1TI Click Computers has the followin... [FREE SOLUTION]

Chapter 5: 1TI (page 325)

Click Computers has the following transactions in July related to the sale of merchandise inventory.
July 12 Sold computers on account for $8,000 to a customer, terms 3/15, n/30. The cost of the computers is $4,800. Click uses the gross method for recording sales revenue.
26 Received payment from the customer on balance due.
Journalize the sales transactions for Click Computers assuming the company uses the perpetual inventory system.

Short Answer

Expert verified

The total of debits and credits is$20,800.

Step by step solution

Meaning of Sales

In accounting, the term sales refer to the process of transferring the ownership associated with the goods or services. Under such a process, theseller transfers the ownership in the buyer鈥檚 favoragainst a predetermined amount of consideration.

Preparation of journal entries

Date	Accounts and Explanation	Debit ($)	Credit ($)
Jul 12	Accounts receivable	8,000
	Sales revenue		8,000
	(To record the sales on account)
Jul 12	Cost of goods sold	4,800
	Merchandise inventory		4,800
	(To record the cost of goods sold)
Jul 26	Cash	8,000
	Accounts receivable		8,000
	(To record the receipt of payment)

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1. Cost of Goods Sold	a. An inventory system that requires businesses to obtain a physical count of inventory to determine quantities on hand.
2. Perpetual inventory system	b. Expenses, other than the Cost of Goods Sold, that are incurred in the entity鈥檚 major ongoing operations.
3. Vendor	c. Excess of Net Sales Revenue over Cost of Goods Sold.
4. Periodic inventory system	d. The cost of merchandise inventory that the business has sold to customers.
5. Operating expenses	e. The individual or business from whom a company purchases goods.
6. Gross profit	f. An inventory system that keeps a running computerized record of merchandise inventory.

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Short Answer

Step by step solution

Meaning of Sales

Preparation of journal entries

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