Connect - another Financial Accounting, Chapter 4

1.

Compute the amount to be paid for each of the four separate invoices assuming that all invoices are paid within the discount period.

Merchandise (gross) Terms Payment a. $10,000 2/10, n/60 $9,800selected answer correct b. 27,500 1/15, EOM 27,225selected answer correct c. 85,000 1/10, n/30 84,150selected answer correct d. 22,500 3/15, n/45 21,825selected answer correct Explanation Payment Computations a. $ 9,800 $ 10,000 – ($ 10,000 × 2%) = $ 10,000 × 98% b. $ 27,225 $ 27,500 – ($27,500 × 1%) = $ 27,500 × 99% c. $ 84,150 $ 85,000 – ($85,000 × 1%) = $ 85,000 × 99% d. $ 21,825 $ 22,500 – ($22,500 × 3%) = $ 22,500 × 97%

----------------------------------------------------------------------------------- 2. Prepare journal entries to record each of the following transactions of a merchandising company. The company uses a perpetual inventory system and the gross method. Nov. 5 Purchased 500 units of product at a cost of $20 per unit. Terms of the sale are 3/10, n/60; the invoice is dated November 5. Nov. 7 Returned 45 defective units from the November 5 purchase and received full credit. Nov. 15 Paid the amount due from the November 5 purchase, less the return on November 7. No Date General Journal Debit Credit 1 Nov 05 Merchandise inventory 500*20selected answer correct 10,000selected answer correct not attempted Accounts payableselected answer correct not attempted 10,000selected answer correct 2 Nov 07 Accounts payable 45*20selected answer correct 900selected answer correct not attempted Merchandise inventoryselected answer correct not attempted 900selected answer correct 3 Nov 15 Accounts payable 10000-900selected answer correct 9,100selected answer correct not attempted Merchandise inventory 3% of 9100selected answer correct not attempted 273selected answer correct Cashselected answer correct not attempted 8,827selected answer correct ----------------------------------------------------------------------------------- 3. Prepare journal entries to record each of the following transactions. The company records purchases using the gross method and a perpetual inventory system. Aug. 1 Purchased merchandise with an invoice price of $87,000 and credit terms of 2/10, n/30. Aug. 11 Paid supplier the amount owed from the August 1 purchase. No Date General Journal Debit Credit 1 Aug 01 Merchandise inventoryselected answer correct 87,000selected answer correct not attempted Accounts payableselected answer correct not attempted 87,000selected answer correct 2 Aug 11 Accounts payableselected answer correct 87,000selected answer correct not attempted Merchandise inventory 2% of 87000selected answer correct not attempted 1,740selected answer correct Cashselected answer correct not attempted 85,260selected answer correct ----------------------------------------------------------------------------------- 4. Prepare journal entries to record each of the following transactions. The company records purchases using the gross method and a perpetual inventory system. Sept. 15 Purchased merchandise with an invoice price of $62,500 and credit terms of 5/5, n/15. Sept. 29 Paid supplier the amount owed on the September 15 purchase. No Date General Journal Debit Credit 1 Sept 15 Merchandise inventoryselected answer correct 62,500selected answer correct not attempted Accounts payableselected answer correct not attempted 62,500selected answer correct 2 Sept 29 Accounts payableselected answer correct 62,500selected answer correct not attempted Cashselected answer correct not attempted 62,500selected answer correct ----------------------------------------------------------------------------------- 5. Prepare journal entries to record the following transactions for a retail store. The company uses a perpetual inventory system and the gross method.    Apr. 2 Purchased $5,400 of merchandise from Lyon Company with credit terms of 2/15, n/60, invoice dated April 2, and FOB shipping point. 3 Paid $230 cash for shipping charges on the April 2 purchase. 4 Returned to Lyon Company unacceptable merchandise that had an invoice price of $400. 17 Sent a check to Lyon Company for the April 2 purchase, net of the discount and the returned merchandise. 18 Purchased $10,100 of merchandise from Frist Corp. with credit terms of 1/10, n/30, invoice dated April 18, and FOB destination. 21 After negotiations, received from Frist a $500 allowance toward the $10,100 owed on the April 18 purchase. 28 Sent check to Frist paying for the April 18 purchase, net of the allowance and the discount. No Date General Journal Debit Credit 1 Apr 02 Merchandise inventoryselected answer correct 5,400selected answer correct not attempted Accounts payable—Lyonselected answer correct not attempted 5,400selected answer correct 2 Apr 03 Merchandise inventoryselected answer correct 230selected answer correct not attempted Cashselected answer correct not attempted 230selected answer correct 3 Apr 04 Accounts payable—Lyonselected answer correct 400selected answer correct not attempted Merchandise inventoryselected answer correct not attempted 400selected answer correct 4 Apr 17 Accounts payable—Lyon 5000-400selected answer correct 5,000selected answer correct not attempted Merchandise inventory 2% of 5000selected answer correct not attempted 100selected answer correct Cashselected answer correct not attempted 4,900selected answer correct 5 Apr 18 Merchandise inventoryselected answer correct 10,100selected answer correct not attempted Accounts payable—Fristselected answer correct not attempted 10,100selected answer correct 6 Apr 21 Accounts payable—Fristselected answer correct 500selected answer correct not attempted Merchandise inventoryselected answer correct not attempted 500selected answer correct 7 Apr 28 Accounts payable—Fristselected answer correct 9,600selected answer correct not attempted Merchandise inventory 1%selected answer correct not attempted 96selected answer correct Cashselected answer correct not attempted 9,504selected answer correct ----------------------------------------------------------------------------------- 6. Prepare journal entries to record each of the following sales transactions of a merchandising company. The company uses a perpetual inventory system and the gross method. Apr. 1 Sold merchandise for $5,800, with credit terms n/30; invoice dated April 1. The cost of the merchandise is $3,480. Apr. 4 The customer in the April 1 sale returned $660 of merchandise for full credit. The merchandise, which had cost $396, is returned to inventory. Apr. 8 Sold merchandise for $2,400, with credit terms of 1/10, n/30; invoice dated April 8. Cost of the merchandise is $1,680. Apr. 11 Received payment for the amount due from the April 1 sale less the return on April 4. No Date General Journal Debit Credit 1 Apr 01 Accounts receivableselected answer correct 5,800selected answer correct not attempted Salesselected answer correct not attempted 5,800selected answer correct 2 Apr 01 Cost of goods soldselected answer correct 3,480selected answer correct not attempted Merchandise inventoryselected answer correct not attempted 3,480selected answer correct 3 Apr 04 Sales returns and allowancesselected answer correct 660selected answer correct not attempted Accounts receivableselected answer correct not attempted 660selected answer correct 4 Apr 04 Merchandise inventoryselected answer correct 396selected answer correct not attempted Cost of goods soldselected answer correct not attempted 396selected answer correct 5 Apr 08 Accounts receivableselected answer correct 2,400selected answer correct not attempted Salesselected answer correct not attempted 2,400selected answer correct 6 Apr 08 Cost of goods soldselected answer correct 1,680selected answer correct not attempted Merchandise inventoryselected answer correct not attempted 1,680selected answer correct 7 Apr 11 Cashselected answer correct 5,140selected answer correct not attempted Accounts receivable 5800-660selected answer correct not attempted 5,140selected answer correct ----------------------------------------------------------------------------------- 7. Use the following information for the Exercises below. Allied Merchandisers was organized on May 1. Macy Co. is a major customer (buyer) of Allied (seller) products. May 3 Allied made its first and only purchase of inventory for the period on May 3 for 1,000 units at a price of $11 cash per unit (for a total cost of $11,000). 5 Allied sold 500 of the units in inventory for $15 per unit (invoice total: $7,500) to Macy Co. under credit terms 2/10, n/60. The goods cost Allied $5,500. 7 Macy returns 50 units because they did not fit the customer’s needs (invoice amount: $750). Allied restores the units, which cost $550, to its inventory. 8 Macy discovers that 50 units are scuffed but are still of use and, therefore, keeps the units. Allied sends Macy a credit memorandum for $350 toward the original invoice amount to compensate for the damage. 15 Allied receives payment from Macy for the amount owed on the May 5 purchase; payment is net of returns, allowances, and any cash discount. Prepare journal entries to record the following transactions for Allied assuming it uses a perpetual inventory system and the gross method. (Allied estimates returns using an adjusting entry at each year-end.) No Date General Journal Debit Credit 1 May 03 Merchandise inventoryselected answer correct 11,000selected answer correct not attempted Cashselected answer correct not attempted 11,000selected answer correct 2 May 05 Accounts receivableselected answer correct 7,500selected answer correct not attempted Salesselected answer correct not attempted 7,500selected answer correct 3 May 05 Cost of goods soldselected answer correct 5,500selected answer correct not attempted Merchandise inventoryselected answer correct not attempted 5,500selected answer correct 4 May 07 Sales returns and allowancesselected answer correct 750selected answer correct not attempted Accounts receivableselected answer correct not attempted 750selected answer correct 5 May 07 Merchandise inventoryselected answer correct 550selected answer correct not attempted Cost of goods soldselected answer correct not attempted 550selected answer correct 6 May 08 Sales returns and allowancesselected answer correct 350selected answer correct not attempted Accounts receivableselected answer correct not attempted 350selected answer correct 7 May 15 Cashselected answer correct 6,272selected answer correct not attempted Sales discounts 2% of 6400selected answer correct 128selected answer correct not attempted Accounts receivable 7500-750-350selected answer correct not attempted 6,400selected answer correct 8. Prepare the appropriate journal entries for Macy Co. to record each of the May transactions. Macy is a retailer that uses the gross method and a perpetual inventory system, and purchases these units for resale. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) No Date General Journal Debit Credit 1 May 03 No journal entry requiredselected answer correct not attempted not attempted 2 May 05 Merchandise inventoryselected answer correct 7,500selected answer correct not attempted Accounts payableselected answer correct not attempted 7,500selected answer correct 3 May 07 Accounts payableselected answer correct 750selected answer correct not attempted Merchandise inventoryselected answer correct not attempted 750selected answer correct 4 May 08 Accounts payableselected answer correct 350selected answer correct not attempted Merchandise inventoryselected answer correct not attempted 350selected answer correct 5 May 15 Accounts payableselected answer correct 6,400selected answer correct not attempted Merchandise inventoryselected answer correct not attempted 128selected answer correct Cashselected answer correct not attempted 6,272selected answer correct ----------------------------------------------------------------------------------- 9. Sydney Retailing (buyer) and Troy Wholesalers (seller) enter into the following transactions.    May 11 Sydney accepts delivery of $23,500 of merchandise it purchases for resale from Troy: invoice dated May 11; terms 3/10, n/90; FOB shipping point. The goods cost Troy $15,745. Sydney pays $650 cash to Express Shipping for delivery charges on the merchandise. 12 Sydney returns $1,400 of the $23,500 of goods to Troy, who receives them the same day and restores them to its inventory. The returned goods had cost Troy $938. 20 Sydney pays Troy for the amount owed. Troy receives the cash immediately. (Both Sydney and Troy use a perpetual inventory system and the gross method.) 1. Prepare journal entries that Sydney Retailing (buyer) records for these three transactions. 2. Prepare journal entries that Troy Wholesalers (seller) records for these three transactions. Prepare journal entries that Sydney Retailing (buyer) records for these three transactions. No Date General Journal Debit Credit 1 May 11 Merchandise inventoryselected answer correct 23,500selected answer correct not attempted Accounts payableselected answer correct not attempted 23,500selected answer correct 2 May 11 Merchandise inventoryselected answer correct 650selected answer correct not attempted Cashselected answer correct not attempted 650selected answer correct 3 May 12 Accounts payableselected answer correct 1,400selected answer correct not attempted Merchandise inventoryselected answer correct not attempted 1,400selected answer correct 4 May 20 Accounts payable 23500-1400selected answer correct 22,100selected answer correct not attempted Merchandise inventory 3%selected answer correct not attempted 663selected answer correct Cashselected answer correct not attempted 21,437selected answer correct Prepare journal entries that Troy Wholesalers (seller) records for these three transactions. No Date General Journal Debit Credit 1 May 11 Accounts receivableselected answer correct 23,500selected answer correct not attempted Salesselected answer correct not attempted 23,500selected answer correct 2 May 11 Cost of goods soldselected answer correct 15,745selected answer correct not attempted Merchandise inventoryselected answer correct not attempted 15,745selected answer correct 3 May 12 Sales returns and allowancesselected answer correct 1,400selected answer correct not attempted Accounts receivableselected answer correct not attempted 1,400selected answer correct 4 May 12 Merchandise inventoryselected answer correct 938selected answer correct not attempted Cost of goods soldselected answer correct not attempted 938selected answer correct 5 May 20 Cashselected answer correct 21,437selected answer correct not attempted Sales discountsselected answer correct 663selected answer correct not attempted Accounts receivableselected answer correct not attempted 22,100selected answer correct ----------------------------------------------------------------------------------- 10. Following are the merchandising transactions for Dollar Store. Nov. 1 Dollar Store purchases merchandise for $1,900 on terms of 2/5, n/30, FOB shipping point, invoice dated November 1. 5 Dollar Store pays cash for the November 1 purchase. 7 Dollar Store discovers and returns $150 of defective merchandise purchased on November 1, and paid for on November 5, for a cash refund. 10 Dollar Store pays $95 cash for transportation costs for the November 1 purchase. 13 Dollar Store sells merchandise for $2,052 with terms n/30. The cost of the merchandise is $1,026. 16 Merchandise is returned to the Dollar Store from the November 13 transaction. The returned items are priced at $270 and cost $135; the items were not damaged and were returned to inventory. Journalize the above merchandising transactions for the Dollar Store assuming it uses a perpetual inventory system and the gross method. No Date General Journal Debit Credit 1 Nov 01 Merchandise inventoryselected answer correct 1,900selected answer correct not attempted Accounts payableselected answer correct not attempted 1,900selected answer correct 2 Nov 05 Accounts payableselected answer correct 1,900selected answer correct not attempted Merchandise inventoryselected answer correct not attempted 38selected answer correct Cashselected answer correct not attempted 1,862selected answer correct 3 Nov 07 Cash 150*(100%-2%)selected answer correct 147selected answer correct not attempted Merchandise inventoryselected answer correct not attempted 147selected answer correct 4 Nov 10 Merchandise inventoryselected answer correct 95selected answer correct not attempted Cashselected answer correct not attempted 95selected answer correct 5 Nov 13 Accounts receivableselected answer correct 2,052selected answer correct not attempted Salesselected answer correct not attempted 2,052selected answer correct 6 Nov 13 Cost of goods soldselected answer correct 1,026selected answer correct not attempted Merchandise inventoryselected answer correct not attempted 1,026selected answer correct 7 Nov 16 Sales returns and allowancesselected answer correct 270selected answer correct not attempted Accounts receivableselected answer correct not attempted 270selected answer correct 8 Nov 16 Merchandise inventoryselected answer correct 135selected answer correct not attempted Cost of goods soldselected answer correct not attempted 135selected answer correct ----------------------------------------------------------------------------------- 11. Use the following information for the Exercises below. [The following information applies to the questions displayed below.] Nix’It Company’s ledger on July 31, its fiscal year-end, includes the following selected accounts that have normal balances (Nix’It uses the perpetual inventory system).       Merchandise inventory $ 47,300 Sales returns and allowances $ 4,600 Retained earnings 134,300 Cost of goods sold 110,700 Dividends 7,000 Depreciation expense 12,200 Sales 164,100 Salaries expense 42,000 Sales discounts 4,800 Miscellaneous expenses 5,000 A physical count of its July 31 year-end inventory discloses that the cost of the merchandise inventory still available is $45,200. Prepare the entry to record any inventory shrinkage. No Date General Journal Debit Credit 1 July 31 Cost of goods soldselected answer correct 2,100selected answer correct not attempted Merchandise inventory 47300-45200selected answer correct not attempted 2,100selected answer correct 12. Prepare journal entries to close the balances in temporary revenue and expense accounts. Remember to consider the entry for shrinkage. No Date General Journal Debit Credit 1 July 31 Salesselected answer correct 164,100selected answer correct not attempted Income summaryselected answer correct not attempted 164,100selected answer correct 2 July 31 Income summaryselected answer correct 181,400selected answer correct not attempted Sales discountsselected answer correct not attempted 4,800selected answer correct Sales returns and allowancesselected answer correct not attempted 4,600selected answer correct Cost of goods sold (+2100) selected answer correct not attempted 112,800selected answer correct Depreciation expenseselected answer correct not attempted 12,200selected answer correct Salaries expenseselected answer correct not attempted 42,000selected answer correct Miscellaneous expensesselected answer correct not attempted 5,000selected answer correct ----------------------------------------------------------------------------------- 13. The following list includes selected permanent accounts and all of the temporary accounts from the December 31, 2017, unadjusted trial balance of Emiko Co.. Emiko Co. uses a perpetual inventory system. Debit Credit Merchandise inventory $ 34,500 Prepaid selling expenses 6,500 Dividends 42,000 Sales $ 565,000 Sales returns and allowances 19,300 Sales discounts 5,900 Cost of goods sold 230,000 Sales salaries expense 57,000 Utilities expense 19,500 Selling expenses 40,500 Administrative expenses 114,000 Additional Information Accrued sales salaries amount to $2,100. Prepaid selling expenses of $3,900 have expired. A physical count of year-end merchandise inventory shows $31,400 of goods still available. (a) Use the above account balances along with the additional information, prepare the adjusting entries. (b) Use the above account balances along with the additional information, prepare the closing entries. Use the above account balances along with the additional information, prepare the adjusting entries. No Date General Journal Debit Credit 1 Dec 31 Sales salaries expenseselected answer correct 2,100selected answer correct not attempted Salaries payableselected answer correct not attempted 2,100selected answer correct 2 Dec 31 Selling expensesselected answer correct 3,900selected answer correct not attempted Prepaid selling expensesselected answer correct not attempted 3,900selected answer correct 3 Dec 31 Cost of goods soldselected answer correct 3,100selected answer correct not attempted Merchandise inventoryselected answer correct not attempted 3,100selected answer correct