Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Cherry Lopez runs the Wear Ever Store which sells ladies' wear. The company is VAT registered. All sales and freight are inclusive of 1 2

Cherry Lopez runs the Wear Ever Store which sells ladies' wear. The company is VAT registered. All sales and freight are inclusive of 12% VAT. She carries charge accounts for a few customers. To encourage prompt payment she offers cash discounts of 210,n30, FOB Shipping Point. She invested on January 1 merchandise worth P200,000. She also invested P500,000 cash of which P400,000 was deposited with Citibank for the account of the business. The following are the transactions for the month of January:
2 Issued a check for rent deposit, P25,000.
3 Purchased merchandise from a Hong Kong distributor for $44,800. Terms: FOB Shipping Point, 210,n30 with prepaid freight of $280 added to the invoice. The exchange rate is P5.5 to a Hong Kong Dollar. Add 12% VAT on the purchase price including freight.
4 Purchased merchandise from Folks Wear, P39,200 less 2% and 1% trade discounts. Terms: FOB Shipping Point, 2/10,115,n30. Add 12% VAT to the gross invoice price.
5 Paid cash for freight of Folks Wear shipment, P1,440.
6 Sold merchandise on account to Sari Store, P8,960. Freight collect, P504.
7 Returned merchandise to Folks Wear who credited the account for PI,800.
11 Issued a check in payment of the Hong Kong account.
14 Summary of cash sales P15,680 which was immediately deposited.
15 Paid cash for the salary of an office secretary P14,000 less payroll liabilities.
16 Issued a check in payment of Folks Wear account.
17 Received cash in full of Sari account. This was immediately deposited with Citibank.
18 Sold merchandise for cash, P16,800. This was immediately deposited with Citibank.
19 Cash refund to customers amounted to P12,320.
20 Sold merchandise on account to Robinson's P33,600 plus prepaid freight P1,456.
21 Sold merchandise to Citibank credit cardholders, P9,520.(Considered as cash sales. Use cash in bank account).
22 Received merchandise returned by Robinson's, P4,704. VAT included.
23 Service fee charged by Citibank, P1,125.(Use the title bank service charges and decrease cash in bank)
24 Paid for utilities in cash P5,650 and rent P15,000.
25 Paid for salary less payroll liabilities.
28 Issued a check in payment of the rent P12;500.
30 A physical count of inventory showed P553,000 still unsold.
Required:
Journalize the transactions.
Open the creditors' and customers' subsidiary ledger and post the entries.
Post the entries to the control accounts. Prove the balances of the subsidiary ledgers against the control accounts.
Determine the gross profit for the month and the gross profit ratio.
image text in transcribed

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Cost Accounting A Managerial Emphasis

Authors: Charles T. Horngren, Foster George, Srikand M. Datar, Maureen P. Gowing

5th Canadian Edition

0135004934, 978-0135004937

More Books

Students also viewed these Accounting questions

Question

When does an employer have to submit payroll tax payments?

Answered: 1 week ago