Click Computers has the following transactions in July related to the purchase of merchandise inventory.
July 1 Purchase of $20,500 worth of computers on account, terms of 2/10, n/30.
3 Return of $4,000 of the computers to the vendor.
9 Payment made on the account.
Journalize the purchase transactions for Click Computers assuming the company uses the perpetual inventory system.
The total debit and credit for the journal are $41,000.
The perpetual inventory system immediately records the sale and purchase of inventories through an electronic medium. This system requires computers and knowledge to record inventory-related transactions.
Accounts and Explanation
(To record the purchase of computers)
(To record the return of goods)
(To record the payment within the discount period)
Dobbs Wholesale Antiques makes all sales under terms of FOB shipping point. The company usually ships inventory to customers approximately one week after receiving the order. For orders received late in December, Kathy Dobbs, the owner, decides when to ship the goods. If profits are already at an acceptable level, Dobbs delays shipment until January. If profits for the current year are lagging behind expectations, Dobbs ships the goods during December.
1. Under Dobbs’s FOB policy, when should the company record a sale?
2. Do you approve or disapprove of Dobbs’s manner of deciding when to ship goods to customers and record the sales revenue? If you approve, give your reason. If you disapprove, identify a better way to decide when to ship goods. (There is no accounting rule against Dobbs’s practice.)
Camilia Communications reported the following figures from its adjusted trial balance for its first year of business, which ended on July 31, 2018:
Cash $ 2,900 Cost of Goods Sold $ 18,700
Selling Expenses 1,400 Equipment, net 9,500
Accounts Payable 4,300 Accrued Liabilities 1,800
Common Stock 4,365 Net Sales Revenue 29,200
Notes Payable, long-term 500 Accounts Receivable 3,200
Merchandise Inventory 1,100 Interest Expense 65
Administrative Expenses 3,300
1. Prepare Camilia Communication’s statement of retained earnings for the year ended July 31, 2018. Assume that there were no dividends declared during the year and that the business began on August 1, 2017.
2. Prepare Camilia Communication’s classified balance sheet at July 31, 2018. Use the report format.
Journalize the following sales transactions for Sierra Tractors. Explanations are not required.
June 5 Sierra sold $20,000 of inventory on account, credit terms are 4/10, n/30. Cost of goods is $10,000. Sierra uses the gross method to record sales revenue.
12 Sierra receives payment from the customer on the amount due, less the discount.
94% of StudySmarter users get better grades.Sign up for free