Credit Terms & Inventory Accounting Davenport Docking uses the net method of accounting for purchases and sales. The net method assumes that discounts are taken when a purchase or sale of inventory is made on account. Discounts are applied at the time a purchase or sale of inventory is made. PURCHASE DISCOUNT TERMS: When Davenport Docking purchases merchandise inventory from a supplier or vendor on account, they receive credit terms of 2/20, net 30. Do NOT round intermediate calculations. If required round final number to nearest cent. SALE DISCOUNT TERMS: When Davenport Docking sells merchandise to a customer on account, they offer that customer credit terms of 2/30, net 45. DO NOT round intermediate calculations. If required round final number to nearest cent. Davenport Docking uses a perpetual inventory accounting system and a first-in, first-out (FIFO) inventory costing method. Within this workbook there is a worksheet labeled "Inventory Control". You will need to update this worksheet EVERYTIME a purchase or sale of INVENTORY is made. As part of that process you will be calculating the value of COGS each time you generate a sale of Inventory. Use the "Inventory Control" worksheet to calcluate your COGS values. JULY JOURNAL TRANSACTIONS 1-Jul Purchased 5,000 Fish Finder units on Credit from Raydar Marine for $42.00 per unit. 1-Jul Issued 10,000 shares of common stock for $20 per share (Refer to the Chart of Accounts for description of common stock - including # of shares outstanding). 1-Jul signed a one-year 15%, $216,000 note payable with Boat US Bank. 1-Jul Sold 4,000 Propellers on account to Chris Craft for $85 per units, Invoice #5555. 2-Jul Rented part of the warehouse to a new tenant and received $18,000 for three months rent (July, August, September). 2-Jul Sold 5,200 Fish Finder units on account to Sea Ray for $82 per unit, Invoice #5556. 2-Jul Purchased office supplies from Staples on credit for $4,800. There is NO purchase discount on this transaction as it is not an inventory item. Credit Terms & Inventory Accounting Davenport Docking uses the net method of accounting for purchases and sales. The net method assumes that discounts are taken when a purchase or sale of inventory is made on account. Discounts are applied at the time a purchase or sale of inventory is made. PURCHASE DISCOUNT TERMS: When Davenport Docking purchases merchandise inventory from a supplier or vendor on account, they receive credit terms of 2/20, net 30. Do NOT round intermediate calculations. If required round final number to nearest cent. SALE DISCOUNT TERMS: When Davenport Docking sells merchandise to a customer on account, they offer that customer credit terms of 2/30, net 45. DO NOT round intermediate calculations. If required round final number to nearest cent. Davenport Docking uses a perpetual inventory accounting system and a first-in, first-out (FIFO) inventory costing method. Within this workbook there is a worksheet labeled "Inventory Control". You will need to update this worksheet EVERYTIME a purchase or sale of INVENTORY is made. As part of that process you will be calculating the value of COGS each time you generate a sale of Inventory. Use the "Inventory Control" worksheet to calcluate your COGS values. JULY JOURNAL TRANSACTIONS 1-Jul Purchased 5,000 Fish Finder units on Credit from Raydar Marine for $42.00 per unit. 1-Jul Issued 10,000 shares of common stock for $20 per share (Refer to the Chart of Accounts for description of common stock - including # of shares outstanding). 1-Jul signed a one-year 15%, $216,000 note payable with Boat US Bank. 1-Jul Sold 4,000 Propellers on account to Chris Craft for $85 per units, Invoice #5555. 2-Jul Rented part of the warehouse to a new tenant and received $18,000 for three months rent (July, August, September). 2-Jul Sold 5,200 Fish Finder units on account to Sea Ray for $82 per unit, Invoice #5556. 2-Jul Purchased office supplies from Staples on credit for $4,800. There is NO purchase discount on this transaction as it is not an inventory item
