Your Questions About In Which Journal Is The Return Of Supplies Purchased On Account Recorded

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Daniel asks…

Colo Company – Accounting Help?

May 1 Issued Check No. 3410 to S&P Management Co. in payment of the May rent, $3,710. (Use
two lines to record the transaction. Charge 80% of the rent to Rent Expense—Selling Space
and the balance to Rent Expense—Office Space.)
2 Sold merchandise on credit to Hensel Company, Invoice No. 8785, for $6,100 (cost is $4,100).
2 Issued a $175 credit memorandum to Knox, Inc., for defective (worthless) merchandise sold
on April 28 and returned for credit. The total selling price (gross) was $4,725.
3 Received a $798 credit memorandum from Peyton Products for the return of merchandise
purchased on April 29.
4 Purchased the following on credit from Gear Supply Co.: merchandise, $37,072; store supplies,
$574; and office supplies, $83. Invoice dated May 4, terms n
5 Received payment from Knox, Inc., for the balance from the April 28 sale less the May 2
return and the discount.
8 Issued Check No. 3411 to Peyton Products to pay for the $7,098 of merchandise purchased
on April 29 less the May 3 return and a 2% discount.
9 Sold store supplies to the merchant next door at their cost of $350 cash.
10 Purchased $4,074 of office equipment on credit from Gear Supply Co., invoice dated May
10, terms n10 EOM.
11 Received payment from Hensel Company for the May 2 sale less the discount.
11 Purchased $8,800 of merchandise from Garcia, Inc., invoice dated May 10, terms 210,
n30.
12 Received an $854 credit memorandum from Gear Supply Co. for the return of defective office
equipment received on May 10.
15 Issued Check No. 3412, payable to Payroll, in payment of sales salaries, $5,320, and office
salaries, $3,150. Cashed the check and paid the employees.
15 Cash sales for the first half of the month are $59,220 (cost is $38,200). (Cash sales are
recorded daily but are recorded only twice here to reduce repetitive entries.)
15 Post to the customer and creditor accounts. Also post individual items that are not included
in column totals at the end of the month to the general ledger accounts. (Such items are
posted daily but are posted only twice each month because they are few in number.)
16 Sold merchandise on credit to Hensel Company, Invoice No. 8786, for $3,990 (cost is
$1,890).
17 Purchased $13,650 of merchandise from Fink Corp., invoice dated May 14, terms 210,
n60.
19 Issued Check No. 3413 to Garcia, Inc., in payment of its May 10 invoice less the discount.
22 Sold merchandise to Lee Services, Invoice No. 8787, for $6,850 (cost is $4,990), terms
210, n60.
23 Issued Check No. 3414 to Fink Corp. in payment of its May 14 invoice less the discount.
24 Purchased the following on credit from Gear Supply Co.: merchandise, $8,120; store supplies,
$630; and office supplies, $280. Invoice dated May 24, terms n10 EOM.
25 Purchased $3,080 of merchandise from Peyton Products, invoice dated May 23, terms 210,
n30.
26 Sold merchandise on credit to Crane Corp., Invoice No. 8788, for $14,210 (cost is $8,230).
26 Issued Check No. 3415 to Perennial Power in payment of the May electric bill, $1,283.
29 The owner of Colo Company, Jenny Colo, used Check No. 3416 to withdraw $7,000 cash
from the business for personal use.
30 Received payment from Lee Services for the May 22 sale less the discount.
30 Issued Check No. 3417, payable to Payroll, in payment of sales salaries, $5,320, and office
salaries, $3,150. Cashed the check and paid the employees.
31 Cash sales for the last half of the month are $66,052 (cost is $42,500).
31 Post to the customer and creditor accounts. Also post individual items that are not included
in column totals at the end of the month to the general ledger accounts. Foot and crossfoot
the journals and make the month-end postings.
Required
1. Enter these transactions in a sales journal, a purchases journal, a cash receipts journal, a cash disbursements
journal, or a general journal as illustrated in this chapter. Post when instructed to do
so. Assume a perpetual inventory system.
2. Prepare a trial balance in the Trial Balance columns of the work sheet form provided with the working
papers. Complete the work sheet using the following information for accounting adjustments:
a. Expired insurance, $553.
b. Ending store supplies inventory, $2,632.
c. Ending office supplies inventory, $504.
d. Depreciation of store equipment, $567.
e. Depreciation of office equipment, $329.
Prepare and post adjusting and closing entries.
3. Prepare a May 2005 multiple-step income statement, a May 2005 statement of owner’s equity,
and a May 31, 2005, classified balance sheet.
4. Prepare a post-closing trial balance. Also prove the accuracy of subsidiary ledgers by preparing
schedules of both accounts receivable and accounts payable

financi4 answers:

The notes at the link should be useful to you.

Michael asks…

Accounting?

Ex. 1 (16 pts.)
On October 1, Taylor Bicycle Store had an inventory of 20 ten speed bicycles at a cost of $200 each. During the month of October, the following transactions occurred.

Oct.4Purchased 25 bicycles at a cost of $200 each from Lang Bicycle Company, terms 2/10, n/30.

6 Sold 15 bicycles to Team America for $300 each, terms 2/10, n/30.

7Received credit from Lang Bicycle Company for the return of 2 defective bicycles.

13Issued a credit memo to Team America for the return of a defective bicycle.

14Paid Lang Bicycle Company in full, less discount.

Instructions
Prepare the journal entries to record the transactions assuming the company uses a perpetual inventory system.

Ex. 2 (11 pts.)
Prepare the necessary journal entries to record the following transactions, assuming Lewis Company uses a perpetual inventory system.
(a)Lewis sells $40,000 of merchandise, terms 1/10, n/30. The merchandise cost $30,000.
(b)The customer in (a) returned $4,000 of merchandise to Lewis. The merchandise returned cost $3,000.
(c)Lewis received the balance due within the discount period.

Ex. 3 (10 pts.)
The following information is available for Tolan Company:

Debit Credit
Tolan, Capital$ 50,000
Tolan, Drawing$ 42,000
Sales510,000
Sales Returns and Allowances20,000
Sales Discounts7,000
Cost of Goods Sold337,000
Freight-out2,000
Advertising Expense15,000
Interest Expense19,000
Store Salaries Expense45,000
Utilities Expense18,000
Depreciation Expense7,000
Interest Revenue25,000

Instructions
Using the above information, prepare the closing entries for Tolan Company.

Ex. 4(16 pts.)

The adjusted trial balance of Olsen Company contained the following information:
Debit Credit
Sales$580,000
Sales Returns and Allowances$ 20,000
Sales Discounts7,000
Cost of Goods Sold386,000
Freight-out2,000
Advertising Expense15,000
Interest Expense18,000
Store Salaries Expense50,000
Utilities Expense28,000
Depreciation Expense7,000
Interest Revenue30,000

Instructions
1.Use the above information to prepare a multiple-step income statement for the year ended December 31, 2005.

Ex. 5(6 pts)
The income statement of Miller, Inc. includes the items listed below:
Net sales$900,000
Gross profit350,000
Beginning inventory100,000
Purchase discounts15,000
Purchase returns and allowances8,000
Freight-in10,000
Operating expenses300,000
Purchases540,000

Instructions
Use the appropriate items listed above as a basis for determining:
(a)Cost of goods sold.
(b)Cost of goods available for sale.
(c)Ending inventory.

Ex. 6(6 pts)
Morton Company uses the periodic inventory method and had the following inventory information available:
UnitsUnit CostTotal Cost
1/1Beginning Inventory100$4$ 400
1/20Purchase400$52,000
7/25Purchase200$71,400
10/20Purchase 300$8 2,400
1,000$6,200
A physical count of inventory on December 31 revealed that there were 350 units on hand.

Instructions
Answer the following independent questions and show computations supporting your answers.
1.Assume that the company uses the FIFO method. The value of the ending inventory at December 31 is $__________.
2.Assume that the company uses the Average Cost method. The value of the ending inventory on December 31 is $__________.
3.Assume that the company uses the LIFO method. The value of the ending inventory on December 31 is $__________.

Ex. 7(5 pts)
Dexter Company maintains four special journals and a general journal to record its transactions. Using the code below, indicate in the space provided the appropriate journal for recording the transactions listed.

CodeJournals
SSales journal
CRCash receipts journal
CPCash payments journal
PSingle-column purchases journal
GGeneral Journal

1.Mr. Dexter invested cash in the business.
2.Purchased store supplies on account.
3.Sold merchandise to customer on account.
4.Purchased a 2-year fire insurance policy for cash.
5.Received a check from a customer as payment on account.
6.Paid for store supplies purchased in transaction 2.
7.Purchased merchandise on account.
8.Issued a credit memorandum to a customer who returned defective merchandise previously sold on account.
9.Purchased office equipment for cash.
10.Made an adjusting entry for store supplies used during the period.

financi4 answers:

Ex. 1
On October 1, Taylor Bicycle Store had an inventory of 20 ten speed bicycles at a cost of $200 each. During the month of October, the following transactions occurred.

Oct. 4 Purchased 25 bicycles at a cost of $200 each from Lang Bicycle Company, terms 2/10, n/30
Dr Merchandise inventory 5,000
Cr A/cs payable 5,000

6 Sold 15 bicycles to Team America for $300 each, terms 2/10, n/30
Dr A/cs receivable 4,500
Cr Sales 4,500

Dr COGS 3,000
Cr Merchandise inventory 3,000

7 Received credit from Lang Bicycle Company for the return of 2 defective bicycles
Dr AP 400
Cr Merchandise inventory 400

13 Issued a credit memo to Team America for the return of a defective bicycle
Dr Sales returns 300
Cr AR 300
(I’m not adjusting COGS on the basis that the bicycle is defective and cannot be sold again)

14 Paid Lang Bicycle Company in full, less discount
Dr AP 4,600
Cr Purchase discount 92
Cr Cash 4,508

Ex. 2
Prepare the necessary journal entries to record the following transactions, assuming Lewis Company uses a perpetual inventory system
(a)Lewis sells $40,000 of merchandise, terms 1/10, n/30. The merchandise cost $30,000
Dr AR 40k
Cr Sales 40k

Dr COGS 30k
Cr Merchandise inventory 30k

(b)The customer in (a) returned $4,000 of merchandise to Lewis. The merchandise returned cost $3,000
Dr Sales 4k
Cr AR 4k

Dr Merch. Inv. 3k
Cr COGS 3k

(c)Lewis received the balance due within the discount period.
Dr Cash 35,640
Dr Sales discount 360
Cr AR 36,000

Ex. 3
Closing entries:
Dr Sales 510,000
Dr Interest revenue 25,000
Cr Income summary 535,000

Dr Income summary 470,000
Cr Sales Returns and Allowances 20,000
Cr Sales Discounts 7,000
Cr Cost of Goods Sold 337,000
Cr Freight-out 2,000
Cr Advertising Expense 15,000
Cr Interest Expense 19,000
Cr Store Salaries Expense 45,000
Cr Utilities Expense 18,000
Cr Depreciation Expense 7,000

Dr Income summary 65,000
Cr Retained earnings 65,000

Dr Capital 42,000
Cr Drawings 42,000

Ex. 4
multiple-step income statement

Sales $580,000
Less:
Sales Returns and Allowances $20,000
Sales Discounts 7,000
Net sales $553,000
Less:
Cost of Goods Sold 386,000
Gross profit $167,000
Less:
Operating expenses
Selling expenses –
– Freight-out 2,000
– Advertising Expense 15,000
General & admin. Expenses –
– Store Salaries Expense 50,000
– Utilities Expense 28,000
– Depreciation Expense 7,000
Operating income $65,000

Non-operating or other
Interest Revenue 30,000
Interest Expense (18,000)

Net income $77,000

Ex. 5
(a) Cost of goods sold
Net sales $900,000 – Gross profit 350,000 = COGS $550,000

(b) Cost of goods available for sale –
Beginning inventory 100,000
Purchases 540,000
Purchase discounts (15,000)
Purchase returns and allowances (8,000)
Freight-in 10,000
Cost of gds available for sale $627,000

(c) Ending inventory
Cost of gds available for sale $627k – COGS $550k = Ending inventory $77k

Ex. 6
Morton Company uses the periodic inventory method and had the following inventory information available:
1/1 Beginning Inventory 100 $4 $400
1/20 Purchase 400 $5 $2,000
7/25 Purchase 200 $7 $1,400
10/20 Purchase 300 $8 $2,400
Total 1,000units costing $6,200
A physical count of inventory on December 31 revealed that there were 350 units on hand, i.e. 650 units were sold

1.Assume that the company uses the FIFO method. The value of the ending inventory at Dec 31 is $2,750
2.Assume that the company uses the Average Cost method. The value of the ending inventory on Dec 31 is $2,170
3.Assume that the company uses the LIFO method. The value of the ending inventory on Dec 31 is $1,650

Ex. 7

1.Mr. Dexter invested cash in the business (CR)
2.Purchased store supplies on account. (G)
3.Sold merchandise to customer on account. (S)
4.Purchased a 2-year fire insurance policy for cash. (G)
5.Received a check from a customer as payment on account(CR)
6.Paid for store supplies purchased in transaction 2. (CP)
7.Purchased merchandise on account. (P)
8.Issued a credit memorandum to a customer who returned defective merchandise previously sold on account. (G)
9.Purchased office equipment for cash. (G)
10.Made an adjusting entry for store supplies used during the period. (G)

Donald asks…

In a perpetual inventory system how do you figure out a sales, purchase, and cash receipts journal?

In a perpetual inventory system how do you figure out a sales, purchase, and cash receipts journal?
Assume it is Monday, May 1, the first business day of the month, and you have just been hired as the accountant for Colo Company, which operates with monthly accounting periods. All of the company’s accounting work is completed through the end of April and its ledgers show April 30 balances. During your first month on the job, the company experiences the following transactions and
events (terms for all its credit sales are 2_10, n_30 unless stated differently): May 1 Issued Check No. 3410 to S&P Management Co. in payment of the May rent, $3,710. (Use two lines to record the transaction. Charge 80% of the rent to Rent Expense—Selling Space and the balance to Rent Expense—Office Space.)
2 Sold merchandise on credit to Hensel Company, Invoice No. 8785, for $6,100 (cost is $4,100). 2 Issued a $175 credit memorandum to Knox, Inc., for defective (worthless) merchandise sold on April 28 and returned for credit. The total selling price (gross) was $4,725.
3 Received a $798 credit memorandum from Peyton Products for the return of merchandise purchased on April 29.
4 Purchased the following on credit from Gear Supply Co.: merchandise, $37,072; store supplies, $574; and office supplies, $83. Invoice dated May 4, terms n_10 EOM.
5 Received payment from Knox, Inc., for the balance from the April 28 sale less the May 2 return and the discount.
8 Issued Check No. 3411 to Peyton Products to pay for the $7,098 of merchandise purchased on April 29 less the May 3 return and a 2% discount.
9 Sold store supplies to the merchant next door at their cost of $350 cash.
10 Purchased $4,074 of office equipment on credit from Gear Supply Co., invoice dated May 10, terms n_10 EOM.
11 Received payment from Hensel Company for the May 2 sale less the discount.
11 Purchased $8,800 of merchandise from Garcia, Inc., invoice dated May 10, terms 2_10, n_30.
12 Received an $854 credit memorandum from Gear Supply Co. for the return of defective office equipment received on May 10.
15 Issued Check No. 3412, payable to Payroll, in payment of sales salaries, $5,320, and office salaries, $3,150. Cashed the check and paid the employees.
15 Cash sales for the first half of the month are $59,220 (cost is $38,200). (Cash sales are recorded daily but are recorded only twice here to reduce repetitive entries.)
15 Post to the customer and creditor accounts. Also post individual items that are not included in column totals at the end of the month to the general ledger accounts. (Such items are posted daily but are posted only twice each month because they are few in number.)
16 Sold merchandise on credit to Hensel Company, Invoice No. 8786, for $3,990 (cost is $1,890).
17 Purchased $13,650 of merchandise from Fink Corp., invoice dated May 14, terms 2_10, n_60.
19 Issued Check No. 3413 to Garcia, Inc., in payment of its May 10 invoice less the discount.
22 Sold merchandise to Lee Services, Invoice No. 8787, for $6,850 (cost is $4,990), terms 2_10, n_60.
23 Issued Check No. 3414 to Fink Corp. in payment of its May 14 invoice less the discount.
24 Purchased the following on credit from Gear Supply Co.: merchandise, $8,120; store supplies, $630; and office supplies, $280. Invoice dated May 24, terms n_10 EOM.
25 Purchased $3,080 of merchandise from Peyton Products, invoice dated May 23, terms 2_10, n_30.
26 Sold merchandise on credit to Crane Corp., Invoice No. 8788, for $14,210 (cost is $8,230).
26 Issued Check No. 3415 to Perennial Power in payment of the May electric bill, $1,283.
29 The owner of Colo Company, Jenny Colo, used Check No. 3416 to withdraw $7,000 cash from the business for personal use.
30 Received payment from Lee Services for the May 22 sale less the discount.
30 Issued Check No. 3417, payable to Payroll, in payment of sales salaries, $5,320, and office salaries, $3,150. Cashed the check and paid the employees.
31 Cash sales for the last half of the month are $66,052 (cost is $42,500).
31 Post to the customer and creditor accounts. Also post individual items that are not included in column totals at the end of the month to the general ledger accounts. Foot and crossfoot the journals and make the month-end postings.
Required
1. Enter these transactions in a sales journal, a purchases journal, a cash receipts journal, a cash disbursements
journal, or a general journal as illustrated in this chapter. Post when instructed to do so. Assume a perpetual inventory system.
2. Prepare a trial balance in the Trial Balance columns of the work sheet form provided with the working
papers. Complete the work sheet using the following information for accounting adjustments: a. Expired insurance, $553.
b. Ending store supplies inventory, $2,632.
c. Ending office supplies inventory, $504.
d. Depreciation of store equipment, $567.
e. Depreciation of office equipment, $329.
Prepare and post adjusting and closing entries.
3. P

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