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Chapter 5: QA5C-ITI (page 249)

Question: 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.

Short Answer

Expert verified

Answer

The total of debits and credits is$20,800.

Step by step solution

01

Meaning of Sales

In accounting, the term sales refer to the process of transferring the ownership associated with the goods or services. Under such a process, theseller transfers the ownership in the buyer鈥檚 favor against a predetermined amount ofconsideration.

02

Preparation of journal entries

Date

Accounts and Explanation

Debit ($)

Credit ($)

Jul 12

Accounts receivable

8,000

Sales revenue

8,000

(To record the sales on account)

Jul 12

Cost of goods sold

4,800

Merchandise inventory

4,800

(To record the cost of goods sold)

Jul 26

Cash

8,000

Accounts receivable

8,000

(To record the receipt of payment)

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Most popular questions from this chapter

D & T Printing Supplies鈥� accounting records include the following accounts at December 31, 2018.

Purchases \( 185,200 Accumulated Depreciation鈥擝uilding \) 21,000

Accounts Payable 7,700 Cash 18,100

Rent Expense 8,600 Sales Revenue 257,800

Building 42,800 Depreciation Expense鈥擝uilding 4,700

Common Stock 55,000 Dividends 26,500

Retained Earnings 30,400 Interest Expense 1,900

Merchandise Inventory,

Beginning 119,000 Merchandise Inventory,

Ending 102,100

Notes Payable 11,300 Purchase Returns and Allowances 20,700

Purchase Discounts 2,900

Requirements

1. Journalize the required closing entries for D & T Printing Supplies assuming that D & T uses the periodic inventory system.

2. Determine the ending balance in the Retained Earnings account.

Journalize the following transactions that occurred in March 2018 for Double Company. Assume Double uses the periodic inventory system. No explanations are needed. Identify each accounts payable and accounts receivable with the vendor or customer name. Double estimates sales returns at the end of each month.

Mar. 3 Purchased merchandise inventory on account from Sidecki Wholesalers, \(5,500. Terms 2/15, n/EOM, FOB shipping point.

4 Paid freight bill of \)70 on March 3 purchase.

4 Purchased merchandise inventory for cash of \(1,100.

6 Returned \)900 of inventory from March 3 purchase.

8 Sold merchandise inventory to Herrick Company, \(3,400, on account. Terms 1/15, n/35.

9 Purchased merchandise inventory on account from Tex Wholesalers, \)5,600. Terms 2/10, n/30, FOB destination.

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

12 Received payment from Herrick Company, less discount.

13 After negotiations, received a \(500 allowance from Tex Wholesalers.

15 Sold merchandise inventory to Jesper Company, \)1,700, on account. Terms n/EOM.

22 Made payment, less allowance, to Tex Wholesalers for goods purchased on March 9.

23 Jesper Company returned \(300 of the merchandise sold on March 15.

25 Sold merchandise inventory to Salter for \)1,000 on account. Terms of 1/10, n/30 was offered, FOB shipping point.

29 Received payment from Salter, less discount.

30 Received payment from Jesper Company, less return.

Journalize the following sales transactions for Sanborn Camera Store using the periodic inventory system. Explanations are not required.

Dec. 3, Sanborn sold $41,900 of camera equipment on the account; credit terms are 3/15, n/EOM.

17 Sanborn receives payment from the customer on the amount due to less the discount.

What are the four steps involved in the closing process for a merchandising company?

The unadjusted trial balance for Tuttle Electronics Company follows:

TUTTLE ELECTRONICS COMPANY

Unadjusted Trial Balance

October 31, 2018

Balance

Account Title Debit Credit

Cash \(4,200

Accounts Receivable 33,800

Merchandise Inventory 45,700

Office Supplies 5,700

Equipment 129,500

Accumulated Depreciation-Equipment \)37,200

Accounts Payable 15,600

Unearned Revenue 13,400

Notes Payable, long-term 53,000

Common Stock 48,000

Retained Earnings 6,700

Dividends 27,000

Sales Revenue 300,300

Cost of Goods Sold 171,600

Salaries Expense (Selling) 26,000

Rent Expense (Selling) 15,400

Salaries Expense (Administrative) 4,800

Utilities Expense (Administrative) 10,500

Total \(474,200 \)474,200

Requirements

1. Journalize the adjusting entries using the following data:

a. Interest revenue accrued, \(550.

b. Salaries (Selling) accrued, \)2,800.

c. Depreciation Expense鈥擡quipment (Administrative), \(1,295.

d. Interest expense accrued, \)1,500.

e. A physical count of inventory was completed. The ending Merchandise Inventory should have a balance of \(45,300.

f. Tuttle estimates that approximately \)6,200 of merchandise sold will be returned with a cost of $2,480.

2. Prepare Tuttle Electronics鈥檚 adjusted trial balance as of October 31, 2018.

3. Prepare Tuttle Electronics鈥檚 multi-step income statement for year ended October 31, 2018.
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