Transcript Chapter 5 - Accounting

Chapter 5
Exercises
Accounting for
Merchandising Operations
Merchandising Transactions
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In-Class Exercises:
Exercise No.
5-1
Page
211
Merchandise purchases
Merchandise Purchases
Prepare journal entries to record the following transactions for a retail store. Assume a
perpetual inventory system.
Apr. 2 Purchased merchandise from Blue Company under the following terms: $3,600
price, invoice dated April 2, credit terms of 2/15,n/60, and FOB shipping point.
3 Paid $200 for shipping charges on the April 2 purchase.
4 Returned to Blue Company unacceptable merchandise that had an invoice price of
$600.
17 Sent a check to Blue Company for the April 2 purchase, net of the discount and the
returned merchandise.
18 Purchased merchandise from Fox Corp. under the following terms: $7,500 price,
invoice dated April 18, credit terms of 2/10,n/30, and FOB destination.
21 After negotiations, received from Fox a $2,100 allowance on the April 18 purchase.
28 Sent check to Fox paying for the April 18 purchase, net of the discount and
allowance.
Merchandise Purchases
Merchandise Purchases
Discount ($3,000 x 2% = $60)
Merchandise Purchases
End of Exercise
Seller Transactions
Exercise No.
5-2
Page
211
Seller transactions only
Seller Transactions
Taos Company purchased merchandise for resale from
Tuscon Company with an invoice price of $22,000 and
credit terms of 3/10, n/60. The merchandise had cost
Tuscon $15,000. Taos paid within the discount period.
Assume that Tuscon uses a perpetual inventory System.
Prepare entries that the seller (Tuscon) should record for:
a. The sale.
b. The cash collection.
Seller Transactions
Discount ($22,000 x 3% = $660)
Seller Transactions
Seller Transactions
End of Exercise