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Chapter 5: Q5-24RQ (page 294)
When a company has a contract involving multiple performance obligations, how must the company recognize revenue?
The company can recognize its revenues only when all theperformance obligations written in the contract are satisfied or fulfilled.
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Question: Capital City Motorcycle鈥檚 selected accounts as of December 31, 2018, follow:
Selling Expenses $ 10,500
Interest Revenue 1,000
Net Sales Revenue 113,500
Cost of Goods Sold 85,000
Administrative Expenses 8,000
Prepare the multi-step income statement for the year ended December 31, 2018.
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.
Lawrence Appliances had the following purchase transactions. Journalize all necessary transactions using the periodic inventory system. Explanations are not required.
Sep. 4 Purchased inventory of \(6,900 on account from Max Appliance Wholesale, an appliance wholesaler. Terms were 3/15, n/30, FOB shipping point.
4 Paid freight charges, \)480.
10 Returned \(300 of inventory to Max.
17 Paid Max Appliance Wholesale, less return, and discount.
20 Purchased inventory of \)3,900 from MY Appliance, an appliance wholesaler. Terms were 1/10, n/45, FOB destination.
22 Received a $400 allowance from MY Appliance for damaged but usable goods.
29 Paid MY Appliance, less allowance and discount.
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.
Consider the following transactions for Garman Packing Supplies:
Apr. 10 Garman Packing Supplies buys \(175,000 worth of merchandise inventory on account with credit terms of 1/10, n/30.
12 Garman returns \)15,200 of the merchandise to the vendor due to damage during shipment.
19 Garman paid the amount due, less the return and discount.
Requirements
1. Journalize the purchase transactions assuming Garman Packing Supplies uses the periodic inventory system. Explanations are not required.
2. What is the amount of net purchases?
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