Problem 7-26BComprehensive accounting cycle problem (uses percent of sales allowance
LO 1, 2,3,5,6
The following trial balance was prepared for Gifts, Etc., Inc., on December 31, 2013, after the closing entries were
Gifts, Etc. had the following transactions in 2014:
1. Purchased merchandise on account for $405,000 .
2. Sold merchandise that cost $310,000 for $490,000 on account.
3. Sold for $250,000 cash merchandise that had cost $156,000.
4. Sold merchandise for $190,000 to credit card customers. The merchandise had cost $112,000. The credit
card company charges a 4 percent fee.
5. Collected $520,000 cash from accounts receivable.
6. Paid $495,000 cash on accounts payable.
7. Paid $145,000 cash for selling and administrative expenses.
8. Collected cash for the full amount due from the credit card company (see item 4).