Exercise 5-3 Prepare journal entries to record the following transactions for a retail store: March Purchased merchandise from Alfa Company under the following terms: $1,800 invoice price, 2/15, n/60, FOB factory. Paid $125 for shipping charges on the purchase of March 2 Returned to Alfa Company unacceptable merchandise that had an invoice price of $300. Sent a cheque to Alfa Company for the March 2 purchase, net of the dis- count and the returned merchandise. March Purchased merchandise from Bravo Company under the following terms: $2,500 invoice price, 2/10,n/30, FOB destination 21 After brief negotiations, received a credit memorandum from Bravo Company granting a $700 allowance on the purchase of March 18. 28 Sent a cheque to Bravo Company paying for the March 18 purchase, net of the discount and the allowance. On May 12, Wilcox Company accepted delivery of $20,000 of merchandise and received an invoice dated May 11, with terms of 3/10,n/30, FOB Garner Company's factory. When the goods were delivered, Wilcox Company paid $185 to Express Shipping Service for the delivery charges on the merchandise. The next day, Wilcox Company returned $800 of defective goods to the seller, which received them one day later. On May 21, Wilcox Company mailed a cheque to Garner Company for the amount owed on that date. It was received the following day. Required: a. Present the journal entries that Wilcox Company should record for these transactions b. Present the journal entries that Garner Company should record for these transactions. Sandra's Store purchased merchandise from a manufacturer with an invoice price of $11,000 and credit terms of 3/10, 1/60, and paid within the discount period. Required: a. Prepare the journal entries that the purchaser should record for the purchase and payment. b. Prepare the journal entries that the seller should record for the sale and collection 6. Assume that the buyer borrowed enough cash to pay the balance on the last day of the discount period at an annual interest rate of 8% and paid it back on the last day of the credit period. Calculate how much the buyer saved by following this strategy. (Use a 365-day year.) The following information appeared in a company's income statement Sales $300,000 Sales returns 15,000 Sales discounts 4,500 Beginning inventory 25.000 Purchases 180,000 Purchases returns and allowances 6,000 Purchases discounts 3,600 Transportation-in 11,000 Gross profit from sales 105,000 Net income 55,000 Required: Calculate the (a) total operating expenses. (b) cost of goods sold, and (c) ending inventory. Exercise 5-3 Prepare journal entries to record the following transactions for a retail store: March Purchased merchandise from Alfa Company under the following terms: $1,800 invoice price, 2/15, n/60, FOB factory. Paid $125 for shipping charges on the purchase of March 2 Returned to Alfa Company unacceptable merchandise that had an invoice price of $300. Sent a cheque to Alfa Company for the March 2 purchase, net of the dis- count and the returned merchandise. March Purchased merchandise from Bravo Company under the following terms: $2,500 invoice price, 2/10,n/30, FOB destination 21 After brief negotiations, received a credit memorandum from Bravo Company granting a $700 allowance on the purchase of March 18. 28 Sent a cheque to Bravo Company paying for the March 18 purchase, net of the discount and the allowance. On May 12, Wilcox Company accepted delivery of $20,000 of merchandise and received an invoice dated May 11, with terms of 3/10,n/30, FOB Garner Company's factory. When the goods were delivered, Wilcox Company paid $185 to Express Shipping Service for the delivery charges on the merchandise. The next day, Wilcox Company returned $800 of defective goods to the seller, which received them one day later. On May 21, Wilcox Company mailed a cheque to Garner Company for the amount owed on that date. It was received the following day. Required: a. Present the journal entries that Wilcox Company should record for these transactions b. Present the journal entries that Garner Company should record for these transactions. Sandra's Store purchased merchandise from a manufacturer with an invoice price of $11,000 and credit terms of 3/10, 1/60, and paid within the discount period. Required: a. Prepare the journal entries that the purchaser should record for the purchase and payment. b. Prepare the journal entries that the seller should record for the sale and collection 6. Assume that the buyer borrowed enough cash to pay the balance on the last day of the discount period at an annual interest rate of 8% and paid it back on the last day of the credit period. Calculate how much the buyer saved by following this strategy. (Use a 365-day year.) The following information appeared in a company's income statement Sales $300,000 Sales returns 15,000 Sales discounts 4,500 Beginning inventory 25.000 Purchases 180,000 Purchases returns and allowances 6,000 Purchases discounts 3,600 Transportation-in 11,000 Gross profit from sales 105,000 Net income 55,000 Required: Calculate the (a) total operating expenses. (b) cost of goods sold, and (c) ending inventory
