Scribd Logo
Upload

Welcome to Scribd!

  • 2K views

    Mortel-BSA1202 (Inventories)

    Uploaded by

    Aphol Joyce Mortel
    The document provides transactions for Autumn Company during its first year of operations. It includes purchases of merchandise on account, freight costs, cash payments on accounts payable, and the amount of inventory remaining at year-end. The required section asks to prepare journal entries to record the transactions under the gross and net methods and to compute inventory and cost of sales for each method. The response provides the journal entries for both methods and calculations of inventory and cost of sales.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd

    Mortel-BSA1202 (Inventories)

    Uploaded by

    Aphol Joyce Mortel
    2K views5 pages
    The document provides transactions for Autumn Company during its first year of operations. It includes purchases of merchandise on account, freight costs, cash payments on accounts payable, and the amount of inventory remaining at year-end. The required section asks to prepare journal entries to record the transactions under the gross and net methods and to compute inventory and cost of sales for each method. The response provides the journal entries for both methods and calculations of inventory and cost of sales.

    Copyright

    © © All Rights Reserved

    Available Formats

    DOCX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    The document provides transactions for Autumn Company during its first year of operations. It includes purchases of merchandise on account, freight costs, cash payments on accounts payable, and the amount of inventory remaining at year-end. The required section asks to prepare journal entries to record the transactions under the gross and net methods and to compute inventory and cost of sales for each method. The response provides the journal entries for both methods and calculations of inventory and cost of sales.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    2K views5 pages

    Mortel-BSA1202 (Inventories)

    Uploaded by

    Aphol Joyce Mortel
    The document provides transactions for Autumn Company during its first year of operations. It includes purchases of merchandise on account, freight costs, cash payments on accounts payable, and the amount of inventory remaining at year-end. The required section asks to prepare journal entries to record the transactions under the gross and net methods and to compute inventory and cost of sales for each method. The response provides the journal entries for both methods and calculations of inventory and cost of sales.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 5

    Mortel, Aphol Joyce B.

    BSA-2202

    10-6

    Autumn Company provided the following transactions for the current year, the first year of operations.

    1. Purchase of merchandise at an invoice price of P4,750,000 excluding freight. Terms are 2/10,
    n/30.
    2. Freight paid, P250,000. The freight is allocated to each purchase.
    3. Cash payments on purchases, P3,717,000 of which P1,617,000 was paid within the discount
    period.
    4. It is expected that all discounts on unpaid accounts payable will be lost.
    5. On December 31, one fifth of the merchandise remains on hand

    Required: 
    a. Prepare journal entries to record transactions using gross method and net method
    b. Compute inventory and cost of sales under each method

    Answer:

    Gross Method

    1 Purchases P4,750,000

    Accounts Payable P4,750,000

    2 Freight in 250,000

    Cash 250,000

    3 Accounts Payable 1,650,000

    Cash 1,617,000

    Purchase Discounts 33,000

    Accounts Payable 2,100,000

    Cash 2,100,000

    4 No entry

    5 Merchandise Inventory end (5,000,000×2%) 1,000,000


    Income Summary(5,000,000×2%) 1,000,000

    Net Method

    1 Purchases P4,655,000

    Accounts Payable P4,655,000

    2 Freight in 250,000

    Cash 250,000

    3 Accounts Payable 1,617,000

    Cash 1,617,000

    Accounts Payable 2,058,000

    Cash 2,100,000

    Purchase Discount Lost 42,000

    4 Purchase Discount Lost 20,000

    Accounts payable 20,000

    5 Merchandise Inventory end(4,905,000×2%) 981,000

    Income Summary(4,905,000×2%) 981,000

    Gross Method

    Purchases P4,750,000

    Purchase Discounts (33,000)

    Net Purchase P4,717,000

    Freight in 250,000

    Total P4,967,000
    Merchandise Inventory end (1,000,000)

    Cost of Sales P3,967,000

    Net Method

    Purchases P4,655,000

    Freight in 250,000

    Goods available for sale P4,905,000

    Merchandise Inventory end (981,000)

    Cost of Sales P3,924,000


    10-8

    Myriad Company revealed the following purchase transactions occurred during the last few days of the
    fiscal year, which ends December 31, and in the first few days after that date.

    1. An invoice for P50,000, FOB shipping point, was received and recorded on December 27. The
    shipment was received in satisfactory condition on January 2. The merchandise was not included
    in the inventory.
    2. An invoice for P75,000, FOB Destination, was received and recorded on December 28. The
    shipment was received on satisfactory condition on January 3. The merchandise was not included
    in the inventory.
    3. An invoice for P30,000, FOB shipping point, was received and recorded on January 4. The
    invoice shows that the goods had been shipped on December 28 and the receiving report
    indicated that the goods had been received on January 4. The merchandise was not included in the
    inventory.
    4. The invoice for P90,000, FOB shipping point, was received on December 15. The receiving
    report indicates that the goods were received on December 18 but across the face of the report is
    the notation “merchandise not of the same quality as ordered-returned for credit, December 19”.
    The merchandise was included in the inventory.
    5. An invoice for P140,000, FOB Destination, was received and recorded on January 4. The
    receiving report indicates that the goods were received on December29. The merchandise  not
    included in the inventory.

    Required: Prepare the adjustments on December 31. Books are still open.

    Answer:

    1 Inventory P 50,000

    Income Summary P50,000

    2 Accounts Payable 75,000

    Purchases 75,000

    3 Purchases 30,000

    Accounts Payable 30,000

    Inventory 30,000

    Income Summary 30,000

    4 Income Summary 90,000

    Inventory 90,000

    5 Purchases 140,000

    Accounts Payable 140,000


    Inventory 140,000

    Income Summary 140,000

    You might also like