ACC 220 Lecture Notes - Lecture 45: Perpetual Inventory, Retained Earnings, Current Asset

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orangegnat648

24 Feb 2019

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Some sales result in cash received at the time of sale. Terminology for these types of sales include sales on account and sales on credit. Some retailers that sell to individual customers have their own branded credit card to facilitate sales. A charge account provided by a retailer to its customers is called an open account. What is inventory for a merchandising firm? the cost of goods purchased for resale not yet sold to customers. Inventory is a current asset on the balance sheet. It is a permanent account, meaning its ending balance carries forward to the next period as its beginning balance. What is cost of goods sold? the cost of goods sold to customers. Cost of goods sold is an expense on the income statement. It is a nominal account, meaning its ending balance is closed to retained. Earnings at the end of each accounting period. Cost of goods available cost of goods sold = ending inventory.

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Atlas Co. allows select customers to makepurchases on credit. Its other customers can use either of twocredit cards: Zisa or Access. Zisa deducts a 4.0% service chargefor sales on its credit card and credits the bank account of Atlasimmediately when credit card receipts are deposited. Atlas depositsthe Zisa credit card receipts each business day. When customers useAccess credit cards, Atlas accumulates the receipts for severaldays before submitting them to Access for payment. Access deducts a3.0% service charge and usually pays within one week of beingbilled. Atlas completes the following transactions in June. (Theterms of all credit sales are 2/15, n/30, and all sales arerecorded at the gross price.)

June	4	Sold$700 of merchandise (that had cost $350) on credit to AnneCianci.
	5	Sold$7,200 of merchandise (that had cost $3,600) to customers who usedtheir Zisa cards.
	6	Sold$5,782 of merchandise (that had cost $2,891) to customers who usedtheir Access cards.
	8	Sold$4,870 of merchandise (that had cost $2,435) to customers who usedtheir Access cards.
	10	Submitted Access card receipts accumulated sinceJune 6 to the credit card company for payment.
	13	Wrote off the account of Nakia Wells against theAllowance for Doubtful Accounts. The $509 balance in Wells%u2019saccount stemmed from a credit sale in October of last year.
	17	Received the amount due from Access.
	18	Received Cianci%u2019s check in full payment for the purchase ofJune 4.

Required:

Prepare journal entries to record the precedingtransactions and events. (The company uses the perpetual inventorysystem.

chocolateraven710

Levine Company uses the perpetual inventory system and allows customers to use two credit cards in charging purchases. With the Suntrust Bank Card, Levine receives an immediate credit to its account when it deposits sales receipts. Suntrust assesses a 4% service charge for credit card sales. The second credit card that Levine accepts is the Continental Card. Levine sends its accumulated receipts to Continental on a weekly basis and is paid by Continental about a week later. Continental assesses a 2.5% charge on sales for using its card.

April 8. Sold merchandise for $8,400 (that had cost $6,000) and accepted the customer's Suntrust Bank Card. The Suntrust receipts are immediately deposited in Levine's bank account.

12. Sold merchandise for $5,600 (that had cost $3,500) and accepted the customer's Continental Card. Transferred $5,600 of credit card receipts to Continental, requesting payment.

20. Received Continental's check for the April 12 billing, less the service charge.

Prepare journal entries to record the above-selected credit card transactions of Levine Company.

scarletclam462

Question 1 On October 5, Ivanhoe Company buys merchandise onaccount from Pharoah Company. The selling price of the goods is$5,240, and the cost to Pharoah Company is $3,180. On October 8,Ivanhoe Company returns defective goods with a selling price of$640 and a scrap value of $310. Record the transactions on thebooks of Pharoah Company, assuming a perpetual approach. (If noentry is required, select "No Entry" for the account titles andenter 0 for the amounts. Credit account titles are automaticallyindented when amount is entered. Do not indent manually. Recordjournal entries in the order presented in the problem.) DateAccount Titles and Explanation Debit Credit choose a transactiondate enter an account title to record credit sales Inventory entera debit amount enter a credit amount enter an account title torecord credit sales Accounts Payable enter a debit amount enter acredit amount (To record credit sales) enter an account title torecord cost of goods sold on account Accounts Payable enter a debitamount enter a credit amount enter an account title to record costof goods sold on account Inventory enter a debit amount enter acredit amount (To record cost of goods sold on account) choose atransaction date enter an account title to record credit grantedfor receipt of returned goods Accounts Receivable enter a debitamount enter a credit amount enter an account title to recordcredit granted for receipt of returned goods Sales Revenue enter adebit amount enter a credit amount (To record credit granted forreceipt of returned goods) enter an account title to record scrapvalue of goods returned enter a debit amount enter a credit amountenter an account title to record scrap value of goods returnedenter a debit amount enter a credit amount (To record scrap valueof goods returned)

pinkmammoth169

ACC 220 Lecture Notes - Lecture 45: Perpetual Inventory, Retained Earnings, Current Asset

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