ACCT291T PRINCIPLES OF ACCOUNTING 2 WEEK 1 APPLY

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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.

NoDateGeneral JournalDebitCredit
1May 11Merchandise inventory28,500
Accounts payable28,500
2May 11Merchandise inventory640
Cash640
3May 12Accounts payable1,500
Merchandise inventory1,500
4May 20Accounts payable27,000
Cash26,190
Merchandise inventory810

Seller

NoDateGeneral JournalDebitCredit
1May 11Accounts receivable28,500
Sales28,500
2May 11Cost of goods sold19,095
Merchandise inventory19,095
3May 12Sales returns and allowances1,500
Accounts receivable1,500
4May 12Merchandise inventory1,005
Cost of goods sold1,005
5May 20Cash26,190
Sales discounts810
Accounts receivable27,000

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.

NoTransactionGeneral JournalDebitCredit
1aMerchandise inventory16,900
Accounts payable16,900
2bAccounts payable16,900
Cash16,393
Merchandise inventory507
3cAccounts payable16,900
Cash16,900
  • 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.

NoTransactionGeneral JournalDebitCredit
1a-1Accounts receivable16,900
Sales16,900
2a-2Cost of goods sold11,526
Merchandise inventory11,526
3bCash16,393
Sales discounts507
Accounts receivable16,900
4cCash16,900
Accounts receivable16,900