Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Fact Pattern A-Questions #1 through #5: Purchaser is acquiring $15,000 worth of inventory from Seller on account (i.e., with credit). The cost to the Seller

image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
Fact Pattern A-Questions #1 through #5: Purchaser is acquiring $15,000 worth of inventory from Seller on "account" (i.e., with credit). The cost to the Seller associated with the goods purchased by Purchaser is $7,000. Purchaser is in Tallahassee, Seller is in New York. Question #1: Under the perpetual method of accounting for inventories, consider the journal entry for the transaction in Fact Pattern A, above, from the Purchaser's perspective. The Purchaser will: a. Debit Purchases for $15,000. b. Credit Inventory for $15,000. C. Credit cash for $15,000. d. Debit Inventory for $15,000. Question #2. Under the perpetual method of accounting for inventories, consider the journal entry for the transaction in Fact Pattern A, above, from the Seller's perspective. The Seller will: a. Debit COGS for $15,000. b. Debit Account Payable for $15,000. C. Credit Sales Revenue for $15,000. d. Credit Prepaid Sales Revenue for $15,000. e. Credit Sales Revenue for $7,000. Question #3. Under the perpetual method of accounting for inventories, consider the journal entry for the transaction in Fact Pattern A, above, from the Seller's perspective. The Seller will: a. Debit COGS for $15,000. b. Debit Sales Revenue for $15,000. C. Credit Inventory for $15,000. d. Credit Inventory for $7,000. e. Credit Purchases for $7,000. Question #4. Under the periodic method of accounting for inventories, consider the journal entry for a payment for freight charges in the amount of $500 if the freight charges are paid on "account" (i.e., by credit) and if the shipping designation is FOB New York. The person "paying" the freight will: a. Debit Inventory for $500. b. Debit Freight-In for $500. C. Debit Freight Expense for $500. d. Credit cash for $500. e. Credit Freight-In for $500. Question #5. Regarding the journal entry you considered in Question #4, above, from whose perspective did you consider the journal (i.e., from the Purchaser's perspective or from the Seller's perspective)? a. Seller b. Purchaser

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

Students also viewed these Accounting questions