BA221 FINANCIAL ACCOUNTING REVIEW EXERCISES Exercise 1 (Revision of purchase, sale, return, allowance and discount transactions) Company M has no beginning Merchandise Inventory. 4 Oct: Purchased merchandise worth TL 20 000 under the condition 5/10; n/30. 7 Oct: Returned TL 5 000 of merchandise purchased. The refund will be deducted from the liability for the unpaid goods. 8 Oct: Received allowance invoice for other defective merchandise (TL 500). The refund will be deducted from the liability for the unpaid goods. 9 Oct: Paid for the merchandise purchased on October 4. 10 Oc: Sold merchandise for TL 10 000, under the condition 5/10; n/30. Cost of the sold merchandise was TL 8 000. 12 Oct: The customer returned the %20 of merchandise sold on October 10. The refund will be deducted from the liability for the unpaid goods. Approved 200 TL allowance for defective goods previously sold to a customer on October 10. The refund will be deducted from the liability for the unpaid goods. 14 Oct: Received payment for the merchandise sold on October 10. Required: A. Journalise the transactions and prepare the T-accounts. B. What is the value of merchandise that the company has after these transactions? C. Prepare the INCOME STATEMENT for the Company M. D. Calculate gross profit ratio