ACC 231 Lecture Notes - Lecture 7: Rei

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cerisegiraffe538

19 Mar 2018

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Can be a wholesaler who sells to a retailer or. Wholesaler- purchases large quantities of physical goods and usually sells them to retailers. Practice: (wolfe powerpoint: a merchandiser purchases goods from a supplier. Cr accounts payable or cash : what if the merchandiser returns some or all of the goods to the supplier? (we would reverse the entry above for the appropriate amount. ) The n30 means that if the retailer doesn"t pay within 10 days the entire invoice is due in 30 days. Instead of n30 you might see eom or end of month: journal entry when paid in time. The merchandiser may get a discount if they pay cash within a certain time period: nike sells merchandise to rei with an invoice amount of ,000 and offers credit terms of. Match the cost of the inventory with the revenue it generated and record the outflow of inventory. Rei sells ,000 in t-shirts to a sports team on credit.

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Required information

Problem 7-1A Special journals, subsidiary ledgers, trialbalance-perpetual LO C3, P1, P2

[The following information applies to the questionsdisplayed below.]

Church Company completes these transactions and events during Marchof the current year (terms for all its credit sales are 3/10,n/30).

Mar.	1		Purchased $40,000 of merchandisefrom Van Industries, invoice dated March 1, terms 3/15, n/30.
	2		Sold merchandise on credit to MinCho, Invoice No. 854, for $16,000 (cost is $8,000).
	3	(a)	Purchased $1,200 of office supplieson credit from Gabel Company, invoice dated March 3, terms n/10EOM.
	3	(b)	Sold merchandise on credit to LindaWitt, Invoice No. 855, for $8,000 (cost is $4,000).
	6		Borrowed $72,000 cash from FederalBank by signing a long-term note payable.
	9		Purchased $20,000 of officeequipment on credit from Spell Supply, invoice dated March 9, termsn/10 EOM.
	10		Sold merchandise on credit toJovita Albany, Invoice No. 856, for $4,000 (cost is $2,000).
	12		Received payment from Min Cho forthe March 2 sale less the discount.
	13	(a)	Sent Van Industries Check No. 416in payment of the March 1 invoice less the discount.
	13	(b)	Received payment from Linda Wittfor the March 3 sale less the discount.
	14		Purchased $34,000 of merchandisefrom the CD Company, invoice dated March 13, terms 3/10, n/30.
	15	(a)	Issued Check No. 417, payable toPayroll, in payment of sales salaries expense for the first half ofthe month, $15,200. Cashed the check and paid the employees.
	15	(b)	Cash sales for the first half ofthe month are $64,000 (cost is $51,200). (Cash sales are recordeddaily, but are recorded only twice here to reduce repetitiveentries.)
	16		Purchased $1,720 of store supplieson credit from Gabel Company, invoice dated March 16, terms n/10EOM.
	17		Received a $3,400 credit memorandumfrom CD Company for the return of unsatisfactory merchandisepurchased on March 14.
	19		Received a $600 credit memorandumfrom Spell Supply for office equipment received on March 9 andreturned for credit.
	20		Received payment from Jovita Albanyfor the sale of March 10 less the discount.
	23		Issued Check No. 418 to CD Companyin payment of the invoice of March 13 less the March 17 return andthe discount.
	27		Sold merchandise on credit toJovita Albany, Invoice No. 857, for $12,000 (cost is $4,800).
	28		Sold merchandise on credit to LindaWitt, Invoice No. 858, for $4,800 (cost is $1,920).
	31	(a)	Issued Check No. 419, payable toPayroll, in payment of sales salaries expense for the last half ofthe month, $15,200. Cashed the check and paid the employees.
	31	(b)	Cash sales for the last half of themonth are $70,400 (cost is $42,240).
	31	(c)	Verify that amounts impactingcustomer and creditor accounts were posted and that any amountsthat should have been posted as individual amounts to the generalledger accounts were posted. Foot and crossfoot the journals andmake the month-end postings.

Assume the following ledger account amounts Inventory (March 1 beg.bal. is $63,000), Z. Church, Capital (March 1 beg. bal. is $63,000)and Church Company uses the perpetual inventory system.

Problem 7-1A Part 2

Required:
2-a. Enter the transactions in a sales journal.
2-b. Enter the transactions in a purchasesjournal.
2-c. Enter the transactions in a cash receiptsjournal.
2-d. Enter the transactions in a cashdisbursements journal.
2-e. Enter the transactions in a generaljournal.

Enter the transactions in a sales journal.

SALES JOURNAL
Date	Account Debited	Invoice Number	Accounts Receivable Dr. Sales Cr.	Cost of Goods Sold Dr. Inventory Cr.






Mar.31	Totals		$0	$0

Enter the transactions in a purchases journal.

PURCHASES JOURNAL
Date	Account	Date of Invoice	Terms	Accounts Payable Cr.	Inventory Dr.	Office Supplies Dr.	Other Accounts Dr.






Mar.31	Totals			$0	$0	$0	$0

Enter the transactions in a cash receipts journal.

CASH RECEIPTS JOURNAL
Date	Account Credited	Cash Dr.	Sales Discount Dr.	Accounts Receivable Cr.	Sales Cr.	Other Accts. Cr.	Cost of Goods Sold Dr. Inventory Cr.







Mar.31	Totals	$0	$0	$0	$0	$0	$0

Enter the transactions in a cash disbursements journal.

CASH DISBURSEMENTS JOURNAL
Date	Ck.No.	Payee	Account Debited	Cash Cr.	Inventory Cr.	Other Accounts Dr.	Accounts Payable Dr.





Mar.31		Totals		$0	$0	$0	$0

Enter the transactions in a general journal.

Journal Entry Worksheet

Received a $3,400 credit memorandum from CD Company for thereturn of unsatisfactory merchandise purchased on March 14.

Received a $600 credit memorandum from Spell Supply for officeequipment received on March 9 and returned for credit.

Mar. 17

*Enter debits before credits

Enter the transactions in a general journal.

Journal Entry Worksheet

Received a $3,400 credit memorandum from CD Company for thereturn of unsatisfactory merchandise purchased on March 14.

Received a $600 credit memorandum from Spell Supply for officeequipment received on March 9 and returned for credit.

Mar. 19

*Enter debits before credits

ivoryox215

Solve for the adjusting entry:-

2018

Debit Balance Credit Balance

100000 Bank Account dr $300,318

110100 Accounts Receivable (Direct Posting Account) dr 94,670

110150 Allowance for Bad Debts cr 2,600

200600 Inventory-Operating Supplies dr 8,832

200900 Inventory-Raw Materials (Direct Post) dr 52,000

200910 Inventory-Finished Goods (Direct Post) dr 281,298

200920 Inventory-Trading Goods (Direct Post) dr 66,474

210000 Prepaid Insurance dr 3,000

212000 Prepaid Advertising dr 2,400

220110 Land (Direct Post) dr 528,000

220210 Production Machinery, Equip & Fixtures (Dir.Post) dr 915,000

220310 Accumulated Depreciation-Machinery (Direct Post) cr 408,000

300200 Accounts Payable (Direct Posting Account) cr 48,000

300700 Payables-Salaries and Wages cr 94,313

300800 Accrued Expenses cr 2,200

320000 Accrued Tax â Output cr 4,000

329000 Common Stock cr 1,010,000

329100 Additional Paid-in-Capital cr 52,870

330010 Retained Earnings (Direct Posting) cr 630,009

Payables-Salaries and Wages	94,313
Bank Account		94,313
to record payment of salaries and wages

Inventory-Trading Goods (Direct Post)	60,600
Inventory-Raw Materials (Direct Post)	40,900
Accounts Payable (Direct Posting Account)		100,000
Bank Account		1,500
to record acquisition of invemtory and payment of shipment

Accounts Receivable (Direct Posting Account)	22,500
Cost of Goods Sold	15,000
Sales Revenue		22,500
Inventory-Trading Goods (Direct Post)		15,000
to record the sale of accessories

Bank Account	24,000
Accounts Receivable (Direct Posting Account)		24,000
to record payment receipt from Northwest bikes

Accrued Expenses	2,200
Bank Account		2,200
to record payment of utilities

Advertising Expense	1,100
Prepaid Advertising		1,100
to record advertisiment expense

Inventory-Operating Supplies	380
Accounts Payable (Direct Posting Account)		380
to record receipt of Staples

Bank Account	21,825
Sales Discount	675
Accounts Receivable (Direct Posting Account)		22,500
to recors payment of windy city bikes

Accounts Payable (Direct Posting Account)	100,000
Bank Account		100,000
to record payment to Dallas Bike Basics

Deposits on Purchases	8,800
Bank Account		2,000
Accounts Payable (Direct Posting Account)		6,800
to record the purchase of barcoding

Accounts Payable (Direct Posting Account)	15,890
Bank Account		15,890
to record payment of Lightbulb Accesorry Kits

Accounts Receivable (Direct Posting Account)	128,000
Cost of Goods Sold	78,000
Sales Revenue		128,000
Inventory-Finished Goods (Direct Post)		78,000
to record sale to Rocky Mountain Bikes(Denver)

Inventory-Raw Materials (Direct Post)	75,600
Accounts Payable (Direct Posting Account)		75,600
to record purchase of raw material(Space Bike)

Allowance for Bad Debts	4,200
Accounts Receivable (Direct Posting Account)		4,200
to record Bad debt expense

Bank Account	90,000
Accounts Receivable (Direct Posting Account)		90,000
to record payment from Sillicon Valley Bikes

Accounts Payable (Direct Posting Account)	380
Bank Account		380


Accounts Receivable (Direct Posting Account)	2,977
Cost of Goods Sold	1,300
Sales Revenue		2,750
Accrued Tax- Input		227
Inventory-Trading Goods (Direct Post)		1,300
to record sale of inventory

Prepaid Advertising	9,000
Bank Account		9,000
to record payment for advertising

Bank Account	27,000
Cost of Goods Sold	17,000
Sales Revenue		27,000
Inventory-Finished Goods (Direct Post)		17,000
to record sale to Beantown Bikes

Accounts Payable (Direct Posting Account)	32,000
Bank Account		32,000
to record payment to Night Rider Aluminum

Accrued Tax â Output	3,000
Bank Account		3,000
to record payment sale tax

Prepaid Rent	4,000
Bank Account		4,000
to record prepaid rent

Accounts Payable (Direct Posting Account)	6,800
Bank Account		6,800
to record payment for barcoding system

Accounts Receivable (Direct Posting Account)	358,500
Cost of Goods Sold	250,000
Sales Revenue		358,500
Inventory-Trading Goods (Direct Post)		65,000
Inventory-Finished Goods (Direct Post)		185,000
to record sale to Big Apple Bikes

Adjustment information as of January 31, not already given in the original transaction(s):

1. Based on prior experience, GBI estimates that approximately 1.5 % of the credit sales from each month will become bad debt. GBI writes off bad debts as they occur and recognizes bad debt expense based on percentage of credit sales as an adjusting entry each month.

2. As a control measure, physical inventories are taken on a periodic basis alternating between the raw materials inventory, finished goods inventory and trading goods inventory. Physical inventory of the finished goods inventory was taken at the end of January. It was determined that the value of the finished goods merchandise on hand was $1,200.

3. GBI counted the office (operating) supplies on hand after the close of business on the last day of the month and determined the cost of the unused office supplies to be $1000.

4. Production Machinery, Equipment and Fixtures were placed in service on January 1, 2013, with no salvage value. The bar-code system has a 5-year life and no salvage value. GBI depreciates fixed assets on a straight-line basis and those assets placed in service in the first half of the months are depreciated for the entire month, while fixed assets placed in service during the last half of the month are not depreciated until the second month. Depreciation is rounded to the nearest dollar and assets are depreciated on a monthly basis (i.e. number of days in the month is not of consequence).

5. GBI used the Internet to review the monthly charges for utilities the business consumed during January. Based on the Internet report, the amount to be billed by the utilities company for January usage is the same as was billed for December.

6. Liability insurance for the six-month period ending on January 31 was paid last August on the first of the month. Liability insurance is assumed to be utilized uniformly over the six-month policy period.

7. GBI needs to recognize the wages expense for the month. Since all employees are paid salaries and no changes have been made, this amount is the same as the previous month salaries. (For purposes of this assignment, ignore manufacturing, office, and administrative payrolls and assume all wages expense is towards labor expense.

salmonyak82

Use the following information toanswer the next 11 questions. SELECT ALL ANSWERS THATAPPLY.

On May I. Sam Company sold $5,000of inventory to Bob Company. The sale was made on account and Samgranted Bob credit terms of 2/10. n/30. The inventory cost SamCompany $3,000. On May 3, Bob returned $1,000 of the inventory toSam. (The inventory returned by Bob cost Sam $600.) On May 9, Bobpaid Sam in full for the amount due.

1. What account will Bob debit on May I if the periodicinventory system is used?

A) Accounts Payable

B) Cost of Goods Sold

c) Merchandise Inventory

D) Purchases

E) None of the above

2. What account will Bob debit on May I if the perpetualinventory system is used?

A) Accounts Payable

B) Cost of Goods Sold

C) Merchandise Inventory

D) Purchases

E) None of the above

3. What account will Sam debit on May l if the periodicinventory system, is used?

A) Accounts Payable

B) Cost of Goods Sold

C) Merchandise Inventory

D) Purchases

E) None of the above

4. What account will Sam debit on May I if the perpetualinventory system is used?

A) Accounts Payable

B) Cost of Goods Sold

C) Merchandise Inventory

D) Purchases

E) None of the above

5. What journal entry will Bob record on May 3 if the periodicinventory system is used?

A) debit Accounts Payable, $1,000; credit Merchandise Inventory,$1,000.

B) debit Accounts Payable, $1,000; credit Purchases, $1,000.

C) debit Accounts Payable, $1,000; credit Purchase Discounts,$1,000.

D) debit Accounts Payable, $1,000; credit Purchase Returns andAllowances, $1,000.

E) debit Merchandise Inventory; $600; credit Cost of Goods Sold,$600.

6. what journal entry will Bob record on May 3 if the perpetualinventory system is used?

A) debit Accounts Payable, $1,000; credit Merchandise Inventory,$1,000.

B) debit Accounts Payable, $1,000; credit Purchases, $1,000.

C) debit Accounts Payable, $1,000; credit Purchase Discounts,$1,000.

D) debit Accounts Payable, $1,000; credit Purchase returns andAllowances, $1,000.

E) debit Merchandise Inventory; $600; credit Cost of Goods Sold,$600.

7. what journal entry will Sam record on May 3 if the periodicinventory system is used?

A) debit Merchandise Inventory, $600; credit Cost of Goods Sold,$600.

B) debit Sales, $1,000; credit Accounts Receivable, $1,000.

C) debit Sales, $1,000; credit Cash, $1,000.

D) debit Sales Returns and Allowances, $1,000; credit AccountsReceivable, $1,000.

E) debit Sales Returns and Allowances, $1,000; credit Cash,$1,000.

ACC 231 Lecture Notes - Lecture 7: Rei

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