Accounting for Receivables

Freight Charges
Papi Company sold merchandise on account for P500, 000. The terms are 2/10, n/30. The related
freight charge amount to P10, 000. The account was collected within the discount period.

Prepare the journal entries for the following freight terms

1. Fob Destination and Freight Collect
2. Fob Destination and Freight Prepaid
3. Fob Shipping Point and Freight Collect
4. Fob Shipping Point and Freight Prepaid

Net Method vs Gross Method

On June 15, 2019, Hotdog Company sold 100 air conditioning units. The sale price of each unit
is P45, 000.
All of sales are subject to terms 2/10, n30. The entity used the gross method of accounting for
accounts receivable.

Prepare the Journal entries:

 To record the sale
 Receipt of the payment if the amount was received on June 25, 2019
 Receipt of the payment if the amount was received on June 30, 2019

On June 14, 2019, Foot long company sold 50 air conditioning units. The sales price for each
unit is P50, 000.
All of sales are subject to terms 2/10, n30. The entity used the net method of accounting for
accounts receivable.

Prepare the Journal entries:

 To record the sale
 Receipt of the payment if the amount was received on February 24, 2019
 Receipt of the payment if the amount was received on February 29, 2019

On August 1 of the current year, Ace Company recorded purchases of inventory of P 800,000
and P 1,000,000 under credit terms of 2/15, net 30. The payment due on the P 800,000 purchase
was remitted on August 16. The payment due on the P 1,000,000 purchase was remitted on
August 31. Under the net method and the gross method, these purchases should be included at
what respective amounts in the determination of cost of goods available for sale?

Allowance for Sales Discount

Raven Company started business in March 2019. Sales for the year totaled P4, 000,000.
Industry statistics suggest that 10% of the merchandise sold to customers will be returned
The entity estimated sales returns based on the industry average. During the year, customers
returned goods with sale price of 300,000
Additionally, during the year the following transactions occurred in summary form:

1. Sales of merchandise on account, 3/10, n/30 5,000,000

2. Collection within the discount period 1,470,000
3. Collection beyond the discount period 1,000,000
4. Sales return granted 100,000
5. Sales return estimated at the end of the year 20,000