PERIODIC INVENTORY SYSTEM
Slowhand Merchandising was formed on November 1, 2020. The following transactions took
place during the first month.
Transactions on November:
1.
Johnson Castro invested P500,000 cash in the company, as its sole owner.
2
Purchased merchandise on account from Jerry’s Wholesale Supply P400,000,
terms 2/10, n/30.
4
Signed a 2-year rental agreement on a warehouse; paid P24,000 cash in advance
for the first year.
Sold merchandise on account P200,000, terms 1/10, n/30.
5
Received credit from Jerry’s Wholesale Supply for merchandise returned
P35,000.
Sold merchandise to Andrews for P350,000, terms 5/10, n/30.
8
Purchased furniture and equipment costing P50,000. A cash payment of P20,000
was made immediately; the remainder will be paid in 6 months with
corresponding note.
Paid Jerry’s Wholesale Supply in full.
11
Paid P18,000 cash for a one-year insurance policy on the furniture and
equipment.
Received collections in full, less discounts, from customers billed on sales on
November 4
15
Purchased basic office supplies for P5,000 cash.
Borrowed money from BDO, Castro signed a promissory note for 100,000.
Purchased merchandise for cash P100,000.
Collected the full payment from Andrews ( November 5).
17
Purchased merchandise from Cosmo Distributors P100,000, FOB shipping point,
terms 2/10, n/30. Johnson Castro paid freight amounting to 10,000.
19
Purchased merchandise from Costanza, Inc. P55,000, FOB destination, terms
2/10, n/30. The cost of shipping is 5,000 and is paid by the appropriate party.
22
Paid Cosmo Distributors in full.
Paid advertising expens, P11,000;
28
Received utility bills in the amount of P200, to be paid next month.
31
Paid the monthly salaries of the two employees, P5,600.
Johnson Castro withdrew 10,000 from the business for personal use.
Required: PREPARE THE JOURNAL ENTRIES OF THE ABOVE TRANSACTIONS USING PERIODIC
INVENTORY SYSTEM.
Chart of Accounts:
Castro uses the following chart of accounts:
No. 101 Cash
No. 112 Accounts Receivable
No. 120 Prepaid Rent
No. 121 Prepaid Insurance
No. 126 Office Supplies
No. 130 Furniture and Equipment
No. 201 Accounts Payable
No. 210 Notes Payable
No. 205 Unearned Revenue
No. 301 Johnson Castro, Capital
No. 302 Johnson Castro, Withdrawals
No. 400 Sales
No. 401 Sales return and allowances
No. 402 Sales Discount
No. 701 Purchases
No. 702 Purchases returns and allowances
No. 703 Purchase discounts
No. 725 Advertising Expense
No. 726 Salaries Expense
No. 729 Rent Expense
No. 730 Insurance Expense
No. 750 Utilities Expense
No 751 Freight In
No. 752 Freight Out
PERPETUAL INVENTORY SYSTEM
On November 1, 2020, Santos Merchandising was registered as a single proprietorship with the
Department of Trade and Industry. For the month of November, the following transactions
happened.
1
Santos invested 300,000 to the business
2
Bought computer equipment for 50,000 cash
Bought merchandise on account from CROWN Company, P150,000 terms 2/10, n/30.
3
Bought office supplies for cash , P7,000
4
Sold merchandise on account, P150,000, FOB Destination, terms 2/10, n/30. The cost of
the merchandise sold was 100,000.
5
Paid 2,000 freight on November 4 transaction
6
Received credit from Crown Company for merchandise returned, P20,000.
11
Paid Crown Co the full amount.
13
Collected from November 4 customers.
14
Bought merchandise on cash basis for P80,000.
15
Paid salaries, P15,000
16
Borrowed money from RCBC, signed a promissory note, P100,000.
17
Received refund from a supplier on cash purchase of January 14, P10,000.
18
Bought merchandise from Pacific Company, P180,000. FOB Shipping point, terms 2/10,
n/30.
20
Paid freight on November 18 transaction, P7,000.
23
Sold merchandise for P160,000. The cost of the merchandise sold was P100,000.
26
Bought merchandise for cash, P13,200.
27
Paid Pacific on November 18 purchase, P90,000. No discount is allowed for partial
payment.
28
Withdraw 50,000 cash from business.
29
Made cash refund to cash customers for defective merchandise, P9,000.
30
Sold merchandise on account, P137,000. The cost of the merchandise sold is P89,000.
Paid the following expenses: Advertising: P11,000; Utilities, P4,000; Rent, 5,000 and
salaries, P10,000.
Required: Required: PREPARE THE JOURNAL ENTRIES OF THE ABOVE TRANSACTIONS USING
PERPETUAL INVENTORY SYSTEM.
No. 101 Cash
No. 112 Accounts Receivable
No. 121 Merchandise Inventory
No. 120 Prepaid Rent
No. 121 Prepaid Insurance
No. 126 Office Supplies
No. 130 Furniture and Equipment
No. 201 Accounts Payable
No. 210 Notes Payable
No. 205 Unearned Revenue
No. 301 Santos, Capital
No. 302 Santos, Withdrawals
No. 400 Sales
No. 401 Sales return and allowances
No. 402 Sales Discount
No. 725 Advertising Expense
No. 726 Salaries Expense
No. 727 Freight Out
No. 729 Rent Expense
No. 730 Insurance Expense
No. 750 Utilities Expense