Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

4.You are the new accounts payable manager for a merchandising company that purchases its mer- chandise on credit. You are trained for your new job

image text in transcribed
image text in transcribed
4.You are the new accounts payable manager for a merchandising company that purchases its mer- chandise on credit. You are trained for your new job by the outgoing employee. You are to oversee payment of payables to maintain the company's credit standing with suppliers and to take advan- tage of favourable cash discounts. The outgoing employee explains that the computer system is programmed to prepare cheques for amounts net of favourable cash discounts, and cheques are dated the last day of the discount period. You are told that cheques are not mailed until five days later, however. "It's simple," this employee explains. "Our company gets free use of cash for an extra five days, and our department looks better. When a supplier complains, we blame the computer system and the mail room." Your first invoice arrives with a 10-day discount period for a $10,000 purchase. This transaction occurs on April 9 with credit terms of 2/10, n/30. Do you mail the $9,800 cheque on April 19 or April 24? 5.Thorsten Company, a trendy clothing retailer, had the following transactions in March: March 2 Purchased merchandise from Sabine Company under the following terms: $1,800 invoice price, 2/15, n/60, FOB factory. (The cost of the merchandise to Sabine Company was $990.) March 3 Paid UBS Shipping $125 for shipping charges on the purchase of March 2. March 4 Returned to Sabine Company unacceptable merchandise that had an invoice price of $300 (and a cost to Sabine of $165). Sabine returned the merchandise to inventory March 17 Sent a cheque to Sabine Company for the March 2 purchase, net of the discount and the returned merchandise. Required Assuming both Thorsten and Sabine use a perpetual inventory systems a Present the journal entries Thorsten Company should record for these transactions b Present the journal entries Sabine Company should record for these transactions

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Routledge Companion To Auditing

Authors: David Hay, W. Robert Knechel, Marleen Willekens

1st Edition

1138363081, 978-1138363083

More Books

Students also viewed these Accounting questions

Question

7. Define cultural space.

Answered: 1 week ago

Question

8. Describe how cultural spaces are formed.

Answered: 1 week ago