Purchase- Related Transaction
The Stationery Company purchased merchandise on account from a
supplier for $17,000 terms 2/10 n/30. The Stationery Company
returned merchandise with invoice amount of $2, 200 and received
full credit.
a) If The Stationery Company pays invoice within the discount
period, what is the amount of cash required for the payment?
$____________.
Determining Amounts to be Paid on Invoices
Determine the amount to be paid in full settlement of each of
the following invoices, assuming that credit for returns and
allowances was received prior to payment and that all invoices were
paid within the discount period:
Merchandise
Invoice Amount Freight
Paid by Seller Customer Returns
and Allowances
a. $20,000 — FOB destination, n/30 $1,000
b. 9,300 $400 FOB shipping point, 1/10, n/30 1,100
c. 7,300 — FOB shipping point, 1/10, n/30 700
d. 3,200 100 FOB shipping point, 1/10, n/30 400
e. 1,300 — FOB destination, 2/10, n/30 —
a. $________
b. $________
c. $________
d. $________
e. $________
Sales Tax
A sale of merchandise on account for $16,600 is subject to a
5% sales tax.
(a) Should the sales tax be recorded at the time of sale or
when payment is received?
___________
(b) What is the amount credited to sales?
$__________.
(c) What is the amount debited to Accounts Receivable?
$__________.
(d) What is the account to which the $830.00 is
credited?
__________.
Income Statement and Accounts for Retail Business
For the fiscal year, sales were $3,866,000 and the cost of
goods sold was $2,204,000.
a. What was the amount of gross profit?
$__________.
b. If total operating expenses were $573,000, could you
determine net income?
___________.
c. Customer Refunds Payable is a(n) ________account.
What is its normal balance?
d. Estimated Returns Inventory is a(n)________account.
What is its normal balance?
__________.
Omega Tire Co.’s perpetual inventory records indicate that
$3,145,000 of merchandise should be on hand on August 31, 20Y4. The
physical inventory indicates that $3,113,500 of merchandise is
actually on hand.
Journalize the adjusting entry for the inventory shrinkage for
Omega Tire Co. for the fiscal year ended August 31. Refer to the
Chart of Accounts for exact wording of account titles.
CHART OF ACCOUNTS
Omega Tire Co.
General Ledger
ASSETS
110 Cash
120 Accounts Receivable
125 Notes Receivable
130 Inventory
131 Estimated Returns Inventory
140 Office Supplies
141 Store Supplies
142 Prepaid Insurance
180 Land
192 Store Equipment
193 Accumulated Depreciation-Store Equipment
194 Office Equipment
195 Accumulated Depreciation-Office Equipment
LIABILITIES
210 Accounts Payable
218 Salaries Payable
219 Customer Refunds Payable
221 Notes Payable
EQUITY
310 Common Stock
311 Retained Earnings
312 Dividends
Journalize the adjusting entry for the inventory shrinkage for
Omega Tire Co. for the fiscal year ended August 31. Refer to the
Chart of Accounts for exact wording of account titles.
PAGE 10
JOURNAL
ACCOUNTING EQUATION
DATE DESCRIPTION POST. REF. DEBIT CREDIT ASSETS LIABILITIES
EQUITY
1 Adjusting Entries
2
3
Journalize the entries for the following transactions. Refer
to the Chart of Accounts for exact wording of account titles.
(Note: The company uses a clearinghouse to take care of all bank as
well as non-bank credit cards used by its customers.)
A. Sold merchandise for cash, $25,000. The cost of the goods
sold was $17,500.
B. Sold merchandise on account, $98,000. The cost of the goods
sold was $58,800.
C. Sold merchandise to customers who used MasterCard and VISA,
$475,000. The cost of the goods sold was $280,000.
D. Sold merchandise to customers who used American Express,
$63,000. The cost of the goods sold was $39,000.
E. Received an invoice from National Clearing House Credit Co.
for $13,450, representing a service fee paid for processing
MasterCard, VISA, and American Express sales
ASSETS
110 Cash
120 Accounts Receivable
125 Notes Receivable
130 Inventory
131 Estimated Returns Inventory
140 Office Supplies
141 Store Supplies
142 Prepaid Insurance
180 Land
192 Store Equipment
193 Accumulated Depreciation-Store Equipment
194 Office Equipment
195 Accumulated Depreciation-Office Equipment
LIABILITIES
210 Accounts Payable
216 Salaries Payable
218 Sales Tax Payable
219 Customer Refunds Payable
220 Unearned Rent
221 Notes Payable
EQUITY
310 Common Stock
311 Retained Earnings
312 Dividends
REVENUE
410 Sales
610 Rent Revenue
EXPENSES
510 Cost of Goods Sold
521 Delivery Expense
522 Advertising Expense
524 Depreciation Expense-Store Equipment
525 Depreciation Expense-Office Equipment
526 Salaries Expense
531 Rent Expense
533 Insurance Expense
534 Store Supplies Expense
535 Office Supplies Expense
536 Credit Card Expense
539 Miscellaneous Expense
710 Interest Expense
Journalize the entries for the transactions on December 31.
Refer to the Chart of Accounts for exact wording of account
titles.
PAGE 10
JOURNAL
ACCOUNTING EQUATION
DATE DESCRIPTION POST. REF. DEBIT CREDIT ASSETS LIABILITIES
EQUITY
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