/*! This file is auto-generated */ .wp-block-button__link{color:#fff;background-color:#32373c;border-radius:9999px;box-shadow:none;text-decoration:none;padding:calc(.667em + 2px) calc(1.333em + 2px);font-size:1.125em}.wp-block-file__button{background:#32373c;color:#fff;text-decoration:none} 3SE Suppose Muddyriver.com sells 2,0... [FREE SOLUTION] | 91影视

91影视

Log out

Learning Materials

Features

Discover

Chapter 5: 3SE (page 325)

Suppose Muddyriver.com sells 2,000 books on account for \(19 each (cost of these books is \)22,800), credit terms 1/20, n/45 on October 10, to The Salem Store. The Salem Store paid the balance to Muddyriver.com on October 22.

Requirements

1. Journalize the Salem Store鈥檚 October transactions.

2. Journalize Muddyriver.com鈥檚 October transactions. Assume Muddyriver.com uses the gross method to record sales revenue.

Short Answer

Expert verified

The total of debits and credits for Salem Store is$76,000.

The total of debits and credits for Muddyriver is$98,800.

Step by step solution

01

Meaning of Journal Entries

In accounting, journal entries are one of the processes of recording and maintaining thefinancial transactionsof a business entity. It records the business transactions chronologically and helps the business to prepare ledgers and trial balances.

02

Preparation of journal entries for Salem Store

Date

Accounts and Explanation

Debit ($)

Credit ($)

Oct 10

Merchandise inventory

38,000

Accounts payable

38,000

(To record the purchase)

Oct 22

Accounts payable

38,000

Cash

37,620

Merchandise inventory

380

(To record the payment)

03

Preparation of journal entries for Muddyriver.com

Date

Accounts and Explanation

Debit ($)

Credit ($)

Oct 10

Accounts receivable

38,000

Sales revenue

38,000

(To record the sales)

Oct 10

Cost of goods sold

22,800

Merchandise inventory

22,800

(To record the cost of goods sold)

Oct 22

Cash

37,620

Sales discount (38000*1%)

380

Accounts receivable

38,000

(To record the receipt of payment)

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Over 30 million students worldwide already upgrade their learning with 91影视!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

Highlight the differences in the closing process when using the periodic inventory system rather than the perpetual inventory system.

Journalize the following transactions that occurred in November 2018 for Julie鈥檚 Fun World. No explanations are needed. Identify each accounts payable and accounts receivable with the vendor or customer name. Julie鈥檚 Fun World estimates sales returns at the end of each month.

Nov. 4 Purchased merchandise inventory on account from Vera Company, \(5,000. Terms 3/10, n/EOM, FOB shipping point.

6 Paid freight bill of \)100 on November 4 purchase

8 Returned half the inventory purchased on November 4 from Vera Company.

10 Sold merchandise inventory for cash, \(1,100. Cost of goods, \)400. FOB destination.

11 Sold merchandise inventory to Geary Corporation, \(11,100, on account, terms of 2/10, n/EOM. Cost of goods, \)6,105. FOB shipping point.

12 Paid freight bill of \(20 on November 10 sale.

13 Sold merchandise inventory to Caldwell Company, \)9,500, on account, terms of n/45. Cost of goods, \(5,225. FOB shipping point.

14 Paid the amount owed on account from November 4, less return and discount.

17 Received defective inventory as a sales return from the November 13 sale, \)500. Cost of goods, \(275.

18 Purchased inventory of \)3,600 on account from Rainman Corporation. Payment terms were 2/10, n/30, FOB destination.

20 Received cash from Geary Corporation, less discount.

26 Paid amount owed on account from November 18, less discount.

28 Received cash from Caldwell Company, less return.

29 Purchased inventory from Sandra Corporation for cash, \(12,300, FOB shipping point. Freight in paid to shipping company, \)170.

What are the two types of inventory accounting systems? Briefly describe each.

Emerson St. Book Shop鈥檚 unadjusted Merchandise Inventory at June 30, 2018 was \(5,200. The cost associated with the physical count of inventory on hand on June 30, 2018, was \)4,900. In addition, Emerson St. Book Shop estimated approximately \(1,000 of merchandise sold will be returned with a cost of \)400.

Requirements

1. Journalize the adjustment for inventory shrinkage.

2. Journalize the adjustment for estimated sales returns.

When a company has a contract involving multiple performance obligations, how must the company recognize revenue?
See all solutions

Recommended explanations on Business Studies Textbooks

Accounting

Read Explanation

Introduction to Business

Read Explanation

Startups

Read Explanation

Strategic Direction

Read Explanation

Change Management

Read Explanation

Corporate Finance

Read Explanation
View all explanations

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.