YOUTH ON THE ROCK
BASIC ACCOUNTING
TUTORIAL
Jessa Paola B. Diansuy
BASIC ACCOUNTING TUTORIAL P2 1
BASIC ACCOUNTING TUTORIAL P2 2
Inventory Valuation
1. First In, First Out (FIFO)
2. Last In, First Out (LIFO)
3. Weighted Average Cost - Weighted Average Cost Per Unit = Total Cost of Goods
in Inventory / Total Units in Inventory
4. Specific Identification
5. Perpetual Moving-Average
BASIC ACCOUNTING TUTORIAL P2 3
BASIC ACCOUNTING TUTORIAL P2 4
Problem 10:
Hardaway Inc. purchased inventory as follows:
Hardaway Inc. had no beginning inventory and has 500 units on hand as of January 31.
Assuming the specific identification method is used and ending inventory consists of 100
units from the Jan. 10 purchase, 300 units from the Jan. 20 purchase, and 100 units from the
Jan. 30 purchase, cost of goods sold would be
a. P13,000
b. P4,000
c. P7,500
d. P5,000
BASIC ACCOUNTING TUTORIAL P2 5
Problem 10:
Hardaway Inc. purchased inventory as follows:
Hardaway Inc. had no beginning inventory and has 500 units on hand as of January 31.
Assuming the specific identification method is used and ending inventory consists of 100
units from the Jan. 10 purchase, 300 units from the Jan. 20 purchase, and 100 units from the
Jan. 30 purchase, cost of goods sold would be
a. P13,000
b. P4,000
c. P7,500
d. P5,000
BASIC ACCOUNTING TUTORIAL P2 6
Problem 10:
Hardaway Inc. purchased inventory as follows:
Hardaway Inc. had no beginning inventory and has 500 units on hand as of January 31.
Assuming the specific identification method is used and ending inventory consists of 100
units from the Jan. 10 purchase, 300 units from the Jan. 20 purchase, and 100 units from the
Jan. 30 purchase, ending inventory would be
a. P13,000
b. P4,000
c. P7,500
d. P5,000
BASIC ACCOUNTING TUTORIAL P2 7
Problem 10:
Hardaway Inc. purchased inventory as follows:
Hardaway Inc. had no beginning inventory and has 500 units on hand as of January 31.
Assuming the specific identification method is used and ending inventory consists of 100
units from the Jan. 10 purchase, 300 units from the Jan. 20 purchase, and 100 units from the
Jan. 30 purchase, ending inventory would be
a. P13,000
b. P4,000
c. P7,500
d. P5,000
BASIC ACCOUNTING TUTORIAL P2 8
MERCHANDISING
• Buy and sell of goods or inventories
Payment of Payment of Sale of
Buy goods Collection
goods related services goods
• Accounting elements:
1) Asset, 2) Liability, 3) Equity,
4) Income/ Sales, 5) Costs, 6) Operating Expense
• Inventory System: Periodic and Perpetual System
• Sales Discount, Sales Return, Sales Allowance, Net Sales
• Cost of Goods Sold or Cost of Sales
• Purchase Discount, Purchase Returns and Allowances
BASIC ACCOUNTING TUTORIAL P2 9
BASIC ACCOUNTING TUTORIAL P2 10
Periodic System
Inventory, beginning balance P 100,000
Add: Purchase 20,000
Freight in 2,000
Less: Purchase discounts ( 500)
Purchase returns ( 300)
Cost Goods Available for Sale 121,200
Less: Inventory, ending balance ( 80,000)
Cost of Goods Sold / Cost of Sale P 41,200
BASIC ACCOUNTING TUTORIAL P2 11
• The supplier offers a 10% trade discount for purchases over 1,000 units. The
company bought 1,200 units of Article AB with list price of P23 each unit per
supplier’s cash sales invoice no. 3160.
Entry: Purchases 24,840
Cash 24,840
BASIC ACCOUNTING TUTORIAL P2 12
• Supplier’s charge sales invoice no. 1134 showed goods costing P10,000 purchased
under terms 3/10 n/30.
Entry: Purchases 10,000
Accounts Payable 10,000
Entry if paid within the terms: Accounts Payable 10,000
Purchase Discount 300
Cash 9,700
Entry if paid after 10th day: Accounts Payable 10,000
Cash 10,000
BASIC ACCOUNTING TUTORIAL P2 13
• Supplier’s charge sales invoice no. 1234 in the total amount of P9,408 included a
12% VAT of P1,008.
Entry: Purchases 8,400
Input VAT 1,008
Accounts Payable – Trade 9,408
• The company received supplier’s credit memo for P450, for defective and damaged
goods.
Entry: Accounts Payable – Trade 450
Purchase Returns and Allowances 450
BASIC ACCOUNTING TUTORIAL P2 14
• Company received credit memo for P500 upon the return of P500 worth of goods
per supplier’s charges invoice.
Entry: Accounts Payable – Trade 560
Purchase Return and Allowance 560
On June 11, 2018, the company paid a charge purchase with invoice price of P41,000.
The supplier’s charge sales invoice was dated May 29, 2018, terms 5/15 n/60.
Entry: Accounts Payable – Trade 41,000
Purchase Discount 2,050
Cash 38,950
BASIC ACCOUNTING TUTORIAL P2 15
Question:
5. Purchase discounts are reductions in the amount of
a. Collectibles because customer paid within the discount period
b. Collectibles because customer returned damaged goods to the company
c. Payables because the company paid within the discount period
d. Payables because the company returned damaged goods to supplier
BASIC ACCOUNTING TUTORIAL P2 16
Question:
5. Purchase discounts are reductions in the amount of
a. Collectibles because customer paid within the discount period
b. Collectibles because customer returned damaged goods to the company
c. Payables because the company paid within the discount period
d. Payables because the company returned damaged goods to supplier
BASIC ACCOUNTING TUTORIAL P2 17
Question:
7. Value-added tax levied on the purchase of specified goods and services is
recorded as
a. Output tax, a debit
b. Output tax, a credit
c. Input tax, a debit
d. Input tax, a credit
BASIC ACCOUNTING TUTORIAL P2 18
Question:
7. Value-added tax levied on the purchase of specified goods and services is
recorded as
a. Output tax, a debit
b. Output tax, a credit
c. Input tax, a debit
d. Input tax, a credit
BASIC ACCOUNTING TUTORIAL P2 19
Problem 7:
The trial balance of Rachel Company at the end of its fiscal year, August 31, 2019,
includes these accounts: Inventory P29,200; Purchases P144,000; Sales Revenue
P190,000; Freight-In P8,000; Sales Returns and Allowances P3,000; Freight-Out
P1,000; and Purchases Returns and Allowances P5,000. The ending inventory is
P25,000. Compute for the Cost of Goods Sold.
a. P176,200
b. P151,200
c. P159,200
d. P154,200
BASIC ACCOUNTING TUTORIAL P2 20
Problem 7:
The trial balance of Rachel Company at the end of its fiscal year, August 31, 2019,
includes these accounts: Inventory P29,200; Purchases P144,000; Sales Revenue
P190,000; Freight-In P8,000; Sales Returns and Allowances P3,000; Freight-Out
P1,000; and Purchases Returns and Allowances P5,000. The ending inventory is
P25,000. Compute for the Cost of Goods Sold.
a. P176,200
b. P151,200
c. P159,200
d. P154,200
BASIC ACCOUNTING TUTORIAL P2 21
Problem 1:
1. What are the number of units and cost of goods available for sale at December 31, 2019?
a. 10 units; P 1,730
b. 20 units; P 1,770
c. 30 units; P 1,770
d. 30 units; P 1,730
BASIC ACCOUNTING TUTORIAL P2 22
Problem 1:
1. What are the number of units and cost of goods available for sale at December 31, 2019?
a. 10 units; P 1,730
b. 20 units; P 1,770
c. 30 units; P 1,770
d. 30 units; P 1,730
BASIC ACCOUNTING TUTORIAL P2 23
Problem 2:
2. Assuming the FIFO periodic cost flow assumption, what will be the company’s cost of goods sold
for the 120 items sold in 2019?
a. P 1,380
b. P 1,386
c. P 1,410
d. P 1,460
BASIC ACCOUNTING TUTORIAL P2 24
Problem 2:
2. Assuming the FIFO periodic cost flow assumption, what will be the company’s cost of goods sold
for the 120 items sold in 2019?
a. P 1,380
b. P 1,386
c. P 1,410
d. P 1,460
BASIC ACCOUNTING TUTORIAL P2 25
Problem 2:
3. Assuming the periodic weighted-average cost flow assumption, what will be the company’s cost of
goods sold for the 120 items sold in 2019?
a. P 1,386
b. P 1,410
c. P 1,416
d. P 1,460
BASIC ACCOUNTING TUTORIAL P2 26
Problem 2:
3. Assuming the periodic weighted-average cost flow assumption, what will be the company’s cost of
goods sold for the 120 items sold in 2019?
a. P 1,386
b. P 1,410
c. P 1,416
d. P 1,460
BASIC ACCOUNTING TUTORIAL P2 27
Problem 2:
4. Assuming the perpetual moving-average cost flow assumption, what will be the company’s cost of
goods sold for the 120 items sold in 2019?
a. P 1,386
b. P 1,410
c. P 1,416
d. P 1,460
BASIC ACCOUNTING TUTORIAL P2 28
Problem 2:
4. Assuming the perpetual moving-average cost flow assumption,
what will be the company’s cost of goods sold for the 120 items sold in 2019?
a. P 1,386
b. P 1,410
c. P 1,416
d. P 1,460
BASIC ACCOUNTING TUTORIAL P2 29
