Answers and Solutions To Exercises PDF

ANSWERS AND SOLUTIONS TO EXERCISES
CHAPTER 1: ACCOUNTING FOR MERCHANDISING
MULTIPLE CHOICE QUESTIONS PART 1:
1. B 6. A 11. C
2. B 7. D 12. B
3. C 8. C 13. D
4. A 9. B 14. B
5. C 10. B. 15. B
11. Beginning Merchandise Inventory (Squeeze) P 250,000
Add: Purchases 900,000
Total Goods Available for Sale P 1,150,000
Less: Ending Merchandise Inventory (Squeeze) 230,000
Cost of Goods Sold 920,000
13. Purchase Price P 3,600
Add: Freight In 100
Less: Trade Discount (25%) (900)
Purchase Returns (400)
Net Purchases 2,400
Upon Payment, League is entitled to a 2% discount, so the amount he is going to pay is P 2,352
( 2,400 x 98%)
14. Beginning Merchandise Inventory P 0
Add : Purchases 40,000
Freight In 3,000
Total 43,000
Less: Purchase Returns and Allowances ( 2,000) 41,000
Total Goods Available for Sale 41,000
Less: Ending Inventory (8,000)
COST OF GOODS SOLD 33,000
Prepared by: Krist Mark Q. Macapugay, MBA, MICB, CTT, CB Page 1

15. 6,000 X 98% = P 5,880
MULTIPLE CHOICE QUESTIONS PART 2:
1. C 6. C
2. C 7. D
3. D 8. A
4. A 9. A
5. B 10. B
2 & 3:
Sales P 74,200
Less: Sales Discount P 15,500
Sales Returns and Allowances 18,100
Net Sales P 40,600
Less: Cost of Goods Sold:
Beginning Merchandise Inventory ` P 18,000
Add: Net Purchases: 31,900
Purchases P 37,900
Add: Freight In 2,000
Total 39,900
Less: Purchase Discount (6,000)
Purchase Returns and Allowances (2,000)
Total Goods Available For Sale 49,900
Less: Ending Inventory 35,000
GROSS PROFIT P 25,700

5. Beginning Merchandise Inventory P 0
Add : Purchases 170,000
Freight In 30,000
Total 200,000
Less: Purchase Returns and Allowances ( 20,000) 180,000
Less: Ending Inventory (0)
6.
Sales P 750,000
Less: Sales Discount P 10,000
Sales Returns and Allowances 15,000
Net Sales P 725,000
Less: Cost of Goods Sold (refer to no.5) 180,000
Gross Profit 545,000
Less: Operating Expenses:
Selling Expense P 75,000
General and Administrative Expense 275,000
Total Operating Expenses 350,000
NET PROFIT OR INCOME 195,000
7. Purchase Price P 10,000
Less Trade Discount: 25% ( 2,500)
Net Purchase 7,500
To be paid within the discount period so 7,500 x 98% = 7,350

CHAPTER 2: CHART OF ACCOUNTS TO JOURNALIZATION PROCESS
Date Particulars F Debit Credit
March 8 Furniture and Fixtures 200 P 173,568
Accounts Payable 300 P 173,568
Purchased Furniture
8 Freight In 710 1,670
Cash 100 1,670
Paid Freight
13 Accounts Receivable 110 20,800
Sales 600 20,800
Sold Goods on Account
15 Purchases 700 19,800
Accounts Payable 300 19,800
Purchased Goods on
account
17 Cash 100 10,400
Accounts Receivable 110 10,400
Collections from customers

19 Salaries Expense 810 15,000
Cash 100 15,000
Paid Salaries
Sales 600 16,000
Sold Goods on Account
22 Accounts Payable 300 5,940
Purchase Returns and 730 5,,940

Allowances
Returned Goods to Edsa
Cash 100 5,378
Purchase Discount 720 166
Paid 40% o its account
26 Purchases 700 12,600
Cash 100 12,600
Purchased goods
28 Carriedo, Withdrawal 510 5,000
Cash 100 5,000
Withdrew Cash

31 Salaries Expense 810 15,000
Utilities Expense 820 4,900
Cash 100 19,900
Paid various expenses
CHAPTER 3: POSTING TO THE LEDGER AND TRIAL BALANCE
November 2 Purchases 710 P 65,900
Cash 100 P 42,835
Purchased Goods
4 Office Equipment 200 59,000
Purchased Office
Equipment
8 Cash 100 180,400
Sales 600 180,400
Sold Goods in Cash
9 Cash 100 76,992
Notes Receivable 120 43,308

Sales 600 120,300
Sold Goods to BUN-LON
Office Equipment 200 21,100
Returned the office

equipment
Sales 600 128,110
Sold Goods to customers
17 Freight Out 750 88,590
Salaries Expense 760 89,700
Advertising Expense 780 90,180
Cash 100 268,470
Paid Various Expenses
Cash 100 23,065
Paid its account
Sales 600 77,800
Sold Goods on account

21 Freight Out 750 2,400
Cash 100 2,400
Paid Freight
22 Sales Returns and Allowances 620 11,670
Accounts Receivable 110 11,670
Returned Goods
24 Purchases 710 100,200
Purchased Goods
Purchase Returns and 740 24,500

Allowances
Returned Goods to LEE-

SHA
Cash 100 74,186
Purchase Discount 730 1,514
Paid Lee-Sha
29 Sung, Drawing 510 15,000
Cash 100 15,000
Withdrew cash

GENERAL LEDGER
CASH ACCOUNT NO. 100
Date Particulars F Debit Credit Debit Credit
(Balance) (Balance)
November 1 Beginning Balance 1,548,229
November 2 Purchased Goods J1 42,835 1,505,394
November 8 Sold Goods in Cash J1 180,400 1,685,794
November 9 Sold Goods to BUN- J1 76,992 1,762,786

Long
November 17 Paid Various J1 268,470 1,494,316

Expenses
November 19 Paid its account J1 23, 065 1,471,251
November 21 Paid Freight J1 2,400 1,473,651
November 27 Paid Lee Sha J1 74,186 1,399,465
November 29 Withdrew Cash J1 15,000 1,384,465
ACCOUNTS RECEIVABLE ACCOUNT NO. 110
(Balance) (Balance)
November 1 Beginning Balance 349,220
November 15 Sold Goods to J1 128,110 477,330

Customers
November 20 Sold Goods on J1 77,800 555,130

account
November 21 Returned Goods J1 11,670 543,460

NOTES RECEIVABLE ACCOUNT NO. 120
(Balance) (Balance)
November 9 Sold Goods to Bun- J1 43,308 43,308

Long
MERCHANDISE INVENTORY ACCOUNT NO. 130
(Balance) (Balance)
OFFICE EQUIPMENT ACCOUNT NO. 200
(Balance) (Balance)
November 4 Purchased Office J1 59,000 59,000

Equipment
November 13 Returned the Office J1 21,100 37,900

Equipment
FURNITURE & FIXTURES ACCOUNT NO. 210
(Balance) (Balance)

ACCOUNTS PAYABLE ACCOUNT NO. 300
(Balance) (Balance)
November 2 Purchased Goods J1 23,065 691,915
November 4 Purchased Office J1 59,000 750,915

Equipment
November 13 Returned the J1 21,100 729,815

Equipment
November 19 Paid its account J1 23,065 706,750
November 25 Returned Goods to J1 24,500 782,450

LEE Sha
November 27 Paid Lee Sha J1 75,700 706,750
SUNG, CAPITAL ACCOUNT NO. 500
(Balance) (Balance)
November 1 1,674,479
SUNG, DRAWING ACCOUNT NO. 510
(Balance) (Balance)
November 29 Withdrew cash J1 15,000 15,000

SALES ACCOUNT NO. 600
(Balance) (Balance)
November 8 Sold Goods in Cash J1 180,400 180,400
November 9 Sold Goods to Bun J1 120,300 300,700

Long
November 15 Sold Goods to J1 128,110 428,810

Customers
November 20 Sold Goods on J1 77,800 506,610

account
SALES DISCOUNT ACCOUNT NO. 610
(Balance) (Balance)
SALES RETURNS AND ALLOWANCES ACCOUNT NO. 620
(Balance) (Balance)
November 22 Returned Goods J1 11,670 11,670
PURCHASES ACCOUNT NO. 710
(Balance) (Balance)

FREIGHT IN ACCOUNT NO. 720
(Balance) (Balance)
PURCHASE DISCOUNTS ACCOUNT NO. 730
(Balance) (Balance)
November 27 Paid Lee sha within J1 1,514 1,514

the discount period
PURCHASE RETURNS AND ALLOWANCES ACCOUNT NO. 740
(Balance) (Balance)
November 25 J1 24,500 24,500
FREIGHT OUT ACCOUNT NO. 750
(Balance) (Balance)
November 17 Paid Freight J1 88,590 88,590
November 21 Paid Freight J1 2,400 90,990
SALARIES EXPENSE ACCOUNT NO. 760
(Balance) (Balance)

November 17 Paid Salaries J1 89,700 89,700
UTILITIES EXPENSE ACCOUNT NO. 770
(Balance) (Balance)
ADVERTISING EXPENSE ACCOUNT NO. 780
(Balance) (Balance)
November 17 Paid Advertising J1 90,180 90,180
OFFICE SUPPLIES EXPENSE ACCOUNT NO. 790
(Balance) (Balance)

SAM-SON-SUNG MERCHANDISING COMPANY
TRIAL BALANCE
NOVEMBER 30, 2017
Account No. Account Title Debit Credit
100 Cash 1,379,665
110 Accounts Receivable 543,460
120 Notes Receivable 43,308
200 Office Equipment 37,900
210 Furniture & Fixtures 445,880
300 Accounts Payable 706,750
500 Sung, Capital 1,674,479
510 Sung, Drawing 15,000
600 Sales 506,610
620 Sales Returns and 11,670

Allowances
710 Purchases 166,100
730 Purchase Discount 1,514
740 Purchase Returns and 24,500

Allowances
750 Freight Out 90,990
760 Salaries Expense 89,700
780 Advertising Expense 90,180
TOTAL
2,913,853 2,913,853

Note: for those who received a material with additional information regarding beginning and ending
inventor, kindly disregard it. It is not included in the problem.
CHAPTER 4: FINANCIAL STATEMENTS
PROBLEM 1:
Statement of Cost of Goods Sold
NI-HOON MERCHANDISING
For the month ended October 31, 2017
Hoon Beginning Inventory P 1,200,000
Add: Net Purchases
Purchases P 4,300,000
Add: Freight in 172,000
Total 4,472,000
Less: Purchase Discount 215,000
Purchase Returns and Allowances 129,000 4, 128,000
Total Goods Available for Sale 5,328,000
Less: Hoon Ending Inventory 1,900,000
COST OF GOODS SOLD P 3,428,000
PROBLEM 2:
Note: following the formula for Cost of Goods Sold and Income Statement
A B C D E
Net Sales 120,000 180,000 250,000 290,000 400,000
Merchandise 30,000 50,000 70,000 40,000 120,000

Inventory,
1/1/2017
Net Purchases 80,000 110,000 190,000 160,000 390,000

Total Goods 110,000 160,000 260,000 200,000 510,000
Available for Sale
Merchandise 40,000 20,000 30,000 70,000 130,000

Inventory,
1/31/2017
Cost of Goods 70,000 140,000 230,000 130,000 380,000

Sold
Gross Profit 50,000 40,000 20,000 160,000 20,000
PROBLEM 3:
RAM-YUN TRADING
For the Year Ended December 31, 2017
Yun Beginning Inventory P 90,000
Add: Net Purchases
Purchases P 400,000
Add: Freight in 12,000
Total 412,000
Less: Purchase Discount 9,000
Purchase Returns and Allowances 3,000 400,000
Less: Yun Ending Inventory 75,000
COST OF GOODS SOLD P 415,000

RAM-YUN TRADING
Income Statement
Fot the Year Ended December 31, 2017
Sales P 920,000
Less: Sales Discount (4,000)
Sales Returns and (8,000)

Allowances
Net Sales P 908,000
Less: Cost of Goods Sold (415,000)
GROSS PROFIT 493,000
Less: Operating Expenses
Salaries Expense P 120,000
Supplies Expense 5,000
Insurance Expense 2,000
Depreciation Expense 10,000
Freight Out 6,000
Representation Expense 7,000
Utilities Expense 15,000
Total Operating Expenses (165,000)
NET INCOME P 328,000

CHAPTER 7: ADJUSTING ENTRIES
PROBLEM 1:
PAGE 1
December 31 Salaries Expense 71-1 P 18,500
Salaries Payable 34-1 P 18,500
To record accrued salaries
31 Office Supplies 14-1 6,840
Office Supplies Expense 73-1 6,840
To record the office

supplies on hand
31 Repair Fees Revenue 32-1 181,042
Unearned Fees Revenue 60-1 181,042
To record the adjustment

for revenue
31 Depreciation Expense- Furniture 76-1 4,145

& Fixtures
Accumulated Depreciation F 20-2 4,145

&F
To record Depreciation

31 Doubtful Accounts Expense 4,483
Allowance for Doubtful 12-1 4,483

Accounts
To record the
uncollectible accounts
31 Interest Expense 859
Interest payable 859
To record the interest
PROBLEM 2:
PAGE 1
April 2 Deferred Income 3.2 78,900
Ticket Fees 6.1 78,900
To record the advanced

payment that were actually earned
5 Furniture and Fixtures 2.2 500,000
Cash on Hand 1.1 310,000
Accounts Payable 3.1 95,000
Notes Payable 3.3 95,000
Purchased F and F

8 Office Supplies Expense 7.1 48,564
Office Supplies 1.4 48,564
To record used supplies
10 Cash on Hand 1.1 531.250
Rendered Services in cash
12 Salaries Expense 7.2 25,000
Cash on Hand 11 17,500
Paid its account
15 Repair Expense 7.3 9,000
Advertising Expense 7.4 4,000
Paid various expenses
17 Cash on Hand 1.1 67,000
Loans Payable 3.5 67,000
Borrowed money fro m Farm

Vilage
20 Office Equipment 2.1 45,880
Cash on hand 1.1 18,352

Purchased Office Equipment
23 COC Drawing 5.2 55,110
Withdrew Cash
25 Accounts Receivable 1.2 480,300
Rendered Services on Acct
28 Taxes and License Expense 7.5 12,883
Paid Taxes and licenses
30 THE YEAR IS INVALID
“WHEN YOU FEEL LIKE QUITTING, THINK ABOUT WHY YOU STARTED.”

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ANSWERS AND SOLUTIONS TO EXERCISES

CHAPTER 1: ACCOUNTING FOR MERCHANDISING

MULTIPLE CHOICE QUESTIONS PART 1:

11. Beginning Merchandise Inventory (Squeeze) P 250,000

Add: Purchases 900,000

Total Goods Available for Sale P 1,150,000

Less: Ending Merchandise Inventory (Squeeze) 230,000

Cost of Goods Sold 920,000

13. Purchase Price P 3,600

Add: Freight In 100

Less: Trade Discount (25%) (900)

Purchase Returns (400)

Net Purchases 2,400

14. Beginning Merchandise Inventory P 0

Add : Purchases 40,000

Less: Purchase Returns and Allowances ( 2,000) 41,000

Total Goods Available for Sale 41,000

Less: Ending Inventory (8,000)

COST OF GOODS SOLD 33,000

Prepared by: Krist Mark Q. Macapugay, MBA, MICB, CTT, CB Page 1

MULTIPLE CHOICE QUESTIONS PART 2:

Less: Sales Discount P 15,500

Sales Returns and Allowances 18,100

Net Sales P 40,600

Less: Cost of Goods Sold:

Beginning Merchandise Inventory ` P 18,000

Add: Net Purchases: 31,900

Add: Freight In 2,000

Less: Purchase Discount (6,000)

Purchase Returns and Allowances (2,000)

Total Goods Available For Sale 49,900

Less: Ending Inventory 35,000

COST OF GOODS SOLD 14,900

GROSS PROFIT P 25,700

Prepared by: Krist Mark Q. Macapugay, MBA, MICB, CTT, CB Page 2

Add : Purchases 170,000

Less: Purchase Returns and Allowances ( 20,000) 180,000

Total Goods Available for Sale 180,000

Less: Ending Inventory (0)

COST OF GOODS SOLD 180,000

Less: Sales Discount P 10,000

Sales Returns and Allowances 15,000

Net Sales P 725,000

Less: Cost of Goods Sold (refer to no.5) 180,000

Gross Profit 545,000

Less: Operating Expenses:

Selling Expense P 75,000

General and Administrative Expense 275,000

Total Operating Expenses 350,000

NET PROFIT OR INCOME 195,000

7. Purchase Price P 10,000

Less Trade Discount: 25% ( 2,500)

Net Purchase 7,500

To be paid within the discount period so 7,500 x 98% = 7,350

Prepared by: Krist Mark Q. Macapugay, MBA, MICB, CTT, CB Page 3

Date Particulars F Debit Credit

March 8 Furniture and Fixtures 200 P 173,568

Accounts Payable 300 P 173,568

8 Freight In 710 1,670

Cash 100 1,670

13 Accounts Receivable 110 20,800

Sales 600 20,800

Sold Goods on Account