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Problem 7.4A (Static) Recording sales, sales returns, cash discounts, and cash receipts for a wholesale business. LO 7-1, 7-3 Incredible Sounds is a wholesale business that sells musical instruments. Transactions involving sales and cash receipts for the firm during April 20x1 follow. The firm sells its merchandise for cash and on open account. During April, Incredible Sounds engaged in the following transactions: 10 Received DATE TRANSACTIONS 20x1 April i Sold merchandise for $4,500 to Alto Music Center; issued Invoice 3912 with terms of 1/10, n/30. 3 Received a check for $1,980 from Music Supply Store in payment of Invoice 2718 of March 25 ($2,000), less cash discount ($20). 5 Sold merchandise totaling $1,725 in cash to a new customer who has not yet established credit. 7 Merchandise of $80 sold on April 5 is returned for a cash refund. 8 Sold merchandise for $6,500 to Music Warehouse; issued Invoice 3913 with terms of 2/10, n/30. ived payment from Alto Music Center in payment of Invoice 3912, less cash discount. 15 Accepted a return of damaged merchandise from Music Warehouse; issued Credit Memorandum 105 for $2,300. The original sale was made on Invoice 3913 on April 8. 17 Received payment from Music Warehouse for the sale of April 8, less the return on April 15; Music Warehouse the appropriate cash discount from its payment. 19 Received a check for $2,300 as payment in full from Oldies Sounds for Invoice 3850 dated March 20. 20 Sold merchandise for $11,200 to Hawk Music Center; issued Invoice 3914 with terms of 2/10, n/30. 25 Sold merchandise for $10,800 to Modern Sounds; issued Invoice 3915 with terms of 2/10, n/30. 26 sold merchandise for $8,600 to Country Tunes; issued Invoice 3916 with terms of 2/10, n/30. 27 Accepted a return of damaged merchandise from Modern Sounds; issued Credit Memorandum 106 for $500. The original sale was made on Invoice 3915 on April 25. 29 Received payment from Hawk Music Center for the sale of April 20, less cash discount. 30 Sold merchandise for $3,200 to oldies Sounds; issued Invoice 3917 with terms of 2/10, n/30. Required: Record the transactions in a general journal. Analyze: What was the amount of the cash discount taken by Hawk Music Center on April 29? con April 8. DATE TRANSACTIONS 20x1 April 1 Sold merchandise for $4,500 to Alto Music Center; issued Invoice 3912 with terms of 1/10, n/30. 3 Received a check for $1,980 from Music Supply Store in payment of Invoice 2718 of March 25 ($2,000), less cash discount ($20) 5 Sold merchandise totaling $1,725 in cash to a new customer who has not yet established credit. 7 Merchandise of $80 sold on April 5 is returned for a cash refund. 8 Sold merchandise for $6,500 to Music Warehouse; issued Invoice 3913 with terms of 2/10, n/30. 10 Received payment from Alto Music Center in payment of Invoice 3912, less cash discount. 15 Accepted a return of damaged merchandise from Music Warehouse; issued Credit Memorandum 105 for $2,300. The original sale was made on Invoice 3913 on 17 Received payment from Music Warehouse for the sale of April 8, less the return on April 15; Music Warehouse deducted the appropriate cash discount from its payment. 19 Received a check for $2,300 as payment in full from oldies Sounds for Invoice 3850 dated March 20. 20 Sold merchandise for $11,200 to Hawk Music Center; issued Invoice 3914 with terms of 2/10, n/30. 25 sold merchandise for $10,800 to Modern Sounds; issued Invoice 3915 with terms of 2/10, n/30. 26 Sold merchandise for $8,600 to Country Tunes; issued Invoice 3916 with terms of 2/10, n/30. 27 Accepted a return of damaged merchandise from Modern Sounds; issued Credit Memorandum 106 for $500. The original sale was made on Invoice 3915 on April 25. 29 Received payment from Hawk Music Center for the sale of April 20, less cash discount. 30 Sold merchandise for $3,200 to Oldies Sounds; issued Invoice 3917 with terms of 2/10, n/30. Required: 2. Post the above transactions to the appropriate accounts in the general ledger and in the accounts receivable ledger. 3. Prepare a schedule of accounts receivable. GENERAL LEDGER ACCOUNTS 101 Cash, $27,400 Dr. 111 Accounts Receivable, $4,300 Dr. 401 Sales 451 452 Sales Returns and Allowances Sales Discounts $2,000 ACCOUNTS RECEIVABLE LEDGER ACCOUNTS Alto Music Center Music Supply Store Country Tunes Music Warehouse Hawk Music Center oldies Sounds Modern Sounds $2,300 Analyze: What were the total sales on account in April, prior to any returns, allowances, or discounts? Royal Gift Shop sells cards, supplies, and various holiday greeting cards. Sales to retail customers are subject to an 8 percent sales tax. The firm sells its merchandise for cash; to customers using bank credit cards, such as MasterCard and Visa; and to customers using American Express. The bank credit cards charge a 2 percent fee. American Express charges a 3 percent fee. Royal Gift Shop also grants trade discounts to certain wholesale customers who place large orders. These orders are not subject to sales tax. During February 20X1, Royal Gift Shop engaged in the following transactions: DATE TRANSACTIONS 20x1 Feb. 1 Sold crystal goods to Lovely Kitchens, a wholesale customer. The list price is $6,000, with a 30 percent trade discount. This sale is not subject to sales tax. Issued Invoice 5950 with terms of n/15. 15 Recorded cash sales for the period from February 1 to February 15 of $8,600 plus sales tax of $688. 15 Recorded sales for the period from February 1 to February 15 to customers using bank credit cards of $13,000 plus sales tax of $1,040. (Record the 2 percent credit card expense at this time.) 16 Received a check from Lovely Kitchens in payment of Invoice 5950 dated February 1. Sold merchandise to customers using American Express for $8,100 plus sales tax of $648. 17 Sold a set of Roman statues to Beautiful Bedrooms, a wholesale customer. The list price is $12,000, with a 30 percent trade discount. This sale is not subject to sales tax. Issued Invoice 5951 with terms of n/15. 20 Received payment from American Express for the amount billed on February 16, less a 3 percent credit card expense. 27 Received a check from Beautiful Bedrooms in payment of Invoice 5951 dated February 17. 28 Recorded cash sales for the period from February 16 to February 28 of $7,750 plus sales tax of $620. 28 Recorded sales for the period from February 16 to February 28 to customers using bank credit cards of $15,000 plus sales tax of $1,200. (Record the 2 percent credit card expense at this time.) 28 Sold merchandise to customers using American Express for $12,200 plus sales tax of $976. Required: 2. Record the transactions in a general journal. 3. Post the entries from the general journal to the appropriate accounts in the general ledger. GENERAL LEDGER ACCOUNTS 101 Cash, $23, 230 Dr. 121 Accounts Receivable 222 Sales Tax Payable 401 521 Sales Credit Card Expense Analyze: What was the total credit card expense incurred in February