ash Discount and Remittance Calculations For each of the following Paz Abad Company purchases, assume that credit terms 2/10, n/30 and that any credit memorandum was issued and known before Paz Abad made the payments. Purchases Shipping Terms Prepaid Freight Credit Memo (by seller) a. 12,000 FOB Shipping point 1,000 3,000 b. 24,000 FOB Destination 2,400 2,000 c. 28,000 FOB Shipping point 4,000 d. 40,000 FOB Shipping point 3,000
Activity 2. Cash Discount and Remittance Calculations
For each of the following Paz Abad Company purchases, assume that credit terms 2/10,
n/30 and that any credit memorandum was issued and known before Paz Abad made the
payments.
Purchases Shipping Terms Prepaid Freight Credit Memo
(by seller)
a. 12,000 FOB Shipping point 1,000 3,000
b. 24,000 FOB Destination 2,400 2,000
c. 28,000 FOB Shipping point 4,000
d. 40,000 FOB Shipping point 3,000
Required:
1. Determine the cash discount available.
2. Determine the cash remitted if the payment is made within the discount period.
Let’s Analyze
Activity 1. Transportation Costs
On June 16, 2020, Vergara Co. sold merchandise to Pascual Co. for terms 2/10, n/30.
Shipping costs were P600. Pascual Co. received the goods and Vergara Co.'s invoice on June
17. On June 24, Pascual Co. sent the payment to Vergara Co., which Vergara Co. received
on June 25. Both Vergara Co. and Pascual Co. use the periodic inventory system. The
following are several arrangements regarding the shipping costs:
a. Shipping terms are F.O.B. shipping point, freight collect. Pascual Co. paid the
shipping costs on June 17 and remitted P5,880 on June 24.
UM Digos College
Department of Accounting Education
Roxas Extension, Digos City
ACCBP 100 *Property of UMDC
Page 62 of 125
Required:
1. Prepare the entries for Vergara Co. to record the sale and the cash receipt.
2. Prepare the entries for Pascual Co. to record the purchase, the payment of shipping
costs, and the cash remittance.
b. Shipping terms are F.O.B. destination, freight prepaid. Vergara Co. paid the shipping
costs on June 16. Pascual Co. remitted P5,880 on June 24.
Required:
1. Prepare the entries for Vergara Co. to record the sale, the payment of shipping costs,
and the cash receipt.
2. Prepare the entries for Pascual Co. to record the purchase and the cash remittance.
c. Shipping terms are F.O.B. shipping point, freight prepaid. Vergara Co. paid the
shipping costs on June 16 and added the P600 cost to the invoice sent to Pascual Co.
Pascual Co. remitted P6,480 on June 24.
Required:
1. Prepare the entries for Vergara Co. to record the sale and freight payment, and the
cash receipt.
2. Prepare the entries for Pascual Co. to record the purchase (with shipping costs
added to the invoice from Vergara Co.) and the cash remittance.
d. Shipping terms are F.O.B. destination, freight collect. Pascual Co. paid the shipping
costs on June 17 and deducted the P600 from the amount owed to Vergara Co. A
copy of the freight bill to Vergara Co. was provided with the June 24 cash remittance.
Pascual Co. remitted P5,280 on June 24.
Required:
1. Prepare the entries for Vergara Co. to record the sale and the cash receipt.
2. Prepare the entries for Pascual Co. to record the purchase, the freight payment, and
the cash remittance.
Activity 2. Journalizing Merchandising Transactions
Virginia Ruben Company engaged in the following transactions in August 2020:
Aug. 1 Sold merchandise to O. Lacierda Trading on credit, terms n/30, FOB shipping
point, P21,000.
3 Purchased merchandise on credit from R. Cabellon Stores, terms n/30, FOB
shipping point, P38,000.
5 Paid SouthMin Freight for freight charges on merchandise received, P290.
6 Purchased store supplies on credit from Ipil Supplies, terms n/20, P6,360.
8 Purchased merchandise on credit from Pagadian Company, terms n/30, FOB
shipping point, P36,000. Pagadian Company paid P200 for freight costs.
12 Returned some of the merchandise received on Aug. 3 for credit, P6,000.
UM Digos College
Department of Accounting Education
Roxas Extension, Digos City
ACCBP 100 *Property of UMDC
Page 63 of 125
15 Sold merchandise on credit to Columban Stores, terms n/30, FOB shipping
point, P12,000.
16 Returned some of the store supplies purchased on Aug. 6 for credit, P2,000.
17 Sold merchandise for cash, P10,000.
18 Accepted for full credit a return from O. Lacierda Trading, P2,000.
24 Paid accounts to R. Cabellon Stores.
27 Received full payment from O. Lacierda Tra
Step by step
Solved in 3 steps with 3 images
