Chapter 05 – Accounting for Retail Businesses
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Accounts Receivable
4,044
Cash
4,044
POINTS:
1
DIFFICULTY:
Challenging
Bloom’s: Applying
QUESTION TYPE:
Subjective Short Answer
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.05–02 – LO: 05–02
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.17 – Inventories Reporting
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
7/22/2017 6:19 PM
DATE MODIFIED:
10/16/2017 4:50 PM
196. Details of a purchase invoice and related credit memo are summarized as follows:
Invoice:
Cost of merchandise listed on purchase invoice
$6,500
Prepaid freight charge added to invoice
150
Terms, FOB shipping point, 1/10, n/eom
Credit memo: Cost of merchandise returned
$1,500
Assume that the credit memo was received prior to payment and that the invoice is paid within the discount
period. Determine the following:
(a)
Amount of the cash discount allowed.
(b)
Amount to be paid by the purchaser if the discount is taken.
(c)
Cost of the merchandise to the purchaser if the discount is not taken.
ANSWER:
(a)
$50
(b)
$5,100
(c)
$5,150
POINTS:
1
DIFFICULTY:
Easy
Bloom’s: Applying
QUESTION TYPE:
Subjective Short Answer
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.05–02 – LO: 05–02
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.04 – Cash vs. Accrual
ACCT.ACBSP.APC.17 – Inventories Reporting
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
7/22/2017 6:19 PM
DATE MODIFIED:
10/16/2017 4:50 PM
197. Conquest Company uses a perpetual inventory system. Conquest purchased $1,500 of merchandise on account and
payment was made within the discount period. The credit terms were 2/10, n/30. Journalize Conquest’s purchase and
payment.
ANSWER:
(a)
Inventory
1,470
Accounts Payable
1,470
(b)
Accounts Payable
1,470
Chapter 05 – Accounting for Retail Businesses
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Page 83
(b)
7,600
60
FOB destination, n/30
800
(c)
1,400
55
FOB shipping point, 2/10, n/30
600
(d)
500
50
FOB destination, 1/10, n/30
0
Determine the amount to be paid in full settlement of each of the invoices, assuming that credit for returns and allowances
was received prior to payment and that all invoices were paid within the discount period.
ANSWER:
(a)
$2,800 – $200 – $26 + $45 = $2,619
(b)
$7,600 – $800 = $6,800
(c)
$1,400 – $600 – $16 + $55 = $839
(d)
$500 – $5 = $495
POINTS:
1
DIFFICULTY:
Challenging
Bloom’s: Applying
QUESTION TYPE:
Subjective Short Answer
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.05–02 – LO: 05–02
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.17 – Inventories Reporting
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
7/22/2017 6:19 PM
DATE MODIFIED:
10/16/2017 4:50 PM
200. Journalize the entries to record the following selected transactions:
(a)
Sold $900 of merchandise on account, subject to 7% sales tax. The cost of the
goods sold was $510.
(b)
Paid $436 to the state sales tax department for taxes collected.
ANSWER:
(a)
Accounts Receivable
963
Sales
900
Sales Tax Payable
63
Cost of Goods Sold
510
Inventory
510
(b)
Sales Tax Payable
436
Cash
436
POINTS:
1
DIFFICULTY:
Easy
Bloom’s: Applying
QUESTION TYPE:
Subjective Short Answer
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.05–02 – LO: 05–02
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.06 – Recording Transactions
ACCT.ACBSP.APC.17 – Inventories Reporting
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
7/22/2017 6:19 PM
DATE MODIFIED:
10/16/2017 4:50 PM
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Page 84
201. Gadget Palace is a retailer selling unique hardware. Gadget Palace uses a perpetual inventory system. Journalize the
following transactions:
On July 5, Gadget Palace purchases inventory for sale from Turbo Tools for $11,400.00
with terms 2/10, n/30.
On July 6, Gadget Palace pays Fast Truck Transport $75.00 for freight in on the July 5
order.
On July 8, Gadget Palace receives a credit memo from Turbo Tools for $215.00 for
damaged merchandise.
On July 15, Gadget Palace pays Turbo Tools the balance due.
General Journal
Date
Description
Debit
Credit
ANSWER:
General Journal
Date
Description
Debit
Credit
July 5
Inventory
11,172.00
A/P—Turbo Tools
11,172.00
6
Inventory
75.00
Cash
75.00
8
A/P—Turbo Tools
210.70
Inventory
210.70
15
A/P—Turbo Tools
10,961.30
Cash
10,961.30
1
DIFFICULTY:
Challenging
Bloom’s: Applying
QUESTION TYPE:
Subjective Short Answer
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.05–02 – LO: 05–02
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.17 – Inventories Reporting
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
7/22/2017 6:19 PM
Inventory
1,470
7
Cash
9,750
Sales
9,750
7
Cost of Goods Sold
4,000
Inventory
4,000
206. Record the following transactions for Sparky’s Pet Shop using the general journal form provided below. Assume
Sparky’s uses a perpetual inventory system. Omit transaction descriptions from entries:
Date
Transaction
August 1
Purchased $6,000 of merchandise on account, terms 2/10, n/30.
3
Returned $1,500 of merchandise purchased on August 1 due to defects.
7
Recorded cash sales for the first week of August, $9,750; cost of the
merchandise was $4,000.
10
Made sale on account to a local breeder for $500, terms 1/10 net 30; cost of the
merchandise was $200.
11
Paid for the merchandise purchased on August 1, less return.
20
Received payment from sale of August 10.
Date
Description
Debit
Credit
ANSWER:
Date
Description
Debit
Credit
Aug. 1
Inventory
5,880
Accounts Payable
5,880
3
Accounts Payable
1,470
