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Myco Paque Inventories

1. The document provides accounting journal entries for various inventory transactions under both a periodic and perpetual inventory system. 2. It also includes journal entries to record the same transactions using gross and net methods of accounting for inventory and cost of goods sold. 3. The ending inventory and cost of goods sold are computed under each method.

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MYCO PONCE PAQUE
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58 views5 pages

Myco Paque Inventories

1. The document provides accounting journal entries for various inventory transactions under both a periodic and perpetual inventory system. 2. It also includes journal entries to record the same transactions using gross and net methods of accounting for inventory and cost of goods sold. 3. The ending inventory and cost of goods sold are computed under each method.

Uploaded by

MYCO PONCE PAQUE
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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MYCO PONCE B.

PAQUE BSA-MA11

PROBLEM 10 – 2 IAA

MATERIALS 1,400,000
ADVANCES FOR MATERIALS ORDERED 200,000
Goods in process 650,000
Unexpired insurance on Inventories 60,000
Advertising catalogs and shipping cartons 150,000

Finished goods in factory 2,000,000

Finished goods in company-owned retail store,


including 50% profit on cost(750,000 / 150%) 750,000

Finished goods in in hands of consignees


including 40% profit sales (400,000x60%) 400,000

Finished goods in transit to costumers,


shipped FOB destination cost 250,000
Finished goods out on approval, at cost 100,000
Unsalable finished goods, at cost 50,000
Office Supplies 40,000
Materials in transit shipped FOB shipping point,
excluding freight of (330,000+30,000) 330,000
Goods held on consignment at sales prices, cost 150,000 200,000

Required:
Compute the correct amount of inventory

Materials 1,400,000
Goods in process 650,000
Finished goods in factory 2,000,000
Finished goods in company-owned retail store,
including 50% profit on cost(750,000 / 150%) 500,000
Finished goods in in hands of consignees
including 40% profit sales (400,000x60%) 240,000
Finished goods in transit 250,000
Finished goods out on approval 100,000
Materials in transit (330,30,000) 360,000
Total Inventory: P5,500,000
PROBLEM 10 – 4 IAA

Required:
A. Prepare journal entries, including adjustments to record the above transactions assuming the
company uses periodic system and perpetual system.
B. Determine the cost of sales under each inventory system

REQUIREMENT A
Periodic System Perpetual System
1.Purchases 800,000 1.Merchandise Inventory 800,000
Accounts Payable 800,000 Accounts Payable 800,000

2.Accounts Payable 50,000


2. Accounts Payable 50,000
Merchandise Inventory 50,000
Purchase Returns 50,000

3.Accounts Payable 600,000


3.Accounts Payable 600,000
Cash 600,000
Cash 600,000

4. Accounts receivable 1,580,000


4. Accounts Receivable 1,580,000
Sales 1,580,000
Sales 1,580,000

Cost of sales 790,000


Merchandise Inventory 790,000
5. Sales Return 40,000
5. Sales Return 40,000
Accounts receivable 40,000
Accounts receivable 40,000

Merchandise Inventory 20,000


Cost of sales 20,000
6. Cash 60,000
6. Cash 1,360,000
Accounts receivable 60,000
Accounts receivable 1,360,000
7. Inventory – Dec 31 60,000
7. Inventory shortage 10,000
Income summary 60,000
Merchandise Inventory 10,000

Merchandise Inventory per book 70,000


Physical count 60,000
Shortage 10,000
REQUIREMENT B
PERIODIC SYSTEM PERPETUAL SYSTEM
Beg. Inventroy 90,000 Cost of sales recorded 790,000
Purchases 800,000 Sales Return (20,000)
Purchase Returns (40,000) Inventory Shortage 10,000
Total Goods Available for Sale 840,000 Adjusted cost of sales 780,000
Less: Ending Inventory (60,000)
Cost of sales 780,000
PROBLEM 10 – 6

REQUIRED:
A. Prepare journal entries to record transactions using gross method and net method
B. Compute Inventory and cost of sales under each method

A. Prepare journal entries to record transactions using gross method and net method

GROSS METHOD

1. Purchases 4,750,000
Accounts Payable 4,750,000
To record purchases excluding freight. Terms 2/10, n/30

2. Freight in 250,000
Cash 250,000
To record transportation cost.

3. Accounts Payable 1,650,000


Cash 1,617,000
Purchase discount 33,000
To record cash payment with discount

4. NO ENTRY

5. Inventory 1,000,000
Income Summary 1,000,000
To record 1/5 merchandise on hand.

NET METHOD

1. Purchases 4,655,000
Accounts Payable 4,655,000
To record puchase on account.

2. Freight in 250,000
Cash 250,000
To record transportation cost.

3. Accounts Payable 1,617,000


Cash 1,617,000
To record payment within the discount period.
Accounts Payable 2,058,000
Purchase Discount Lost (other Expense) 42,000
Cash 2,100,000
To record payment before the discount period.

4. Purchase Discount Lost 20,000


Accounts Payable
20,000
To record lost of all discounts on unpaid accounts payable. (1,000,000 x 2%)

5. Inventory 981,000
Income Summary 981,000
To record 1/5 merchandise on hand.

B. Compute inventory and cost of sales under each method

GROSS METHOD NET METHOD


Purchases 4,750,000 4,655,000
Freight in 250,000 250,000
Total 5,000,000 4,905,000
Less: Purchase Discounts 33,000 -
Goods Available For sale 4,967,000 4,905,000
Less: Inventory – December 31 1,000,000 981,000
Cost of Sales 3,967,000 3,924,000

ENDING INVENTORY

Gross (5,000,000/5) 1,000,000

Net (4,905,000/5) 981,000

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