MGAB01H3 Chapter 5.2: Chapter 5.2

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1 Nov 2010

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MGAB01H3 Full Course Notes

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Purchases are recorded by the buyer when the goods are received from the seller. When orders are placed with a supplier, each order is documented with a purchase order. Cash purchases are supported by a cash register receipt. Credit purchases should be supported by a purchase invoice that indicated the total purchase price and other relevant information. Sales taxes are collected on the goods and services sold by companies. When companies purchase goods for resale, gst is charged. However, because gst is offset by the gst they collect from customers; gst is not part of the cost of the merchandise. Pst is never charged to the merchandiser, only to the final consumer. The invoice should indicate whether the seller or buyer is paying for the transportation costs of the goods. Freight terms discuss who is in charge of costs and who is responsible for damages during transportation.

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Nov.	3	Instructions: Journalize the transactions below (credit and debit) Purchased merchandise on account from Moonlight Co., list price $90,000, trade discount Discounts from the list prices in published catalogs or special discounts offered to certain classes of buyers. 25%, terms FOB destination Freight terms in which the seller pays the transportation costs from the shipping point to the final destination. , 2/10, n/30.
	4	Sold merchandise for cash, $36,900. The cost of the goods sold The cost that is reported as an expense when merchandise is sold. was $20,480.
	5	Purchased merchandise on account from Papoose Creek Co., $50,700, terms FOB shipping point Freight terms in which the buyer pays the transportation costs from the shipping point to the final destination. , 2/10, n/30, with prepaid freight of $750 added to the invoice The bill that the seller sends to the buyer. .
	6	Returned $12,750 ($17,000 list price less trade discount of 25%) of merchandise purchased on November 3 from Moonlight Co.
	8	Sold merchandise on account to Quinn Co., $14,550 with terms n/15. The cost of the goods sold was $9,510.
	13	Paid Moonlight Co. on account for purchase of November 3, less return of November 6.
	14	Sold merchandise on VISA, $239,110. The cost of the goods sold was $137,270.
	15	Paid Papoose Creek Co. on account for purchase of November 5.
	23	Received cash on account from sale of November 8 to Quinn Co.
	24	Sold merchandise on account to Rabel Co., $57,100, terms 1/10, n/30. The cost of the goods sold was $32,270.
	28	Paid VISA service fee of $3,700.
	30	Paid Quinn Co. a cash refund of $5,960 for returned merchandise from sale of November 8. The cost of the returned merchandise was $3,290.

pucewildebeest226

The following selected transactions were completed by LorimerCompany during August of the current year. Lorimer Company uses theperiodic system and a perpetual inventory system

Aug 3. Purchased $24,500 of merchandise on account, FOB shippingpoint, terms 2/10 n/30.
4. Paid transportation costs of $475 on the August 3purchase.
7. Returned $4,000 of the merchandise purchased on August 3.
11. Sold merchandise on account, 12,700 FOB destination, 2/15,n/30. The cost of merchandise sold was 7,600.
12. Paid transportation costs of 300 for the merchandise sold onAugust 11.
13. Paid for the purchase of August 3 less the return anddiscount
26. Received payment on account for the sale of August 11 less thediscount.

byzantiumcicada465

Following are the merchandising transactions for Dollar Store.

Nov.	1	Dollar Store purchases merchandise for $1,500 on terms of 2/5, n/30, FOB shipping point, invoice dated November 1.
	5	Dollar Store pays cash for the November 1 purchase.
	7	Dollar Store discovers and returns $200 of defective merchandise purchased on November 1, and paid for on November 5, for a cash refund.
	10	Dollar Store pays $75 cash for transportation costs for the November 1 purchase.
	13	Dollar Store sells merchandise for $1,620 with terms n/30. The cost of the merchandise is $810.
	16	Merchandise is returned to the Dollar Store from the November 13 transaction. The returned items are priced at $300 and cost $150; the items were not damaged and were returned to inventory.

Journalize the above merchandising transactions for the Dollar Store assuming it uses a perpetual inventory system and the gross method.

coralllama790

MGAB01H3 Chapter 5.2: Chapter 5.2

MGAB01H3 Full Course Notes

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