MODULE 13 Flashcards

1
Q

Q: How do you record a purchase of merchandise for cash in the perpetual inventory system?

A

πŸ”Ή A:
Journal Entry:

plaintext
Copy
Edit
Merchandise Inventory 25,000
Cash 25,000
(To record purchase of merchandise for cash)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Q: How do you record a purchase of merchandise on account in the perpetual inventory system?

A

πŸ”Ή A:
Journal Entry:

plaintext
Copy
Edit
Merchandise Inventory 25,000
Accounts Payable 25,000
(To record purchase of merchandise on account)
πŸ“Œ Note: The perpetual inventory system records purchases directly in the Merchandise Inventory account instead of a temporary β€œPurchases” account.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Q: What is the journal entry to record a return of purchased merchandise in the perpetual inventory system?

A

πŸ”Ή A:
Journal Entry:

plaintext
Copy
Edit
Accounts Payable (or Cash) 760
Merchandise Inventory 760
(To record return or allowance on unsatisfactory merchandise)
πŸ“Œ Note: A return reduces the liability (if bought on credit) or refunds cash (if paid in cash), and decreases Merchandise Inventory.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Q: A company bought merchandise on September 20 for P4,000 with terms 2/10, n/60. What is the journal entry?

A

πŸ”Ή A:
Journal Entry:

plaintext
Copy
Edit
Merchandise Inventory 4,000
Accounts Payable 4,000
(To record purchase on credit; terms 2/10, n/60)
πŸ“Œ Note: β€œ2/10, n/60” means a 2% discount if paid within 10 days; otherwise, the full amount is due in 60 days.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Q: If the company returned P1,000 worth of merchandise to the supplier, what is the journal entry?

A

πŸ”Ή A:
Journal Entry:

plaintext
Copy
Edit
Accounts Payable 1,000
Merchandise Inventory 1,000
(To record return of unsatisfactory merchandise)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

πŸ”Ή Q: If the company pays within the discount period (September 30), what is the journal entry?

A

πŸ”Ή A:

Amount due after return = P4,000 - P1,000 = P3,000
Discount (2% of P3,000) = P60
Amount paid = P2,940
Journal Entry:

plaintext
Copy
Edit
Accounts Payable 3,000
Merchandise Inventory 60
Cash 2,940
(To record payment with 2% discount)
πŸ“Œ Note: The discount reduces Merchandise Inventory instead of recording a separate β€œPurchases Discount” account.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Q: If the company pays after the discount period (October 5), what is the journal entry?

A

πŸ”Ή A:
Journal Entry:

plaintext
Copy
Edit
Accounts Payable 3,000
Cash 3,000
(To record payment without discount)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Q: How do you record freight charges when the buyer pays the transportation cost for purchased goods?

A

πŸ”Ή A:
Journal Entry:

plaintext
Copy
Edit
Merchandise Inventory 500
Cash 500
(To record payment of freight for merchandise purchased)
πŸ“Œ Note: Freight cost is added to Merchandise Inventory instead of recording it separately as β€œFreight-In.”

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Q: How does the perpetual inventory system record purchases differently from the periodic inventory system?

A

πŸ”Ή A:

Perpetual: Uses Merchandise Inventory for purchases.
Periodic: Uses a temporary Purchases account instead of updating inventory directly.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Q: A company purchases merchandise on account for P6,000 with terms 2/10, n/30. How is it recorded under both systems?

A

πŸ”Ή A:
βœ… Perpetual Inventory System:

plaintext
Copy
Edit
Merchandise Inventory 6,000
Accounts Payable 6,000
βœ… Periodic Inventory System:

plaintext
Copy
Edit
Purchases 6,000
Accounts Payable 6,000
πŸ“Œ Key Difference: The perpetual system updates inventory immediately, while the periodic system records purchases separately.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Q: A company pays P200 for freight on the purchase. How is it recorded in both systems?

A

πŸ”Ή A:
βœ… Perpetual Inventory System:

plaintext
Copy
Edit
Merchandise Inventory 200
Cash 200
βœ… Periodic Inventory System:

plaintext
Copy
Edit
Freight-In 200
Cash 200
πŸ“Œ Key Difference: The perpetual system adds freight costs to Merchandise Inventory, while the periodic system records it separately.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Q: A company returns P300 worth of purchased merchandise. How is it recorded in both systems?

A

πŸ”Ή A:
βœ… Perpetual Inventory System:

plaintext
Copy
Edit
Accounts Payable 300
Merchandise Inventory 300
βœ… Periodic Inventory System:

plaintext
Copy
Edit
Accounts Payable 300
Purchases Returns & Allowances 300
πŸ“Œ Key Difference: The perpetual system directly reduces Merchandise Inventory, while the periodic system uses a separate Purchases Returns & Allowances account.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Q: A company pays for merchandise within the discount period. How is it recorded in both systems?

A

πŸ”Ή A:
βœ… Perpetual Inventory System:

plaintext
Copy
Edit
Accounts Payable 5,700
Merchandise Inventory 114
Cash 5,586
βœ… Periodic Inventory System:

plaintext
Copy
Edit
Accounts Payable 5,700
Purchases Discounts 114
Cash 5,586
πŸ“Œ Key Difference: The perpetual system reduces Merchandise Inventory, while the periodic system records the discount separately.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly