PROBLEM G SOLUTION:

M. Inventory Accounts Accounts Input tax Sales Output tax

receivable payable
P 704,670 P 606,512 P1,163,705.6 P 521,825.6 P 2,195,100 P 713,412

A.
B. 31,260
C. (43,008) (38,400) (4,608)
D. 52,516.80 5,626.80
E. 25,620
F. (31,314)
G. (34,560)
H. 4,500 (8,736) (936)
700,176 554,768 1,216,222.40 527,452.40 2,156,700 707,868
EXPLANATIONS:

B. shipping term is FOB Shipping point, meaning, the title has already passed to the buyer from the point
of shipment. It should be properly included in the inventory of the buyer. Why there is no adjustment
input tax? Because of the statement “the invoice arrived and was recorded on Dec. 31”.

c. shipping term is FOB destination, meaning, the title still belongs to the seller until it arrives at the
point of destination. But since the title still belongs to the seller, it should not recognize the sale as of
today, it should recognize the sale when the goods arrived at the point of destination. Reverse the entry
made by debiting sales and output tax in the amount of 38,400 and 4,608, respectively and crediting A/R
in the amount of P 43,008.

d. since the goods are already in the possession of the buyer, it should recognize the purchase and
related accounts.

e. since the inventory was received on Dec. 31, add it to the inventory.

f. goods held on consignment should be excluded from the inventory.

g. since the shipment term is FOB shipping pt and already shipped, the entity should remove it from the
inventory.

h. since the goods are not damaged, it should be included in the inventory. And record the return by
debiting SRA and output tax and crediting AR.
PROBLEM H SOLUTION

SALES OUTPUT TAX INVENTORIES

7,500,000 900,000 330,000
1.
2. 7,500 900
3.
4. (12,600) (1,512) 9,300
5. 24,000
6. (19,500) (2,340)
7.
8. 11,700 1,404
9. (25,800) (3,096)
10.
7,461,300 895,356 363,300

PROBLEM K:
A/R ALLOWANCE FOR BAD DEBTS
337,000 900,000 11,000 12,000
1,500,000 500,000 3,000
3,000 220,000 15,000
11,000
6,000
3,000
200,000 19,000

From customers paying w/in the 10-day discount period

Cash 882,000
Sales discount 18,000
AR 900,000 (882,000 / 98%)
From customers paying within the 15-day discount period
Cash 495,000
Sales discount 5,000
AR 500,000 (495,000 / 99%)
From customers paying outside the discount period
Cash 220,000
AR 220,000
=====
AR 3,000
Allowance 3,000

Cash 3,000
AR 3,000

Allow. 11,000
AR 11,000
SRA 6,000
AR 6,000

BDE 15,000
Allow. 15,000