Chapter 5 HW

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1. The operating cycle of a merchandising company contains the following five activities. With merchandise acquisition as the starting point, arrange the events in the correct order. a. Inventory ma... de available for sale 2 b. Cash collections from customers 5 c. Credit sales to customers 3 d. Purchases of merchandise 1 e. Accounts receivable accounted for 4 2. Apr. 2 Purchased merchandise from Lyon Company under the following terms: $4,600 price, invoice dated April 2, credit terms of 2/15, n/60, and FOB shipping point. 3 Paid $300 for shipping charges on the April 2 purchase. 4 Returned to Lyon Company unacceptable merchandise that had an invoice price of $600. 17 Sent a check to Lyon Company for the April 2 purchase, net of the discount and the returned merchandise. 18 Purchased merchandise from Frist Corp. under the following terms: $8,500 price, invoice dated April 18, credit terms of 2/10, n/30, and FOB destination. 21 After negotiations, received from Frist a $1,100 allowance on the April 18 purchase. 28 Sent check to Frist paying for the April 18 purchase, net of the discount and allowance. Prepare journal entries to record the above transactions for a retail store. Assume a perpetual inventory system. Date General Journal Debit Credit April 02 Merchandise inventory 4,600 Accounts payable— Lyon 4,600 April 03 Merchandise inventory 300 Cash 300 April 04 Accounts payable—Lyon 600 Merchandise inventory 600 April 17 Accounts payable—Lyon 4,000 Merchandise inventory 80 Cash 3,920 April 18 Merchandise inventory 8,500 Accounts payable— First 8,500 April 21 Accounts payable—Frist 1,100 Merchandise inventory 1,100 April 28 Accounts payable—Frist 7,400 Merchandise inventory 148 Cash 7,252 Explanation: Apr 17: Paid balance (less 2%) within discount period = $80 = ($4,600 − $600) × 2%. This study source was downloaded by 100000849331226 from CourseHero.com on 07-04-2022 16:44:25 GMT -05:00 https://www.coursehero.com/file/10100301/Fundamental-Accounting-Principles-21st-Ed-Chapter-5-Connect-Problems/Apr 28: Paid balance (less 2%) within discount period = $148 = ($8,500 − $1,100) × 2% 3. Allied Parts was organized on May 1, 2013, and made its first purchase of merchandise on May 3. The purchase was for 2,000 units at a price of $10 per unit. On May 5, Allied Parts sold 1,500 of the units for $14 per unit to Baker Co. Terms of the sale were 2/10, n/60. a. On May 7, Baker returns 200 units because they did not fit the customer's needs. Allied Parts restores the units to its inventory. b. On May 8, Baker discovers that 300 units are damaged but are still of some use and, therefore, keeps the units. Allied Parts sends Baker a credit memorandum for $600 to compensate for the damage. c. On May 15, Baker discovers that 100 units are the wrong color. Baker keeps 60 of these units because Allied Parts sends a $120 credit memorandum to compensate. Baker returns the remaining 40 units to Allied Parts. Allied Parts restores the 40 returned units to its inventory. Prepare entries for Allied Parts to record the May 5 sale and each of the above separate transactions a through c using a perpetual inventory system. Date General Journal Debit Credit May 05 Accounts receivable 21,000 Sales 21,000 May 05 Cost of goods sold 15,000 Merchandise inventory 15,000 May 07 Sales returns and allowances 2,800 Accounts receivable 2,800 May 07 Merchandise inventory 2,000 Cost of goods sold 2,000 May 08 Sales returns and allowances 600 Accounts receivable 600 May 15 Sales returns and allowances 680 Accounts receivable 680 May 15 Merchandise inventory 400 Cost of goods sold 400 Explanation: May 5: Sold merchandise on credit (1,500 × $14) = $21,000 May 5: To record cost of sale (1,500 × $10) = $15,000 May 7: Accepted a return from a customer (200 × $14) = $2,800 May 7: Returned merchandise to inventory (200 × $10) = $2,000 May 15: Accepted a return from a customer [$120 + (40 × $14)] = $680 May 15: Returned merchandise to inventory (40 × $10) = $400 The following list includes selected permanent accounts and all of the temporary accounts from December 31, 2013, unadjusted the trial balance of Emiko Co., a business owned by Kumi Emiko. Emiko Co. uses a perpetual inventory system. Debit Credit Merchandise inventory $ 30,000 Prepaid selling expenses of 5,600 K. Emiko, Withdrawals 33,000 Sales $529,000 Sales returns and allowances 17,500 Sales discounts 5,000 Cost of goods sold 212,000 Sales salaries expense 48,000 Utilities expense 15,000 Selling expenses 36,000 Administrative expenses 105,000 [Show More]

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