24) Metro Company sells lawn and garden products to wholesalers. The company’s fiscal year-end is December 31. During 2020, the following transactions related to receivables occurred: 2/28 Sold merchandise to Lennox, Inc., for $10,000 and accepted a 10%, 7-month note. 10% is an appropriate rate for this type of note. 3/31 Sold merchandise to Maddox Co. and accepted a noninterest-bearing note with a discount rate of 10%. The $8,000 payment is due on March 31, 2019. 4/3 Sold merchandise to Carr Co. for $7,000 with terms 2/10, n/30. Metro uses the gross method to account for cash discounts.
Please solve question 25
24) Metro Company sells lawn and garden products to wholesalers. The company’s fiscal year-end is December 31. During 2020, the following transactions related to receivables occurred:
2/28 Sold merchandise to Lennox, Inc., for $10,000 and accepted a 10%, 7-month note. 10% is an appropriate rate for this type of note.
3/31 Sold merchandise to Maddox Co. and accepted a noninterest-bearing note with a discount rate of 10%. The $8,000 payment is due on March 31, 2019.
4/3 Sold merchandise to Carr Co. for $7,000 with terms 2/10, n/30. Metro uses the gross method to account for cash discounts.
4/11 Collected the entire amount due from Carr Co.
6/30 Discounted the Lennox, Inc., note at the bank. The bank’s discount rate is 12%. The note was discounted without recourse.
12/31 An
.Required:
Prepare the necessary
|
Date |
Account titles and Explanations |
Debit ($) |
Credit ($) |
|
Feb-28 |
10% Notes receivables |
10000 |
|
|
|
Sales Revenue |
|
10000 |
|
|
( To record notes receivable accepted ) |
|
|
|
|
|
|
|
|
Mar-31 |
Notes receivables |
8000 |
|
|
|
Discount ( 8000 * 10% ) |
|
800 |
|
|
Sales revenue |
|
7200 |
|
|
( To record non interest bearing note ) |
|
|
|
|
|
|
|
|
Apr-03 |
Account receivables |
7000 |
|
|
|
Sales revenue |
|
7000 |
|
|
( To record merchandise sold ) |
|
|
|
|
|
|
|
|
Apr-11 |
Cash |
6860 |
|
|
|
Sales discount ( 7000 * 2% ) |
140 |
|
|
|
Account receivables |
|
7000 |
|
|
( To record cash received ) |
|
|
|
|
|
|
|
|
Jun-30 |
Interest receivables ( 10000 * 10% * 4/12 ) |
333 |
|
|
|
Interest revenue |
|
333 |
|
|
|
|
|
|
|
Cash ( see working ) |
10266 |
|
|
|
Loss on sale of notes receivable |
67 |
|
|
|
Interest receivables |
|
333 |
|
|
Notes receivable |
|
10000 |
|
|
|
|
|
|
Dec-31 |
Discount |
600 |
|
|
|
Interest revenue ( 8000 * 10% * 9 /12 ) |
|
600 |
|
|
( To record adjusting entry for Maddox note ) |
|
|
Working :
|
Calculation of cash received : |
Amount ($) |
|
Face value |
10000 |
|
Interest for 7 month at 10% |
583 |
|
Less : Discount on 12% ( 10583 * 12% *3/12 ) |
-317 |
|
Cash received |
10266 |
Use the following to answer the question(s) below:
Shown below is the activity for one of the products of Random Creations:
January 1 balance, 100 units @ $50
Purchases:
January 18: 40 units @ $51
January 25: 40 units @ $52
Sales:
January 22: 60 units
January 31: 50 units
25-1) Required: Compute the January 31 cost of ending inventory, assuming Random Creations uses FIFO and periodic inventory system.
Cost of ending inventory: $____________________
Your computations:
25-2) Required: Compute the cost of goods sold for January, assuming Random Creations uses LIFO and periodicinventory system.
Cost of goods sold: $____________________
Your computations:
25-3) Required: Compute the cost of goods sold for January, assuming Random Creations uses LIFO and perpetual inventory system.
Cost of goods sold: $____________________
Your computations:
25-4) Required: Compute the January 31 cost of ending inventory, assuming Random Creations uses average cost and periodic inventory system.
Cost of ending inventory: $____________________
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