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Chapter 5: 4E (page 325)

Journalize the following sales transactions for Austin Mall. Assume Austin Mall uses the gross method to record sales revenue. Explanations are not required.

Jan. 4 Sold \(10,000 of antiques on account, credit terms are 1/15, n/30. Cost of goods is \)5,000.

20 Austin Mall received payment from the customer on the amount due from Jan. 4.

20 Sold \(5,200 of antiques on account, credit terms are 1/10, n/45, FOB destination. Cost of goods is \)2,600.

20 Austin Mall paid $120 on freight out.

29 Received payment from the customer on the amount due from Jan. 20, less the discount.

Short Answer

Expert verified

The total of debits and credits is$38,120.

Step by step solution

01

Meaning of Transaction

The occurrence of any event in the business is called a transaction in accounting terms. A transaction must be measurable in monetary terms to be recorded in the books of accounts because accounting records onlyfinancial transactions according to themoney measurement principle.

02

Preparation of journal entries

Date

Accounts and Explanation

Debit ($)

Credit ($)

Jan 4

Accounts receivable

10,000

Sales revenue

10,000

Jan 4

Cost of goods sold

5,000

Merchandise inventory

5,000

Jan 20

Cash

10,000

Accounts receivable

10,000

Jan 20

Accounts receivable

5,200

Sales revenue

5,200

Jan 20

Cost of goods sold

2,600

Merchandise inventory

2,600

Jan 20

Delivery expense

120

Cash

120

Jan 29

Cash

5,148

Sales discount (5200*1%)

52

Accounts receivable

5,200

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Most popular questions from this chapter

Match the accounting terms with the corresponding definitions.

1. Credit Terms a. The cost of the merchandise inventory that the business has sold to customers.

2. FOB Destination b. An amount granted to the purchaser as an incentive to keep goods that are not 鈥渁s ordered.鈥�

3. Invoice c. A type of merchandiser that buys merchandise either from a manufacturer or a wholesaler and then sells those goods to consumers.

4. Cost of Goods Sold d. A situation in which the buyer takes ownership (title) at the delivery destination point.

5. Purchase Allowance e. A type of merchandiser that buys goods from manufacturers and then sells them to retailers.

6. FOB Shipping Point f. A discount that businesses offer to purchasers as an incentive for early payment.

7. Wholesaler g. A situation in which the buyer takes title to the goods after the goods leave the seller鈥檚 place of business.

8. Purchase Discount h. The terms of purchase or sale as stated on the invoice.

9. Retailer i. A seller鈥檚 request for cash from the purchaser.

Macarthy Landscape Supply鈥檚 selected accounts as of December 31, 2018, follow. Compute the gross profit percentage for 2018.

Selling Expenses $ 12,900

Interest Revenue 900

Net Sales Revenue 134,700

Cost of Goods Sold 114,000

Administrative Expenses 10,200

What are the two journal entries involved when recording the sale of inventory when using the perpetual inventory system?

The records of Farm Quality Steak Company list the following selected accounts for the quarter ended April 30, 2018:

Interest Revenue \( 400 Accounts Payable \) 17,700

Merchandise Inventory 45,000 Accounts Receivable 38,200

Notes Payable, long-term 54,000 Accumulated Depreciation鈥擡quipment 37,700

Salaries Payable 2,800 Common Stock 30,000

Net Sales Revenue 298,000 Retained Earnings 5,380

Rent Expense (Selling) 15,100 Dividends 25,000

Salaries Expense (Administrative) 2,000 Cash 7,100

Office Supplies 6,500 Cost of Goods Sold 154,960

Unearned Revenue 13,100 Equipment 132,000

Interest Expense 2,100 Interest Payable 1,700

Depreciation Expense鈥擡quipment (Administrative) 1,320

Rent Expense (Administrative) 7,100

Utilities Expense (Administrative) 4,600 Salaries Expense (Selling) 6,000

Delivery Expense (Selling) 3,800 Utilities Expense (Selling) 10,000

Requirements

1. Prepare a single-step income statement.

2. Prepare a multi-step income statement.

3. M. Doherty, manager of the company, strives to earn a gross profit percentage of at least 50%. Did Farm Quality achieve this goal? Show your calculations

Question: Journalize the following transactions that occurred in January 2018 for Mike鈥檚 Amusements. Assume Mike鈥檚 uses the gross method to record sales revenue. No explanations are needed. Identify each accounts payable and accounts receivable with the vendor or customer name.

Jan. 4 Purchased merchandise inventory on account from Vanderbilt Company, \(5,000. Terms 1/10, n/EOM, FOB shipping point.

6 Paid freight bill of \)150 on January 4 purchase.

8 Returned half the inventory purchased on January 4 from Vanderbilt Company.

10 Sold merchandise inventory for cash, \(1,100. Cost of goods, \)440. FOB destination.

11 Sold merchandise inventory to Gilmore Corporation, \(10,100, on account, terms of 3/10, n/EOM. Cost of goods, \)5,555. FOB shipping point.

12 Paid freight bill of \(30 on January 10 sale.

13 Sold merchandise inventory to Cadet Company, \)8,800, on account, terms of 3/10, n/45. Cost of goods, \(4,400. FOB shipping point.

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

18 Purchased inventory of \)4,600 on account from Roberts Corporation. Payment terms were 1/10, n/30, FOB destination.

20 Received cash from Gilmore Corporation, less discount.

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

28 Received cash from Cadet Company.

29 Purchased inventory from Silk Corporation for cash, \(12,000, FOB shipping point. Freight in paid to shipping company, \)240.
See all solutions

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