1.
KEY TERMS
 Inventory
 Sales
 Cost of Goods Sold (COGS)
 Operating Expense
 Gross Profit

2.
INVENTORY SYSTEMS
Two methods of accounting for inventory
a.Perpetual Inventory System – detailed records of the cost of
each items maintained and the cost of each item sold is
determined from records when sale occurs.
b.Periodic Inventory System - Cost of goods sold is determined
only at the end of an accounting period.

3.
PAUL SANTIAGO ENTERPRISE:
June 2022
1 The owner Mr. Santiago invested ₱50,000 to open his business.
2 Bought office machine on cash basis ₱15,000.
3 Bought merchandise on account from Goodwill Supply ₱16,000 term2/10,
n/30
4 Signed contract with promissory note to PNB for barrowed funds ₱15,000
5 Sold merchandise on account ₱14,500 FOB destination term 2/10, n/30
- The COGS was ₱11,000
6 Bought office supplies ₱1,000.
7 Paid ₱150.00 freight on June 5
10 Collected from June 5 customer

4.
PAUL SANTIAGO ENTERPRISE:
June 2022
12 Received credit from Goodwill for defective merchandise returned
₱400
13 Paid Goodwill Supply
15 Salaries paid ₱2,000
16 Bought merchandise for cash ₱12,800
17 Sold merchandise for ₱20,800
- The merchandise had a COGS of ₱14, 500
19 Received refund a supplier on June 16 ₱350
20 Bought merchandise on account from Star Trade Co. ₱13,500 FOB
shipping point, term 2/10, n/30

5.
PAUL SANTIAGO ENTERPRISE:
June 2022
21 Paid freight on June 20 purchased ₱300
24 Bought merchandise on cash basis ₱11,700
25 Made partial payment to Star Trade ₱7,000
27 Mr. Paul withdraw cash from the business for personal use ₱1,800
28 Made refund to customer on June 17, ₱800 for defective merchandise
returned
29 Sold merchandise on account ₱18,000
- The COGS was ₱14,000
- 30 Paid various expenses for the month:
- Salaries ₱2,000, Utilities ₱2,500, Rent ₱2,500