21. Sammy Co. distributes travelling bags retail stores at a price of P1,550 each travelling bag and extends credit terms of 1/10, n/30 to all customers. At the end of June, Sammys closing stock consisted of 70 travelling bags (code 27) costing P800 each. During the month of July the following merchandising transactions occurred.

1 Sammy purchased 60 suitcases (code 28) on account for P800 each from Bagsy Co.

FOB shipping point. Terms: 2% trade discount, n/10. Sammy paid P1,400 freight.

3 Sammy sold 40 suitcases (code 27) on account to Metro World.

9 Paid the account due to Bagsy.

12 Received payment form Metro World for the account on July 3.

17 Sold 30 suitcases (Code 28) on account to Going and Coming.

18 Purchased 60 suitcases (code 29) for P51,000 from Kingsmen Manufacturer, FOB

Destination, terms 1/10, n/30. Kingsmen paid freight of P9,000.

20 Received credit for P8,500 for 10 suitcases (code 29) returned to Kingsmen.

21 Received payment in full from Going and Coming.

22 Sold 30 suitcases (code 27) and 30 suitcases (code 29) on account to Fly-By-Day.

29 Paid Kingsmen in full account due.

30 Granted Fly-By-Day P500 allowance for 4 suitcases (code 29) which were found with

slight defect.

Unsold stock was counted to be 50 pieces.

Chart of accounts includes the following: No. 101 Cash, No. 112 Accounts Receivable, No.120 Merchandise Inventory, No. 201 Accounts Payable, No. 401 Sales, No. 412 Sales Returns and Allowances, No. 414 Sales Discounts, No. 505 Cost of Goods Sold.

Required:

a) Entries using perpetual methods. Post to T Account Merchandise Inventory

b) Prepare 3 stock cards. Did the unsold units tally with balances of the stock cards?

c) Did the balances in the T Account tally with the cost unsold goods?

d) Compute for Gross profit.