Financial Accounting, Student Value Edition (5th Edition)
5th Edition
ISBN: 9780134728520
Author: Robert Kemp, Jeffrey Waybright
Publisher: PEARSON
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Chapter 7, Problem 1EIA
1.
To determine
Explain the ethics in Action for the given case.
2.
To determine
Did Mrs. S use the allowance method properly or not, explain.
3.
To determine
Explain whether Mrs. S would need to inform the bank or not about the bankruptcy of customer with the
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In order to produce a set of accounts for a business, the total sales and purchases must be known.
A business can often provide details of cash sales and purchases.
In order to find the total credit sales and credit purchases, control accounts can be used.
Elizabeth Berry provided the following information:
At the beginning of the financial year debtors were £5,610.
During the year receipts from debtors amounted to £69,630.
At the end of the year debtors owed her £7,710.
We can find the total credit sales by constructing a control account.
When performing accounting services for small businesses, you encounter the
following situations pertaining to cash sales.
(a) "A" Company enters sales and sales taxes separately on its cash register.
On April 10, the register totals are Sales $22,000 and Sales Taxes $1,100.
(b) "B" Company does not segregate sales and sales taxes.
Its register total for April 15 is $13,780, which includes a 6% sales tax.
Instructions
Prepare the entries to record the sales transactions and related taxes for (a) "A"
Company and (b) "B" Company.
(a)
(b)
"A" Company
"B" Company
In performing accounting services for small businesses, you encounter the following situations pertaining to cash sales.
1.
Carla Vista Co. enters sales and sales taxes separately on its cash register. On April 10, the register totals are sales $26,500 and sales taxes $1,325.
2.
Wildhorse Co. does not segregate sales and sales taxes. Its register total for April 15 is $18,550, which includes a 6% sales tax.
(a)
Prepare the entry to record the sales transactions and related taxes for Carla Vista Co.. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Date
Account Titles and Explanation
Debit
Credit
Apr. 10
enter an account title to record the sales transactions and related taxes for Carla Vista Co. on April 10enter an account title to record the sales transactions and related taxes for Carla Vista Co. on April 10
enter a debit amountenter a debit amount
enter a credit amountenter a…
Chapter 7 Solutions
Financial Accounting, Student Value Edition (5th Edition)
Ch. 7.A - Prob. 1SECh. 7.A - Prob. 2SECh. 7.A - Prob. 3AECh. 7.A - Prob. 4AECh. 7.A - Prob. 5BECh. 7.A - Prob. 6BECh. 7.A - Prob. 7APCh. 7.A - Prob. 8BPCh. 7 - Which duties should be segregated in the...Ch. 7 - Prob. 2DQ
Ch. 7 - Prob. 3DQCh. 7 - Why does the allowance method of accounting for...Ch. 7 - Prob. 5DQCh. 7 - Prob. 6DQCh. 7 - Prob. 7DQCh. 7 - How would the net realizable value of Accounts...Ch. 7 - Prob. 9DQCh. 7 - Prob. 10DQCh. 7 - Prob. 1SCCh. 7 - Prob. 2SCCh. 7 - Prob. 3SCCh. 7 - Prob. 4SCCh. 7 - Prob. 5SCCh. 7 - Prob. 6SCCh. 7 - Prob. 7SCCh. 7 - Prob. 8SCCh. 7 - Prob. 9SCCh. 7 - Prob. 10SCCh. 7 - Prob. 11SCCh. 7 - Prob. 12SCCh. 7 - Prob. 1SECh. 7 - Prob. 2SECh. 7 - Prob. 3SECh. 7 - Prob. 4SECh. 7 - Prob. 5SECh. 7 - Prob. 6SECh. 7 - Prob. 7SECh. 7 - Prob. 8SECh. 7 - Prob. 9SECh. 7 - Prob. 10SECh. 7 - Prob. 11SECh. 7 - Prob. 12SECh. 7 - Prob. 13SECh. 7 - Prob. 14SECh. 7 - Prob. 15SECh. 7 - Quick ratio (Learning Objective 7) 510 min....Ch. 7 - Prob. 17SECh. 7 - Prob. 18AECh. 7 - Prob. 19AECh. 7 - Prob. 20AECh. 7 - Prob. 21AECh. 7 - Prob. 22AECh. 7 - Prob. 23AECh. 7 - Prob. 24AECh. 7 - Prob. 25AECh. 7 - Prob. 26AECh. 7 - Prob. 27AECh. 7 - Quick ratio and current ratio (Learning Objective...Ch. 7 - Prob. 29AECh. 7 - Prob. 30BECh. 7 - Prob. 31BECh. 7 - Prob. 32BECh. 7 - Prob. 33BECh. 7 - Prob. 34BECh. 7 - Aging of accounts receivable allowance method...Ch. 7 - Prob. 36BECh. 7 - Prob. 37BECh. 7 - Prob. 38BECh. 7 - Prob. 39BECh. 7 - Quick ratio and current ratio (Learning Objective...Ch. 7 - Prob. 41BECh. 7 - Prob. 42APCh. 7 - Prob. 43APCh. 7 - Prob. 44APCh. 7 - Prob. 45APCh. 7 - Prob. 46APCh. 7 - Accounting for notes receivable (Learning...Ch. 7 - Prob. 48APCh. 7 - Prob. 49BPCh. 7 - Prob. 50BPCh. 7 - Prob. 51BPCh. 7 - Prob. 52BPCh. 7 - Prob. 53BPCh. 7 - Prob. 54BPCh. 7 - Prob. 55BPCh. 7 - Continuing Exercise In this exercise, we continue...Ch. 7 - Prob. 1CPCh. 7 - Prob. 1CFSAPCh. 7 - Prob. 1EIACh. 7 - Prob. 2EIACh. 7 - Financial Analysis Purpose: To help familiarize...Ch. 7 - Industry Analysis Purpose: To help you understand...Ch. 7 - Prob. 1SBACh. 7 - Prob. 1WC
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- In performing accounting services for small businesses, you encounter the following situations pertaining to cash sales. 1. Sunland Company enters sales and sales taxes separately on its cash register. On April 10, the register totals are sales $31,500 and sales taxes $1,575. 2. Crane Company does not segregate sales and sales taxes. Its register total for April 15 is $23,850, which includes a 6% sales tax. Prepare the entry to record the sales transactions and related taxes for Sunland Company. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Apr. 10 enter an account title to record the sales transactions and related taxes for Sunland Company on April 10 enter a debit amount enter a credit amount enter an account title to record the sales transactions and related taxes for Sunland Company on April 10 enter a debit amount enter a…arrow_forwardIn performing accounting services for small businesses, you encounter the following situations pertaining to cash sales. 1. Sandhill Co. enters sales and sales taxes separately on its cash register. On April 10, the register totals are sales $27,000 and sales taxes $1,350. 2. Carla Vista Co. does not segregate sales and sales taxes. Its register total for April 15 is $19,080, which includes a 6% sales tax. Prepare the entry to record the sales transactions and related taxes for Sandhill Co. Date Account Titles and Explanation Debit Credit Apr. 10 enter an account title to record the sales transactions and related taxes for Sandhill Co. on April 10enter an account title to record the sales transactions and related taxes for Sandhill Co. on April 10arrow_forwardApril showers sells goods on credit to most of it's customers. In order to control it's debtor collection system the company maintains a sale ledger control account. In preparing the accounts for the year to 31 October 2019 the accountant discovers that the total of all the personal accounts in the sales ledger account to sh.12,802 whereas the balance on the sales ledger control account is sh.12,550 Upon investigating the matter, the following errors were discovered.- sales for the week ending 27 March 2019 amounting to sh 850 had been ommited from the control account.- A debtor account balance of sh 300 had not been included in the list of balance .- Cash received of sh. 750 had been entered in a personal account as sh. 570.- Discounts allowed totalling sh.100 had not been entered in the control account.- A personal account balance had been undercast by sh.200.- A contra item of sh.400 with the purchase ledger had not been entered in the control account.- A bad debt of sh.500 had…arrow_forward
- April showers sells goods on credit to most of it's customers. In order to control it's debtor collection system the company maintains a sale ledger control account. In preparing the accounts for the year to 31 October 2019 the accountant discovers that the total of all the personal accounts in the sales ledger account to sh.12,802 whereas the balance on the sales ledger control account is sh.12,550 Upon investigating the matter, the following errors were discovered. - sales for the week ending 27 March 2019 amounting to sh 850 had been ommited from the control account. - A debtor account balance of sh 300 had not been included in the list of balance . - Cash received of sh. 750 had been entered in a personal account as sh. 570. - Discounts allowed totalling sh.100 had not been entered in the control account. - A personal account balance had been undercast by sh.200. - A contra item of sh.400 with the purchase ledger had not been entered in the control account. - A bad debt of…arrow_forwardDirections: Record the following transactions in the appropriate journals. Lloyd Gurango Co. completed the following sales transactions during the month of June 2021. A credit sales have terms of 3/10, n/30, and all invoices are dates as at the transaction date. June 1 4 7 9 13 ಈ 15 18 20 Mr. Gurango invested P52 000 of his funds in the business Sold merchandise on account to KRA Company, P32 000. Invoice number 377 Sold P46 000 of merchandise for cash. Received payment from KRA Company, fewer discounts. Received payment from LRM Trading, fewer discounts. Sold merchandise to JPT Store on account, P62 000. Invoice number 379. Collected the amount due from JPT Store. Fewer discounts. Paid the employees' wages for the month amounting to P5,000 Acquired merchandise to YMC Trading worth P15, 000 payable next month Acquired merchandise on credit from ABS Manufacturing worth P15, 000. The invoice number is 201 and the credit term is n/30arrow_forwardIn performing accounting services for small businesses, you encounter these situations pertaining to cash sales. 1. Oriole Company enters sales and sales taxes separately on its cash register. On April 10, the register totals are sales $53,000 and sales taxes $2,650. Sheffield Company does not segregate sales and sales taxes. Its register total for April 15 is $24,300, which includes a 89% sales tax. 2. Prepare the entries to record the sales transactions and related taxes for each client. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit ORIOLE COMPANY SHEFFIELD COMPANY >arrow_forward
- Main Corporation has operated a branch in Cavite for one year. Shipments are billed to the branch at cost. The branch carries its own accounts receivable, makes its own collections, and pays its own expenses. The branch reported an inventory on December 31, 2021: Outsiders, P3,391; Home office, P7,625 The transactions for the year are given effect to in the trial balance below: (see image) QUESTION: Determine the net profit of the Cavite Branch for 2021.arrow_forwardIn performing accounting services for small businesses, you encounter the following situations per taining to cash sales. 1. Tamarisk, Inc. enters sales and sales taxes separately in its cash register. On April 10, the register totals are sales $37,500 and sales taxes $1,875. 2. Ivanhoe Company does not segregate sales and sales taxes. Its register total for April 15 is $24,610, which includes a 7% sales tax. Prepare the entry to record the sales transactions and related taxes for each client. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) No. Date Account Titles and Explanation Debit Credit Tamarisk, Inc. 1. choose a transaction date enter an account title enter a debit amount enter a credit amount enter an account title enter a debit amount enter a credit amount enter an account title enter a debit…arrow_forwardQueen Enterprises is a furniture wholesaler. Queen hired a new accounting clerk on January 1 of the current year. The new clerk does not understand accrual accounting and recorded the transac-tions below based on when cash receipts and disbursements changed hands rather than when the transaction occurred. Queen uses a perpetual inventory system, and its accounting policy calls forinventory purchases to be recorded net of any discounts offered.Jan. 7 Paid Hardwoods Forever Inc. $4,900 for furniture that it received on December 20.(This purchase was recorded as a debit to Inventory and a credit to Accounts Payableon December 20 of last year, but the accounting clerk ignores that fact.)Dec. 23 Received furniture from Koos Hoffwan Co. for $10,000; terms 2/10, n/30.Dec. 26 Sold furniture to Beige Chipmunk Inc. for $15,000; terms 1/10, n/30. The cost of thefurniture to Queen was $12,250.Instructionsa. As a result of the accounting clerk’s errors, compute the amount by which the…arrow_forward
- In performing accounting services for small businesses, you encounter the following situations pertaining to cash sales. Oriole Company enters sales and sales taxes separately on its cash register. On April 10, the register totals are sales $30,000 and sales taxes $1,500. 1. 2. Sheridan Company does not segregate sales and sales taxes. Its register total for April 15 is $18,550, which includes a 6% sales tax. Show Transcribed Text (b) Your answer is partially correct. Prepare tabular summaries to record the sales transactions and related taxes for Sheridan Company. Include margin explanations for the changes in revenues and expenses. (If a transaction causes a decrease in Assets, Liabilities or Stockholders' Equity, place a negative sign (or parentheses) in front of the amount entered for the particular Asset, Liability or Equity item that was reduced.) Apr. 15 $ Assets Cash 18,550 $ C Liabilities Sales Taxes Pay. $ Pd. in Cap. Common Stock $ Revenarrow_forwardShow the solution in good accounting form. Thank you! Main Corporation has operated a branch in Cavite for one year. Shipments are billed to the branch at cost. The branch carries its own accounts receivable, makes its own collections, and pays its own expenses. The branch reported an inventory on December 31, 2021: Outsiders, P3,391; Home office, P7,625 The transactions for the year are given effect to in the trial balance below: (see photo attached) 1. Determine the net profit of the Cavite Branch for 2021.arrow_forwardIn performing accounting services for small businesses, you encounter the following situations pertaining to cash sales. 1. Pina Colada Corp. enters sales and sales taxes separately in its cash register. On April 10, the register totals are sales $37,000 and sales taxes $1,850. 2. Cullumber Company does not segregate sales and sales taxes. Its register total for April 15 is $22,896, which includes a 6% sales tax. Prepare the entry to record the sales transactions and related taxes for each client. Omit the cost of goods sold entry.arrow_forward
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Accounts Receivable and Accounts Payable; Author: The Finance Storyteller;https://www.youtube.com/watch?v=x_aUWbQa878;License: Standard Youtube License