Chapter 3Revisiting The recording process : Chapter 3Revisiting The recording process Prepared by: Pak Mei Sen
3a : 3a The components of income and expenses differ as follows:
3b : 3b The revenue measurement process in RETAIL business is as follows:
9 : 9 If a price is quoted as ‘GST inclusive’, it means the GST component has already been added to the price.
You must divide the total by 11 to find the GST component. For example, sales of $2,200 (GST inclusive) /11 = $200.
This means the sale was for $2,000 and a further $200 was added as GST.
Perpetual inventory system : Perpetual inventory system PURCHASES OF INVENTORY (at cost)
Dr Inventory
Cr Cash / Account Payable PURCHASES RETURNS
(at cost)
Dr Cash / Account Payable
Cr Inventory SALES OF INVENTORY
(at selling price)
Dr Account Receivables/Cash
Cr Sales
(at cost)
Dr Cost of Goods Sold
Cr Inventory INVENTORY WRITE-DOWN
(at cost)
Dr Inventory write-down
Cr Cost of Goods Sold SALES RETURNS
(at selling price)
Dr Sales Returns & Allowance
Cr Account Receivables/Cash
(at cost)
Dr Inventory
Cr Cost of Goods Sold
BRIEF EXERCISE 3-1 : BRIEF EXERCISE 3-1 Giovanni Company
Inventory 780
Accounts Payable 780
Gordon Company
Accounts Receivable 780
Sales 780
Cost of Goods Sold 560
Inventory 560
BRIEF EXERCISE 3-2 : BRIEF EXERCISE 3-2 (a) Accounts Receivable 800,000
Sales 800,000
Cost of Goods Sold 620,000
Inventory 620,000
(b) Sales Returns and Allowances 120,000
Accounts Receivable 120,000
Inventory Write-down 90,000
Cost of Goods Sold 90,000
(c) Cash 680,000
Accounts Receivable
($800,000 – $120,000) 680,000
BRIEF EXERCISE 3-5 : BRIEF EXERCISE 3-5 This journal entry records the payment of the GST to the taxation authority.
Sellers Limited has collected $100 GST on sales during the reporting period, and
the amount of GST paid on purchases is $90;
the remaining balance of $10 is the amount of cash paid to the tax authority. DR GST PAYABLE (LIAB) 100
CR GST PAID (ASSETS) 90
CR CASH 10
BRIEF EXERCISE 3-6 : BRIEF EXERCISE 3-6 3 August
Dr Inventory 2,080
Cr Accounts Payable 2,080
(Recording purchase of inventory from supplier)
5 August
Dr Accounts Payable 360
Cr Inventory 360
(return of goods to supplier)
BRIEF EXERCISE 3-7 : BRIEF EXERCISE 3-7 Dr Cash at Bank 295
Cr Sales Revenue 295
(recording cash sale)
Dr Cost of Sales 150
Cr Inventory 150
(recording cost price of sale)
E3.1 : E3.1 Apr. 5 Apr. 6 Apr. 7 Apr. 8 Apr. 15
E3.3 : E3.3 Dec. 3
Accounts Receivable 480,000
Sales 480,000
Cost of Goods Sold 350,000
Inventory 350,000
Dec. 8
Sales Returns and Allowances 65,000
Accounts Receivable 65,000
Inventory 49,000
Cost of Goods Sold 49,000
Dec. 13
Cash at bank 415,000
Accounts Receivable 415,000
EXERCISE 3-5 Bill Roxam Ltd : EXERCISE 3-5 Bill Roxam Ltd Apr. 5 Inventory 19,800
Accounts Payable 19,800
Apr. 6 Wages Expense 15,200
Cash at bank 15,200
Apr. 7 Equipment 28,600
Accounts Payable 28,600
Apr. 8 Accounts Payable 2,100
Inventory 2,100
Apr. 15 Accounts Payable 17,700
Cash at Bank 17,700
(19,800 – 2,100)
PROBLEM 3-1General Journal : PROBLEM 3-1General Journal
PROBLEM 3-1General Journal : PROBLEM 3-1General Journal
PROBLEM 3-1 (b) : PROBLEM 3-1 (b)
PROBLEM 3-1 (b) : PROBLEM 3-1 (b)
PROBLEM 3-1 (b) : PROBLEM 3-1 (b)
PROBLEM 3-1 (b) : PROBLEM 3-1 (b)
PROBLEM 3-1 (b) : PROBLEM 3-1 (b)
Slide 21 :
THE END…. : THE END…. THANKS YOU.