Survey Of Accounting
5th Edition
ISBN: 9781259631122
Author: Edmonds, Thomas P.
Publisher: Mcgraw-hill Education,
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Textbook Question
Chapter 3, Problem 17E
Effect of cash discounts on financial statements: Perpetual system
Expert Computers was started in 2018. The company experienced the following accounting events during its first year of operation:
1. Started business when it acquired $40,000 cash from the issue of common stock.
2. Purchased merchandise with a list price of $32,000 on account, terms 2/10, n/30.
3. Paid off one-half of the accounts payable balance within the discount period.
4. Sold merchandise on account for $28,000. Credit terms were 1/20, n/30. The merchandise had cost Expert Computers $16,000.
5. Collected cash from the
6. Paid $2,100 cash for operating expenses.
7. Paid the balance due on accounts payable. The payment was not made within the discount period.
Required
a. Record the events in a horizontal statements model like the following one.
b. What is the amount of gross margin for the period? What is the net income for the period?
c. Why would Expert Computers sell merchandise with the terms 1/20, n/30?
d. What do the terms 2/10, n/30 in Event 2 mean to Expert Computers?
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
An analysis of the cash book and other records of Byle Corporation shows the following
data:
Accounts payable, January 1
Accounts payable, December 31
Cash purchases during the year
Payments on the accounts payable during the year
|Purchase discounts taken
How much purchases should be reported on the statement of comprehensive income
160,000
300,000
500,000
800,000
7,000
for the year?
Directions: Read each senterce carefully and determine whether the statement is TRUE or FALS E. Write
your answers on the space provided before each number.
1. At the beginning of the day, you have P200 cash in your pocket. At the end of the day,
you have P50 left. If you make a horizontal analysis of your cash, you would conclude that your cash has
decreased by 80% during the day.
2. In 2019, Entity A reported sales of P100 and profit of P20. In a vertical analysis, a
financial statement user would conclude that Entity A was able to generate 20% profit from every peso of
its sales during the period.
3. Entity A reported irventory balances of P100 and P50 in 2019 and 2018, respectively.
In a horizontal analysis, a financial statement user would conclude that Entity A's inventory has increased
by 50% from2018 to 2019.
4. An analysis of the intenelationships of infomation in a single period, expressed as
parcentages of a common denomirator, is called horizortal analysis.
5. A comparison…
The following selected transactions occurred during the year ended December 31,
2026 of RANOA COMPANY:
Gross sales (cash and credit) P900,736.80
Collections from credit customers, net of 2% cash discount 294,000.00
Cash sales 180,000.00
Uncollectible accounts written off 19,200.00
Credit memos issued to credit customers for sales ret./allow. 10,080.00
Cash refunds given to cash customers for sales ret./allow. 15,168.00
Recoveries on accounts receivable written-off in prior years
(not included in cash received stated above) 6,505.20
At year-end, the company provides for estimated bad debts losses by crediting the
Allowance for Bad Debts account for 2% of its net credit sales for the year. The
allowance for bad debts at the beginning of the year is P19,327.20.
9. How much is the RANOA COMPANY’s gross sales?
10. RANOA credit sales at December 31, 2026 is:
11. How much is the RANOA COMPANY’s net credit sales?
12. The Bad Debts Expense of RANOA COMPANY at December 31,…
Chapter 3 Solutions
Survey Of Accounting
Ch. 3 - 1. Define merchandise inventory. What types of...Ch. 3 - 2. What is the difference between a product cost...Ch. 3 - 3. How is the cost of goods available for sale...Ch. 3 - 4. What portion of cost of goods available for...Ch. 3 - 5. When are period costs expensed? When are...Ch. 3 - 6. If PetCo had net sales of 600,000, goods...Ch. 3 - Prob. 7QCh. 3 - 8. What are the effects of the following types of...Ch. 3 - 9. Northern Merchandising Company sold inventory...Ch. 3 - 10. If goods are shipped FOB shipping point, which...
Ch. 3 - 11. Define transportation-in. Is it a product or a...Ch. 3 - Prob. 12QCh. 3 - Prob. 13QCh. 3 - 14. Dyer Department Store purchased goods with the...Ch. 3 - 15. Eastern Discount Stores incurred a 5,000 cash...Ch. 3 - 16. What is the purpose of giving credit terms to...Ch. 3 - Prob. 17QCh. 3 - 18. Ball Co. purchased inventory with a list price...Ch. 3 - 22. Explain the difference between purchase...Ch. 3 - Prob. 20QCh. 3 - Prob. 21QCh. 3 - 25. What is the advantage of using common size...Ch. 3 - 27. What is the purpose of preparing a schedule of...Ch. 3 - 28. Explain how the periodic inventory system...Ch. 3 - Prob. 25QCh. 3 - Exercise 3-1 Determining the cost of financing...Ch. 3 - Exercise 3-2 Comparing a merchandising company...Ch. 3 - Exercise 3-3 Effect of inventory transactions on...Ch. 3 - Exercise 3-4 Effect of inventory transactions on...Ch. 3 - Exercise 3-5 Recording inventory transactions in a...Ch. 3 - Exercise 4-6A Understanding the freight terms FOB...Ch. 3 - Exercise 3-7 Effect of purchase returns and...Ch. 3 - Exercise 3-8 Accounting for product costs:...Ch. 3 - Effect of product cost and period cost: Horizontal...Ch. 3 - Cash Discounts and Purchase Returns On April 6,...Ch. 3 - Exercise 4-9A Determining the effect of inventory...Ch. 3 - Inventory financing costs Bill Norman comes to you...Ch. 3 - Effect of shrinkage: Perpetual system Ho Designs...Ch. 3 - Comparing gross margin and gain on sale of land...Ch. 3 - Single-step and multistep income statements The...Ch. 3 - Prob. 16ECh. 3 - Effect of cash discounts on financial statements:...Ch. 3 - Using common size statements and ratios to make...Ch. 3 - Prob. 19ECh. 3 - Determining cost of goods sold: Periodic system...Ch. 3 - Identifying product and period costs Required...Ch. 3 - Problem 4-23A Identifying freight costs Required...Ch. 3 - Effect of purchase returns and allowances and...Ch. 3 - Preparing a schedule of cost of goods sold and...Ch. 3 - Prob. 25PCh. 3 - Comprehensive cycle problem: Perpetual system At...Ch. 3 - Prob. 27PCh. 3 - Comprehensive cycle problem: Periodic system...Ch. 3 - Prob. 1ATCCh. 3 - ATC 3-2 Group Exercise Multistep income statement...Ch. 3 - Prob. 3ATCCh. 3 - Prob. 4ATC
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- The following transactions affecting the accounts receivable of FST Inc. took place during the year ended December 31: Sales (Cash & Credit) 5,900,000 Cash received from credit customers, all of whom took advantage of the discount feature of the entity’s credit term 4/10, n/30 3,024,000 Cash received from cash customers 2,100,000 Accounts receivable written off as worthless 50,000 Credit memorandum issued to credit customers for sales return and allowances 250,000 Cash refund given to cash customers for sales return and allowances 20,000 Recoveries on account receivable written off as uncollectible in prior periods (not included in cash amount stated above) 80,000 The following balances were taken from the January 1 Statement of Financial Position: Accounts Receivable 950,000 Allowance for Doubtful account 100,000 The entity provided for uncollectible account losses by crediting allowance for doubtful accounts in the…arrow_forwardThe following transactions affecting the accounts receivable of FST Inc. took place during the year ended December 31: Sales (Cash & Credit) 5,900,000 Cash received from credit customers, all of whom took advantage of the discount feature of the entity’s credit term 4/10, n/30 3,024,000 Cash received from cash customers 2,100,000 Accounts receivable written off as worthless 50,000 Credit memorandum issued to credit customers for sales return and allowances 250,000 Cash refund given to cash customers for sales return and allowances 20,000 Recoveries on account receivable written off as uncollectible in prior periods (not included in cash amount stated above) 80,000 The following balances were taken from the January 1 Statement of Financial Position: Accounts Receivable 950,000 Allowance for Doubtful account 100,000 The entity provided for uncollectible account losses by crediting allowance for doubtful accounts in the…arrow_forwardPierce Corporation reported a $3,600 balance in accounts receivable on January 1, 2014. During the year, $24,800 of sales on account were made. During the year, Price wrote off accounts receivable of $1,700 as uncollectible. If the ending balance of accounts receivable is $2,000, what is the amount of cash received from customers? Multiple Choice $21,200 $21,500 $28,400 $24,700arrow_forward
- Star Company provided the following transactions affecting accountsreceivable during the year ended December 31, 2014:Sales (cash and credit) 5,900,000Cash received from credit customers, all of whomtook advantage of the discount feature of theentity’s credit terms 4/10, n/30 3,024,000Cash received from cash customers 2,100,000Accounts receivable written off as worthless 50,000Credit memorandum issued to credit customersfor sales returns and allowances 250,000Cash refunds given to cash customers for salesreturns and allowances 20,000Recoveries on accounts receivable written off asuncollectible in prior periods (not included incash amount stated above) 80,000The following balances were taken from January 1, 2014 statement of financial position:Accounts receivable 950,000Allowance for doubtful accounts 100,000The entity provided for uncollectible accounts losses by crediting allowance for doubtful accountsin the amount of P 70,000 for the current year.23. What is the balance of accounts…arrow_forwardA credit balance in Cash Over and Short is reported as a(n) Select one: A. asset. B. liability. C. expense. D. revenue. In 2016, Winslow Company had net credit sales of $1,250,000. On January 1, 2016, Allowance for Doubtful Accounts had a credit balance of $25,000. During 2016, $32,000 of uncollectible accounts receivable were written off. Past experience indicates that the allowance should be 10% of the balance in receivables (percentage of receivables basis). If the accounts receivable balance at December 31 was $360,000, what is the required adjustment to the Allowance for Doubtful Accounts at December 31, 2016? Select one: a. $6,000 b. $29,000 c. $36,000 d. $43,000 The interest on a $5,000, 3%, 60-day note receivable is Select one: a. $100. b. $25 c. $150. d. $300. A plant asset was purchased on January 1 for $100,000 with an estimated salvage value of $20,000 at the end of its useful life. The current year's Depreciation Expense is $10,000 calculated on…arrow_forwardYou are to write up a three-column cash book for Allen Electronics Inc. from the information given below: Cash book of Allen Electronics Inc. showed debit balance of RO 37,550 and Bank overdraft RO 21,575. Following business was transacted took place during the month: Purchased Canon Printer for Cash RO 500; Canon offered a discount of 4% October 1, 2020 October 2, 2020 Cash Sales RO 31,315; The accountant was asked to deposit RO 15,000 into Allen Electronics Inc.'s bank account on the same day October 7, 2020 Purchase furniture RO.2,000; Allen Electronics Inc. gets a discount of 1.5%. It pays RO 1,005 in cash and remaining by cheque October 16, 2020 Received cash of RO 1,900 received from its customer, Mr Imran, deducting 5% discount. The amount was deposited into bank on the same day October 16, 2020 Received a cheque from Ali for RO 775 and it was deposited in the bank on the same October 22, 2020 day. On 25th October, the bank informed Allen Electronics Inc. that this cheque has…arrow_forward
- The following are excerpts from the financial statements of 2018 and 2019 of Mandela Corporation. 2019 2018 Sales $187,600 $195,000 Accounts Receivable (net): Beginning of Year 68,100 66,500 End of Year 60,200 68,100 A newly hired manager has started implementing new credit policies. Required: a. As a consultant, you are contracted to analyze Accounts Receivable Turnover and Number of Days’ Sales in Receivable and provide opinion as to whether Mandela’s credit policy changes are working b. What conclusions does your analysis suggest. Are the new credit policies working?arrow_forwardThe accounts receivable balance on the records of of P38,000 were written off during the year as uncollectible. eud was P283,000. In going over the records, you found accounts reccivable REQUIRED: How much cash was received from the sale of the machine? during the year ended December 31, 2020. The accounts receivable at year- REQUIRED: How much cash was collected on credit sales during the year. Luneta Company of January 1, 2020. Credit sales were recorded at P1,060.000 P245,000 on durine p283.000. In going over the records, you found accounts reccivable PEOUIRED: How much cash was collected on credit sales during the year 2020 ? The manager of the Pansol Company is planning for the qaurter ending Narch 31, 2020, and wants to know how much cash must be paid for merchandise purchases. The inventory of merechandise is to be deereased by P46,000 during the quarter. Sales have been estimated at P360,000. The cost of saies is equal to 30% of sales. Accounts payable is expected to inerease…arrow_forwardPresented below is information for Flint Company: Beginning of the year accounts receivable balance was $23,600. Net sales (all on account) for the year were $103,100. Flint Company does not offer cash discounts. Collections on accounts receivable during the year were $90,300. Flint Company is planning to factor some accounts receivable at the end of the year. Accounts totaling $14,100 will be transferred to Credit Factors Inc. with recourse. Credit Factors will retain 7% of the balances for probable adjustments and assess a finance charge of 6%. The fair value of the recourse obligation is $1,021. Prepare the journal entry to record the sale of the receivables Compute Flint’s accounts receivable turnover for the year, assuming the receivables are sold.arrow_forward
- The following selected transactions occurred in Trouble Company during the year ended December 31, 2020: Gross sales (cash and credit) Collections from credit customers, net of 2% cash P750,000 245,000 discount Cash sales 150,000 Uncollectible accounts written off 16,000 Sales returns and allowances 8,400 Recoveries on accounts receivable written off in prior years (not included in cash received stated above) 5,421 At year-end, the company provides for estimated bad debt losses by crediting Allowance for Bad Debts for 2% of its net credit sales for the year. What is the bad debt expense for 2020? P11,732 P14,732 P15,000 P12,000arrow_forwardThe cash records and bank statement for the month of July for Glover Incorporated are shown below. GLOVER INCORPORATED Cash Account Records July 1, 2021, to July 31, 2021 Cash Balance July 1, 2021 Cash Balance Cash Receipts $8,600 Cash Receipts Desc. Sales Sales Sales Cash Disbursements $10,000 July 31, 2021 $5,950 $7,350 !! Cash Disbursements Date 7/9 7/21 7/31 Amount $2,620 3,200 2,780 Date 7/7 7/12 7/19 7/22 7/30 Check# 531 532 533 534 535 Desc. Rent Salaries Equipment Utilities Advertising Amount $ 1,560 2,020 4,100 960 1,360 $10,000 $8,600 P.0. Box 123878 Gotebo, OK 73041 (580) 377-0KIE Account Holder: FIDELITY UNION You Can Bank On Us Member FDIC Glover Incorporated 519 Main Street Gotebo, OK 73041 Account Number: 2252790471 Statement Date: Withdrawals and Debits Total $ 9,706 July 31, 2021 Beginning Balance July 1, 2021 $8,000 Deposits and Credits Date 7/10 7/22 7/31 Deposits and Credits NO. 3 Total $5,876 Withdrawals and Debits Ending Balance July 31, 2021 NO. $ 4,170 Daily…arrow_forwardGiven the following information, complete the balance sheet shown next Collection period Days' sales in cash Current ratio Assets Current assets: Cash Inventory turnover Liabilities to assets Payables period (All sales are on credit. All calculations assume a 365-day year. The payat Note: Round your answers to the nearest whole dollar. Accounts receivable Inventory Total current assets Net fixed assets Total assets Liabilities and shareholders equity Current liabilities: Accounts payable Short-term debt Total current liabilities 70 days 32 days 2.2 5 70% 36 days Long-term debt Shareholders equity Total liabilities and equity times $ 1,300,000 S S 1,900,000 8,000,000 2.400.000 8.000.000arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College Pub
Financial Accounting: The Impact on Decision Make...AccountingISBN:9781305654174Author:Gary A. Porter, Curtis L. NortonPublisher:Cengage Learning
Managerial Accounting
Accounting
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:South-Western College Pub
Financial Accounting: The Impact on Decision Make...
Accounting
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Cengage Learning
The ACCOUNTING EQUATION For BEGINNERS; Author: Accounting Stuff;https://www.youtube.com/watch?v=56xscQ4viWE;License: Standard Youtube License