Accounting Tutorial 2
Accounting Tutorial 2
Accounting Tutorial 2
Tutorial-2
Learning objectives
-Identify the differences between a service and merchandising companies.
1. If a company sells merchandise with credit terms 2/10 n/60, the credit period is 10
days and the discount period is 60 days.
FALSE
2. Each sales transaction for a seller that uses a perpetual inventory system involves
recognizing both revenue and cost of merchandise sold.
TRUE
3. Sales discounts on credit sales can benefit a seller by decreasing the delay in
receiving cash and reducing future collections efforts.
TRUE
5. A journal entry with a debit to cash of $980, a debit to Sales Discounts of $20, and
a credit to Accounts Receivable of $1,000 means that a customer has taken a 10%
cash discount for early payment.
FALSE
$20/$1,000 = 2% discount
6. Sales of $350,000 and net sales of $323,000 could reflect sales discounts of
$27,000.
TRUE
11. Herald Company had sales of $135,000, sales discounts of $2,000, and sales
returns of $3,200. Herald Company's net sales equals how much?
Choice D
Choice E
15. Brig Company had $800,000 in sales, sales discounts of $12,000, sales returns and
allowances of $18,000, cost of goods sold of $380,000, and $275,000 in operating
expenses. Gross profit equals how much?
16. Brig Company had $800,000 in sales, sales discounts of $12,000, sales returns
and allowances of $18,000, cost of goods sold of $380,000, and $275,000 in operating
expenses. Net income equals how much?
19. A company purchases merchandise with a catalog price of $20,000. The company
receives a 35% trade discount from the seller. The seller also offers credit terms of
2/10, n/30. Assuming no returns were made and that payment was made on time, what
is the net cost of the merchandise?
20. A company has net sales and cost of goods sold of $825,000 and $547,000,
respectively. Its net income is $98,500. The company's gross margin and operating
expenses are ________ and ___________, respectively.
$825,000 - $547,000 = $278,000; $278,000 - $98,500 = $179,500
Information related to Star Co. is presented below.
1. On April 5, purchased merchandise from Comcast Co for $23,000,
terms 2/10, net/30, FOB shipping point.
2. On April 6, paid freight costs of $900 on merchandise purchased
from Comcast Co.
3. On April 7, purchased equipment on account for $26000.
4. On April 8, returned damaged merchandise to Comcast Co and
was given a $3,000 credit for returned merchandise.
5. On April 15, paid the amount due to Comcast Co in full.
Required
(a) Prepare the journal entries to record these transactions on the
books of Star Co. under a perpetual inventory system.
(b) Assume that Star Co. paid the balance due to Comcast Co on May
4 instead of April 15. Prepare the journal entry to record this
payment.
Solution
Date Accounts and Explanation Debit Credit
A
April 5 Inventory 23,000
Accounts Payable 23,000
April 6 Inventory 900
Cash 900
April 7 Equipment 26,000
Accounts Payable 26,000
April 8 Accounts Payable 3,000
Inventory 3,000
April 15 Accounts Payable 20,000
Inventory 400
Cash 19,600
B
May. 4 Accounts Payable 20,000
Cash 20,000