Principles of Accounting
12th Edition
ISBN: 9781133626985
Author: Belverd E. Needles, Marian Powers, Susan V. Crosson
Publisher: Cengage Learning
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Question
Chapter 6, Problem 9AP
1.
To determine
Prepare
2.
To determine
Explain whether the terms “net sales” and “sales” are equivalent and comparable, state the content of the net sales and explain the reason for which the company uses sales instead of net sales.
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The following information is for BOUNTY Company for December 2015:
1. On December 1, purchased merchandise from CMU Company for $700 terms 2/10, n/30,
FOB shipping point.
2. On December 7, paid freight cost $50 on merchandise purchased from CMU Company.
3. On December 12, sold merchandise to ALENA Company for $900, terms n/30. The
merchandise sold had a cost of $600.
4. On December 15, received $100 credit from CMU Company for returned merchandise.
Instructions:
Prepare the journal entries to record these transactions for the month of December on the books of
BOUNTY Company using a periodic inventory system.
HOW DO I PREPARE A TRANSACTION CHART?
On June 10, Wildhorse Company purchased $9,500 of merchandise on account from Novak Company, FOB shipping point, terms 2/10, n/30. Wildhorse pays the freight costs of $590 on June 11. Damaged goods totaling $350 are returned to Novak for credit on June 12. The fair value of these goods is $75. On June 19, Wildhorse pays Novak Company in full, less the purchase discount. Both companies use a perpetual inventory system.
Jul.
1
Purchased merchandise from Thompson Company for $7,200 under credit terms of 1/15, n/30, FOB shipping point, invoice dated July 1.
Jul.
2
Sold merchandise to Mitchell Co. for $1,500 under credit terms of 2/10, n/60, FOB shipping point, invoice dated July 2. The merchandise had cost $900.
Jul.
3
Paid $365 cash for freight charges on the purchase of July 1.
Jul.
8
Sold merchandise that had cost $1,700 for $2,900 cash.
Jul.
9
Purchased merchandise from Mannion Co. for $2,800 under credit terms of 2/15, n/60, FOB destination, invoice dated July 9.
Jul.
11
Returned $600 of merchandise purchased on July 9 from Mannion Co. and debited its account payable for that amount.
Jul.
12
Received the balance due from Mitchell Co. for the invoice dated July 2, net of the discount.
Jul.
16
Paid the balance due to Thompson Company within the discount period.
Jul.
19
Sold merchandise that cost $1,700 to Sanchez Co. for $2,400 under credit terms of…
Chapter 6 Solutions
Principles of Accounting
Ch. 6 - Prob. 1DQCh. 6 - Prob. 2DQCh. 6 - Prob. 3DQCh. 6 - Assume a large shipment of uninsured merchandise...Ch. 6 - Prob. 5DQCh. 6 - Prob. 6DQCh. 6 - Prob. 7DQCh. 6 - Indicate whether each of the statements that...Ch. 6 - Prob. 2SECh. 6 - Prob. 3SE
Ch. 6 - Prob. 4SECh. 6 - Prob. 5SECh. 6 - Prob. 6SECh. 6 - Prob. 7SECh. 6 - Prob. 8SECh. 6 - Record the following transactions using T...Ch. 6 - Prob. 10SECh. 6 - Prob. 11SECh. 6 - Sutton Hills Companys management made the...Ch. 6 - Prob. 2EACh. 6 - A company has the following data: net sales,...Ch. 6 - Prob. 4EACh. 6 - Prob. 5EACh. 6 - Linear Company engaged in the following...Ch. 6 - Prob. 7EACh. 6 - Prob. 8EACh. 6 - Prob. 9EACh. 6 - Prob. 10EACh. 6 - Prob. 11EACh. 6 - Prob. 12EACh. 6 - Prob. 13EACh. 6 - Prob. 14EACh. 6 - Prob. 15EACh. 6 - Matuska Tools Corporations income statements...Ch. 6 - Selected accounts from Murrays Furniture Stores...Ch. 6 - Prob. 3PCh. 6 - Selected accounts from Dences Gourmet Shops...Ch. 6 - Prob. 5PCh. 6 - Teague Company engaged in the following...Ch. 6 - Prob. 7APCh. 6 - Prob. 8APCh. 6 - Prob. 9APCh. 6 - Prob. 10APCh. 6 - Prob. 11APCh. 6 - Prob. 12APCh. 6 - Prob. 1CCh. 6 - Prob. 2CCh. 6 - Prob. 3CCh. 6 - Prob. 4CCh. 6 - Prob. 5CCh. 6 - Prob. 6C
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- 1. On June 10, Krabby burger Shack purchased $6,000 of merchandise from Chum Bucket FOB shipping point, terms 2/10, n/30. Krabby burger Shack pays the freight costs of $400 on June 11. Damaged goods totaling $300 are returned to Chum Bucket for credit on June 12. On June 19, Krabby burger pays Chum Bucket in full, less the purchase discount. Both companies use a perpetual inventory system. Instructions (a) Prepare separate entries for each transaction on the books of Krabby burger Shack. (b) Prepare separate entries for each transaction for Chum Bucket.The merchandise purchased by Krabby burger Shack on June 10 had cost Bristol $3,000.arrow_forwardShore Co. sold merchandise to Blue Star Co. on account, $112,000, terms FOB shipping point, n/30. The cost of the goods sold is $67,200. Shore paid freight of $1,800. Shore Co. issued a credit memo for $7,500 to Blue Star Co. for merchandise that was returned. The cost of the merchandise returned was $4,000. Journalize Shore Co.'s entry for the sale, credit memo, and payment of amount due. If an amount box, does not require an entry, leave it blank. Sale Credit Memo Payment 00 00 00 00 00 00 00 00 00 00 00 00arrow_forwardPresented below are transactions related to Oriole Company. 1. On December 3, Oriole Company sold $ 576,200 of merchandise on account to Sheffield Co., terms 4/10, n/30, FOB destination. Oriole paid $ 490 for freight charges. The cost of the merchandise sold was $ 385,100. 2. On December 8, Sheffield Co. was granted an allowance of $ 24,900 for merchandise purchased on December 3. 3. On December 13, Oriole Company received the balance due from Sheffield Co.arrow_forward
- On July 2, 2015, Lake Company sold to Sue Black merchandise having a sales price of $6,000 (cost $3,600) with terms of 2/10, n/30, f.o.b. shipping point. Lake estimates that merchandise with a sales value of $600 will be returned. An invoice totaling $120, terms n/30, was received by Black on July 6 from Pacific Delivery Service for the freight cost. Upon receipt of the goods, on July 3, Black notified Lake that $250 of merchandise contained flaws. The same day, Lake issued a credit memo covering the defective merchandise and asked that it be returned at Lake’s expense. Lake estimates the returned items to have a fair value of $100. The freight on the returned merchandise was $20 paid by Lake on July 7. On July 12, the company received a check for the balance due from Black. Questions: (a) Prepare journal entries for Lake Company to record all the events noted above assuming sales and receivables are entered at gross selling price. (b) Prepare the journal entry assuming that Sue…arrow_forwardThe following transactions are for Wildhorse Company. 1. On December 3, Wildhorse Company sold $584,300 of merchandise to Swifty Co., on account, terms 2/10, n/30, FOB destination. Wildhorse paid $370 for freight charges. The cost of the merchandise sold was $359,300. 2. On December 8, Swifty Co. was granted an allowance of $21,300 for merchandise purchased on December 3. 3. On December 13, Wildhorse Company received the balance due from Swifty Co. 1. Prepare the journal entries to record these transactions on the books of Wildhorse Company using a perpetual inventory system 2. Assume that Wildhorse Company received the balance due from Swifty Co. on January 2 of the following year instead of December 13. Prepare the journal entry to record the receipt of payment on January 2.arrow_forwardOn October 4, 2008, Terry Corporation had eredit sales transactions of P2,80o from merchandise having cost P1.900. The entries to record the day's credit transactions include a * debit of P2,800 to Merchandise Inventory. credit of P2,800 to Sales. debit of P1,900 to Merchandise Inventory. O credit of P1,900 to Cost of Goods Sold.arrow_forward
- The following transactions are for Sheridan Company. On December 3, Sheridan Company sold $613,400 of merchandise to Grouper Co., on account, terms 2/10, n/3O, FOB destination. Sheridan paid $370 for freight charges. The cost of the merchandise sold was $354,500. 1. 2. On December 8, Grouper Co. was granted an allowance of $29,400 for merchandise purchased on December 3. 3. On December 13, Sheridan Company received the balance due from Grouper Co. (a) Prepare the journal entries to record these transactions on the books of Sheridan Company using a perpetual inventory system. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Date Account Titles and Explanation Debit Credit Dec. 3 Accounts Receivable 613400 Sales Revenue 613400 (To record credit sale) (To record cost of merchandise sold)arrow_forwardOn June 16, 2014, ABC sold merchandise to XYZ with a list price of $10,000, trade discount 20% and 25%, 2/10, n/30. They were received by XYZ on the same date. Freight charges were $600. Under each of the following independent situations, prepare all relevant journal entries on the books of (a) ABC and (b) XYZ: a. FOB Shipping Point, freight collect. XYZ settled his account with ABC in full on June 24. b. FOB Destination, freight prepaid. XYZ settled his account with ABC in full on June 25. c. FOB Shipping Point, freight prepaid. XYZ settled his account with ABC in full on June 26. d. FOB Destination, freight collect. XYZ settled his account with ABC in full on June 24. e. FOB Shipping Point, freight collect. XYZ settled his account with ABC in full on June 27. f. FOB Destination, freight collect. XYZ settled his account with ABC in full on June 28.arrow_forwardJuly 1 Purchased merchandise from Zhang Company for $7,400 under credit terms of 1/15, n/30, FOB shipping point, invoice dated July 1. July 2 Sold merchandise to Knight Company for $1,600 under credit terms of 2/10, n/60, FOB shipping point, invoice dated July 2. The merchandise had cost $960. July 3 Paid $405 cash for freight charges on the purchase of July 1. July 8 Sold merchandise that had cost $1,900 for $3,100 cash. July 9 Purchased merchandise from Taylor Company for $2,900 under credit terms of 2/15, n/60, FOB destination, invoice dated July July 11 Returned $600 of merchandise purchased on July 9 from Taylor Company and debited its account payable for that amount. July 12 Received the balance due from Knight Company for the invoice dated July 2, net of the discount. July 16 Paid the balance due to Zhang Company within the discount period. July 19 Sold merchandise that cost $1,800 to Wright Company for $2,600 under credit terms of 2/15, n/60, FOB shipping point, invoice dated…arrow_forward
- This information relates to Oriole Co. 1. On April 5, purchased merchandise on account from Swifty Company for $35,000, terms 4/10, net/30, FOB shipping point. 2. On April 6, paid freight costs of $820 on merchandise purchased from Swifty Company. 3. On April 7, purchased equipment on account for $28,800. 4. On April 8, returned some of April 5 merchandise, which cost $3,300, to Swifty Company. 5. On April 15, paid the amount due to Swifty Company in full. Prepare the journal entries to record these transactions on the books of Oriole Co. using a periodic inventory system.arrow_forwardKendall Company recorded the following transactions during 2014:a.On January 1, they sold $8,000 worth of merchandise to a customer on account with the terms 2/10, n/30. b.On January 5, the customer returned $400 worth of damaged goods, which were thrownaway. c.On January 8, the customer paid for the goods.Based on the transactions provided by Kendall Company, what are the net sales for this period?A. $7,440B. $7,448C. $8,000D. $8,348arrow_forwardOn June 10, Sunland Company purchased $10,000 of merchandise on account from Marigold Company, FOB shipping point, terms 1/10, n/30. Sunland pays the freight costs of $420 on June 11. Goods totaling $300 are returned to Marigold for credit on June 12. On June 19, Sunland pays Marigold Company in full, less the discount. Both companies use a perpetual inventory system. 1. Prepare separate entries for each transaction on the books of Sunland Company 2. Prepare separate entries for each transaction for Marigold Company. The merchandise purchased by Sunland on June 10 cost Marigold $4,500, and the goods returned cost Marigold $160.arrow_forward
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