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Chapter 5: Q-A5C-1SE (page 249)

Question: Journalize the following sales transactions for Paul Sportswear. Explanations are not required.

Aug. 1 Paul sold \(66,000 of women鈥檚 sportswear on account, credit terms are 2/10, n/30. Cost of goods is \)33,000. Paul uses the gross method to record sales revenue.

25 Paul receives payment from the customer on the amount due.

Short Answer

Expert verified

Answer

The total of debits and credits is$165,000.

Step by step solution

01

Meaning of Accounts Receivable

The accounting term accounts receivable indicates the customers to whom sales are made on acredit basis, and the amount is yet to be received. It is considered an asset and reported under thecurrent asset section of thepositional statement.

02

Preparation of journal entries

Date

Accounts and Explanation

Debit ($)

Credit ($)

Aug 1

Accounts receivable

66,000

Sales revenue

66,000

Aug 1

Cost of goods sold

33,000

Merchandise inventory

33,000

Aug 25

Cash

66,000

Accounts receivable

66,000

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Most popular questions from this chapter

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.

Journalize the following sales transactions for Paul Sportswear. Explanations are not required.

Aug. 1 Paul sold \(66,000 of women鈥檚 sportswear on account, credit terms are 2/10, n/30. Cost of goods is \)33,000. Paul uses the gross method to record sales revenue.

25 Paul receives payment from the customer on the amount due.

Journalize the following sales transactions for Straight Shot Archery using the periodic inventory system. Explanations are not required. The company estimates sales returns and allowances at the end of each month.

Aug. 1 Sold \(6,500 of equipment on the account; credit terms are 1/10, n/30.

8 Straight Shot received payment from the customer on the amount due from August 1, less the discount.

15 Sold \)3,100 of equipment on the account; credit terms are n/45, FOB destination.

15 Straight Shot paid \(90 on freight out.

20 Straight Shot negotiated a \)500 allowance on the goods sold on August 15.

24 Received payment from the customer on the amount due from August 15, less the allowance.

Ocean Life Boat Supply uses the periodic inventory method. The adjusted trial balance of Ocean Life Boat Supply at December 31, 2018, follows:

Requirements

1. Journalize the required closing entries at December 31, 2018. Assume ending Merchandise Inventory is $54,300.

2. Set up T-accounts for Income Summary; Retained Earnings; and Dividends. Post the closing entries to the T-accounts, and calculate their ending balances.

3. How much was Ocean Life鈥檚 net income or net loss?

Match the accounting terminology to the definitions.

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.
See all solutions

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