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Chapter 5: Q24E (page 302)
The adjusted trial balance of Quality Office Systems at March 31, 2018, follows:
The net income of the Quality Office is$83,750.
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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. |
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.
26 Received payment from the customer on the balance due.
Journalize the sales transactions for Click Computers assuming the company uses the perpetual inventory system.
Consider the following transactions for Burlington Drug Store:
Feb. 2 Burlington buys \(23,800 worth of inventory on account with credit terms of 2/15, n/30, FOB shipping point.
4 Burlington pays a \)50 freight charge.
9 Burlington returns $5,200 of the merchandise due to damage during shipment.
14 Burlington paid the amount due, less return and discount.
Requirements
1. Journalize the purchase transactions. Explanations are not required.
2. In the final analysis, how much did the inventory cost Burlington Drug Store?
Under the new revenue recognition standard, how is the sale of inventory recorded?
Journalize the following transactions that occurred in September 2018 for Aquamarines. No explanations are needed. Identify each accounts payable and accounts receivable with the vendor or customer name. Aquamarines estimates sales returns at the end of each month.
Sep. 3 Purchased merchandise inventory on account from Sharpner Wholesalers, \(5,500. Terms 2/15, n/EOM, FOB shipping point.
4 Paid freight bill of \)85 on September 3 purchase.
4 Purchased merchandise inventory for cash of \(1,600.
6 Returned \)1,300 of inventory from the September 3 purchase.
8 Sold merchandise inventory to Herman Company, \(5,700, on account. Terms 2/15, n/35. Cost of goods, \)2,565.
9 Purchased merchandise inventory on account from Tucker Wholesalers, \(6,000. Terms 3/10, n/30, FOB destination.
10 Made payment to Sharpner Wholesalers for goods purchased on September 3, less return and discount.
12 Received payment from Herman Company, less discount.
13 After negotiations, I received a \)500 allowance from Tucker Wholesalers.
15 Sold merchandise inventory to Jerome Company, \(2,800, on account. Terms n/EOM. Cost of goods, \)1,200.
22 Made payment, less allowance, to Tucker Wholesalers for goods purchased on September 9.
23 Jerome Company returned \(200 of the merchandise sold on September 15. Cost of goods, \)80.
25 Sold merchandise inventory to Small for \(1,800 on account that cost \)738. Terms of 3/10, n/30 was offered, FOB shipping point. As a courtesy to Small, $40 of freight was added to the invoice, for which Aquamarines paid cash.
29 Received payment from Small, less discount.
30 Received payment from Jerome Company, less return.
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