Problem 4-2 (ACP)
Affectionate Company sold merchandise on account for P500,000. The terms are 3/10,
n/30. The related freight charge amounted to P10,000. The account was collected within
the discount period.
Required:
Prepare journal entries to record the transactions under the following freight terms:
1. FOB destination and freight collect
Original Entry
Particulars Debit Credit
Accounts Receivable 500,000
Freight - Out 10,0000
Sales 500,000
Allowances for Freight Charge 10,000
Terms: 3/10, n/30
Collection Entry
Particulars Debit Credit
Cash 475,000
Sales Discount 15,0000
Allowance for Freight Charge 10,000
Accounts Receivable 500,000
Collection of customers account with
discount
2. FOB destination and freight prepaid
Particulars Debit Credit
Accounts Receivable 500,00
Freight - Out 10,0000
Sales 500,000
Cash 10,000
Terms: 3/10, n/30
Particulars Debit Credit
Cash 485,000
Freight - Out 15,0000
Accounts Receivable 500,000
Collection of customer’s account with
discount
3. FOB shipping point and freight collect
Particulars Debit Credit
Accounts Receivable 500,000
Sales 500,000
Terms: 3/10, n/30
Particulars Debit Credit
Cash 485,000
Sales Discount 15,0000
Accounts Receivable 500,000
Collection of customer’s account with
discount
4. FOB shipping point and freight prepaid
Particulars Debit Credit
Accounts Receivable 510,000
Sales 500,000
Cash 10,000
Terms: 3/10, n/30
Particulars Debit Credit
Cash 495,000
Sales Discount 15,0000
Accounts Receivable 510,000
Collection of customer’s account with
discount
Problem 4-3 (IAA) - On June 15, 2024, Romela Company sold 100 air conditioning
units. The sale price for each unit is P45,000.
All of sales are subject to terms 2/10, 130. The entity used the gross method of
accounting for accounts receivable.
Required:
1. Prepare journal entry to record the sale
Particulars Debit Credit
Accounts Receivable 4,500,000
Sales 4,500,000
Terms: 2/10, n/30
2. Prepare journal entry to record receipt of the payment assuming the correct
amount was received on June 25, 2024.
Particulars Debit Credit
Cash 4,410,000
Sales Discount 90,000
Accounts Receivable 4,500,00
Collection of customer’s account with
discount
3. Prepare the journal entry to record receipt of the payment assuming the correct
amount was received on July 10, 2024
Particulars Debit Credit
Cash 4,500,000
Accounts Receivable 4,500,000
Collection of customer’s account
Problem 4-4 (IAA) - On February 14, 2024, Prime Company sold 50 air conditioning
units. The sale price for each unit is P50,000.
All of the sales are sujbect to terms 2/10, n/30. The entity used the net method of
accounting for accounts receivable.
Required:
1. Prepare the journal entry to record the sale.
Particulars Debit Credit
Accounts Receivable 2,450,000
Sales 2,450,000
Terms: 2/10, n/30
2. Prepare the journal entry to record receipt of the payment assuming the correct
amount was received on February 24, 2024.
Particulars Debit Credit
Cash 2,450,000
Accounts Receivable 2,450,000
Collection of customer’s account
with discount
3. Prepare the journal entry to record receipt of the payment, assuming the correct
amount was received on March 10, 2024.
Particulars Debit Credit
Cash 2,500,000
Account Receivable 2,450,000
Sales Discount Forfeited 50,000
Collection of customer’s account
Problem 4-5 (IAA)
During the current year, Raven Company started business and realized sales for the
first year totaling P4,000,000.
The entity priced its merchandise to yield a 40% gross profit based on sales. 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 current
year, customers returned goods with sale price of P300,000.
Required:
Prepare journal entries to record sales, sales returns and the year-end adjusting entry
for estimated sales returns.
Sales
Particulars Debit Credit
Accounts Receivable 4,000,000
Sales 4,000,000
Merchandise on account
Sales Return and Allowances
Particulars Debit Credit
Sales Returns and Allowances 300,000
Accounts Receivable 300,000
Return of merchandise on account
Year-end adjusting entry for sales returns and allowances
Particulars Debit Credit
Sales Returns and Allowances 100,000
Accounts Receivable 100,000
Adjustment for sales returns and
allowances
