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Chapter 5: QA5C-2SE (page 249)

Question: Journalize the following sales transactions for Sierra Tractors. Explanations are not required.

June 5 Sierra sold \(20,000 of inventory on account, credit terms are 4/10, n/30. Cost of goods is \)10,000. Sierra uses the gross method to record sales revenue.

12 Sierra receives payment from the customer on the amount due, less the discount.

Short Answer

Expert verified

Answer

The total of debits and credits is$50,000.

Step by step solution

01

Meaning of Discount

In accounting, a discount denotes thereduction in the price of the goods or services purchased or sold by a business concern. Discount is bifurcated into two categories for identifying the revenue or expense, i.e.,sales discount and purchase discount.

02

Preparation of journal entries

Date

Accounts and Explanation

Debit ($)

Credit ($)

Jun 5

Accounts receivable

20,000

Sales revenue

20,000

Jun 5

Cost of goods sold

10,000

Merchandise inventory

10,000

Jun 12

Cash

19,200

Sales discount (20000*4%)

800

Accounts receivable

20,000

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Most popular questions from this chapter

The adjusted trial balance of Quality Office Systems at March 31, 2018, follows:

Requirements

1. Journalize the required closing entries at March 31, 2018.

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 Quality Office鈥檚 net income or net loss?

Journalize the following transactions that occurred in September 2018 for Cardinal. Assume Cardinal 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.

Sep. 3 Purchased merchandise inventory on account from Sherry Wholesalers, \(4,000. Terms 1/15, n/EOM, FOB shipping point.

4 Paid freight bill of \)75 on September 3 purchase.

4 Purchased merchandise inventory for cash of \(1,900.

6 Returned \)1,100 of inventory from September 3 purchase.

8 Sold merchandise inventory to Houston Company, \(5,500, on account. Terms 3/15, n/35. Cost of goods, \)2,365.

9 Purchased merchandise inventory on account from Tarin Wholesalers, \(12,000. Terms 3/10, n/30, FOB destination.

10 Made payment to Sherry Wholesalers for goods purchased on September 3, less return and discount.

13 After negotiations, received a \)200 allowance from Tarin Wholesalers.

15 Sold merchandise inventory to Java Company, \(3,300, on account. Terms 2/10, n/EOM. Cost of goods, \)1,320.

22 Made payment, less allowance, to Tarin Wholesalers for goods purchased on September 9.

25 Sold merchandise inventory to Smecker for \(1,900 on account that cost \)722. Terms of 1/10, n/30 were offered, FOB shipping point. As a courtesy to Smecker, $85 of freight was added to the invoice for which cash was paid by Cardinal.

28 Received payment from Houston Company.

29 Received payment from Smecker, less discount.

30 Received payment from Java Company.

What financial statement is merchandise inventory reported on, and in what section?

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?

The adjusted trial balance of Rachael Rey Music Company at June 30, 2018, follows:

RACHAEL REY MUSIC COMPANY

Adjusted Trial Balance

June 30, 2018

Balance

Account Title Debit Credit

Cash \(4,000

Accounts Receivable 38,400

Merchandise Inventory 18,100

Office Supplies 300

Furniture 39,900

Accumulated Depreciation-Furniture \)8,200

Accounts Payable 13,800

Salaries Payable 850

Unearned Revenue 7,500

Notes Payable, long-term 17,000

Common Stock 6,000

Retained Earnings 21,350

Dividends 40,000

Sales Revenue 184,000

Cost of Goods Sold 85,500

Selling Expense 18,600

Administrative Expense 12,000

Interest Expense 1,900

Total \(258,700 \)258,700

Requirements

1. Prepare Rachael Rey鈥檚 multi-step income statement for the year ended June 30, 2018.

2. Journalize Rachael Rey鈥檚 closing entries.

3. Prepare a post-closing trial balance as of June 30, 2018.

See all solutions

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