Professional Documents
Culture Documents
Merchandising Operations
Merchandising Operations
Sarra Company completed the following transactions during May of the current year. Sa
May 3 Purchased merchandise on account from Floyd Co., P4,000,
5 Purchased merchandise on account from Kramer Co., P8,500,
6 Sold merchandise on account to C. F. Howell Co., list pri
8 Purchased office supplies for cash, P150.
10 Returned merchandise purchased on May 5 from Kramer Co.,
13 Paid Floyd Co. on account for purchase of May 3, less dis
14 Purchased merchandise for cash, P10,500.
15 Paid Kramer Co. on account for purchase of May 5, less re
16 Received cash on account from sale of May 6 to C. F. Howe
19 Sold merchandise on nonbank credit cards and reported acc
22 Sold merchandise on account to Comer Co., P3,480, terms 2
24 Sold merchandise for cash, P4,350. The cost of the mercha
25 Received merchandise returned by Comer Co. from sale on M
31 Received cash from card company for nonbank credit card s
Instructions
1. Journalize the preceding transactions
2. Journalize the adjusting entry for merchandise inventory shrinkage of P3,750 at th
3. How much is the actual ending inventory for the month of May?
f the current year. Sarra Company uses a perpetual inventory system.
om Floyd Co., P4,000, terms FOB shipping point, 2/10, n/30, with prepaid transportation costs
om Kramer Co., P8,500, terms FOB destination, 1/10, n/30.
. Howell Co., list price P4,000, trade discount 30%, terms 2/10, n/30. The cost of the mercha
ay 5 from Kramer Co., P1,300.
ase of May 3, less discount.
hase of May 5, less return of May 10 and discount.
of May 6 to C. F. Howell Co., less discount.
cards and reported accounts to the card company, American Express, P2,450. The cost of the me
r Co., P3,480, terms 2/10, n/30. The cost of the merchandise sold was P1,400.
The cost of the merchandise sold was P1,750.
mer Co. from sale on May 22, P1,480. The cost of the returned merchandise was P600.
nonbank credit card sales of May 19, less P140 service fee.
inkage of P3,750 at the end of the month
d transportation costs of P120 added to the invoice.
The cost of the merchandise sold was P1,125.
50. The cost of the merchandise sold was P980.
se was P600.
1. JOURNAL ENTRIES
3-May Merchandise Inventory 4,120.00
Accounts Payable 4,120.00
To record purchase of Inventory and freight-in on account
5-May Merchandise Inventory 8,500.00
Accounts Payable 8,500.00
To record purchase of Inventory on account
6-May Accounts Receivable 2,800.00
Sales 2,800.00
To record sales on account with trade discount
Cost of Goods Sold 1,125.00
Merchandise Inventory 1,125.00
To record cost of goods sold
8-May Office Supplies 150.00
Cash 150.00
To record purchase of office equipment
10-May Accounts Payable 1,300.00
Merchandise Inventory 1,300.00
To record purchase return
13-May Accounts Payable 4,120.00
Merchandise Inventory 80.00
Cash 4,040.00
To record payment of puchase on account with cash discount
14-May Merchandise Inventory 10,500.00
Cash 10,500.00
To record purchase of goods in cash
15-May Accounts Payable 7,200.00
Merchandise Inventory 72.00
Cash 7,128.00
To record payment of puchase on account with cash discount
16-May Cash 2,744.00
Sales Discount 56.00
Accounts Receivable 2,800.00
To reord collection of accounts receivable with cash discount
19-May Accounts Receivable 2,450.00
Sales 2,450.00
To record sales on accounts
Cost of Goods Sold 980.00
Merchandise Inventory 980.00
To record cost of goods sold
22-May Accounts Receivable 3,480.00
Sales 3,480.00
To record sales on account
Cost of Goods Sold 1,400.00
Merchandise Inventory 1,400.00
To record cost of goods sold
24-May Cash 4,350.00
Sales 4,350.00
To record cash sales
Cost of Goods Sold 1,750.00
Merchandise Inventory 1,750.00
To record cost of goods sold
25-May Sales Return 1,480.00
Accounts Receivable 1,480.00
To record sales return
Merchandise Inventory 600.00
Cost of Goods Sold 600.00
To record goods returned by buyer
31-May Cash 2,310.00
Credit Card Expense 2,310.00
Accounts Receivable
To record collection of accounts receivable and service fee charged by credit company
2. ADJUSTING ENTRY FOR SHRINKAGE
Cost of Goods Sold 3,750.00
Merchandise Inventory 3,750.00
To record shrinkage of Inventory
3. ACTUAL (PHYSICAL INVENTORY ENDING)
Beg. Inventory -
Purchases 23,120.00
Purchase Discount (152.00)
Purcahse Return (1,300.00) 21,668.00
Goods Available for Sale 21,668.00
Actual Ending Inventory (Physical) (13,263.00)
Cost of Goods Sold 8,405.00 -
NOTE: THIS FORMULA CAN ONLY BE USED WHEN PERIODIC INVENTORY METHOD IS USED
4,120.00
8,500.00
2,800.00
150.00
1,300.00
80.00
4,040.00
10,500.00
72.00
7,128.00
2,800.00
2,450.00
3,480.00
4,350.00
1,480.00
2,310.00
8,405.00
RY METHOD IS USED