 8 Sales returns
20,000
225,000
218,100
Sales discount
Accounts receivable
Credit
20,000
Accounts receivable
April 10 Cash
6,900
Debit
20,000
218,100
6,900
225,000
end