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Week 1 apply
Exercise 5-7 Recording sales, purchases, shipping, and returns-buyer and seller LO P1, P2
Sydney Retailing (buyer) and Troy Wholesalers (seller) enter into the following transactions.
| May | 11 | Sydney accepts delivery of $28,500 of merchandise it purchases for resale from Troy: invoice dated May 11, terms 3/10, n/90, FOB shipping point. The goods cost Troy $19,095. Sydney pays $640 cash to Express Shipping for delivery charges on the merchandise. | ||
| 12 | Sydney returns $1,500 of the $28,500 of goods to Troy, who receives them the same day and restores them to its inventory. The returned goods had cost Troy $1,005. | |||
| 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.
Complete this question by entering your answers in the tabs below.
- Required 1
- Required 2
Prepare journal entries that Sydney Retailing (buyer) records for these three transactions.
| No | Date | General Journal | Debit | Credit |
| 1 | May 11 | Merchandise inventory | 28,500 | |
| Accounts payable | 28,500 | |||
| 2 | May 11 | Merchandise inventory | 640 | |
| Cash | 640 | |||
| 3 | May 12 | Accounts payable | 1,500 | |
| Merchandise inventory | 1,500 | |||
| 4 | May 20 | Accounts payable | 27,000 | |
| Cash | 26,190 | |||
| Merchandise inventory | 810 |
Seller
| No | Date | General Journal | Debit | Credit |
| 1 | May 11 | Accounts receivable | 28,500 | |
| Sales | 28,500 | |||
| 2 | May 11 | Cost of goods sold | 19,095 | |
| Merchandise inventory | 19,095 | |||
| 3 | May 12 | Sales returns and allowances | 1,500 | |
| Accounts receivable | 1,500 | |||
| 4 | May 12 | Merchandise inventory | 1,005 | |
| Cost of goods sold | 1,005 | |||
| 5 | May 20 | Cash | 26,190 | |
| Sales discounts | 810 | |||
| Accounts receivable | 27,000 |
Question 2
Exercise 5-15 Preparing a multi-step income statement LO P4
Fit-for-Life Foods reports the following income statement accounts for the year ended December 31.
| Gain on sale of equipment | $ | 6,230 | Depreciation expense—Office copier | $ | 500 | |
| Office supplies expense | 640 | Sales discounts | 15,200 | |||
| Insurance expense | 1,380 | Sales returns and allowances | 3,900 | |||
| Sales | 218,000 | TV advertising expense | 3,000 | |||
| Office salaries expense | 31,300 | Interest revenue | 670 | |||
| Rent expense—Selling space | 10,500 | Cost of goods sold | 89,900 | |||
| Sales staff wages | 23,700 | Sales commission expense | 13,400 | |||
Prepare a multiple-step income statement.
| FIT-FOR-LIFE FOODS Income Statement For Year Ended December 31 Sales $218,000 Less: Sales discounts $15,200 Less: Sales returns and allowances 3,900 19,100 Net sales 198,900 Cost of goods sold 89,900 Gross profit 109,000 Expenses Selling expenses Rent expense—Selling space 10,500 Sales staff wages 23,700 TV advertising expense 3,000 Sales commission expense 13,400 Total selling expenses 50,600 General and administrative expenses Office supplies expense 640 Insurance expense 1,380 Office salaries expense 31,300 Depreciation expense—Office copier 500 Total general and administrative expenses 33,820 Total expenses 84,420 Income from operations 24,880 Other revenues, gains, expenses & losses Gain on sale of equipment 6,230 Interest revenue 670 Total other revenues, gains, expenses & losses 6,900 Net income $31,780 |
Question 3
Exercise 5-6 Recording sales, purchases, and cash discounts-buyer and seller LO P1, P2
Santa Fe Retailing purchased merchandise “as is” (with no returns) from Mesa Wholesalers with credit terms of 3/10, n/60 and an invoice price of $16,900. The merchandise had cost Mesa $11,526. Assume that both buyer and seller use a perpetual inventory system and the gross method.
1. Prepare entries that the buyer records for the (a) purchase, (b) cash payment within the discount period, and (c) cash payment after the discount period.
2. Prepare entries that the seller records for the (a) sale, (b) cash collection within the discount period, and (c) cash collection after the discount period.
Complete this question by entering your answers in the tabs below.
Prepare entries that the buyer records for the (a) purchase, (b) cash payment within the discount period, and (c) cash payment after the discount period.
| No | Transaction | General Journal | Debit | Credit |
| 1 | a | Merchandise inventory | 16,900 | |
| Accounts payable | 16,900 | |||
| 2 | b | Accounts payable | 16,900 | |
| Cash | 16,393 | |||
| Merchandise inventory | 507 | |||
| 3 | c | Accounts payable | 16,900 | |
| Cash | 16,900 |
- Required 1
- Required 2
Prepare entries that the seller records for the (a) sale, (b) cash collection within the discount period, and (c) cash collection after the discount period.
| No | Transaction | General Journal | Debit | Credit |
| 1 | a-1 | Accounts receivable | 16,900 | |
| Sales | 16,900 | |||
| 2 | a-2 | Cost of goods sold | 11,526 | |
| Merchandise inventory | 11,526 | |||
| 3 | b | Cash | 16,393 | |
| Sales discounts | 507 | |||
| Accounts receivable | 16,900 | |||
| 4 | c | Cash | 16,900 | |
| Accounts receivable | 16,900 |