Chapter 5: Q5-1RQ (page 294)
What is a merchandiser, and what is the name of the merchandise that it sells?
Merchandiser refers to a business concern that sells merchandise inventory to its customers.
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Journalize the following transactions that occurred in March 2018 for Double Company. Assume Double uses the periodic inventory system. No explanations are needed. Identify each accounts payable and accounts receivable with the vendor or customer name. Double estimates sales returns at the end of each month.
Mar. 3 Purchased merchandise inventory on account from Sidecki Wholesalers, \(5,500. Terms 2/15, n/EOM, FOB shipping point.
4 Paid freight bill of \)70 on March 3 purchase.
4 Purchased merchandise inventory for cash of \(1,100.
6 Returned \)900 of inventory from March 3 purchase.
8 Sold merchandise inventory to Herrick Company, \(3,400, on account. Terms 1/15, n/35.
9 Purchased merchandise inventory on account from Tex Wholesalers, \)5,600. Terms 2/10, n/30, FOB destination.
10 Made payment to Sidecki Wholesalers for goods purchased on March 3, less return and discount.
12 Received payment from Herrick Company, less discount.
13 After negotiations, received a \(500 allowance from Tex Wholesalers.
15 Sold merchandise inventory to Jesper Company, \)1,700, on account. Terms n/EOM.
22 Made payment, less allowance, to Tex Wholesalers for goods purchased on March 9.
23 Jesper Company returned \(300 of the merchandise sold on March 15.
25 Sold merchandise inventory to Salter for \)1,000 on account. Terms of 1/10, n/30 was offered, FOB shipping point.
29 Received payment from Salter, less discount.
30 Received payment from Jesper Company, less return.
Consider the following transactions for Garman Packing Supplies:
Apr. 10 Garman Packing Supplies buys \(175,000 worth of merchandise inventory on account with credit terms of 1/10, n/30.
12 Garman returns \)15,200 of the merchandise to the vendor due to damage during shipment.
19 Garman paid the amount due, less the return and discount.
Requirements
1. Journalize the purchase transactions assuming Garman Packing Supplies uses the periodic inventory system. Explanations are not required.
2. What is the amount of net purchases?
Question: Journalize the following transactions that occurred in January 2018 for Mike’s Amusements. Assume Mike’s uses the gross method to record sales revenue. No explanations are needed. Identify each accounts payable and accounts receivable with the vendor or customer name.
Jan. 4 Purchased merchandise inventory on account from Vanderbilt Company, \(5,000. Terms 1/10, n/EOM, FOB shipping point.
6 Paid freight bill of \)150 on January 4 purchase.
8 Returned half the inventory purchased on January 4 from Vanderbilt Company.
10 Sold merchandise inventory for cash, \(1,100. Cost of goods, \)440. FOB destination.
11 Sold merchandise inventory to Gilmore Corporation, \(10,100, on account, terms of 3/10, n/EOM. Cost of goods, \)5,555. FOB shipping point.
12 Paid freight bill of \(30 on January 10 sale.
13 Sold merchandise inventory to Cadet Company, \)8,800, on account, terms of 3/10, n/45. Cost of goods, \(4,400. FOB shipping point.
14 Paid the amount owed on account from January 4, less return and discount.
18 Purchased inventory of \)4,600 on account from Roberts Corporation. Payment terms were 1/10, n/30, FOB destination.
20 Received cash from Gilmore Corporation, less discount.
26 Paid amount owed on account from January 18, less discount.
28 Received cash from Cadet Company.
29 Purchased inventory from Silk Corporation for cash, \(12,000, FOB shipping point. Freight in paid to shipping company, \)240.
Match the accounting terminology to the definitions.
1. Cost of Goods Sold | a. An inventory system that requires businesses to obtain a physical count of inventory to determine quantities on hand. |
2. Perpetual inventory system | b. Expenses, other than the Cost of Goods Sold, that are incurred in the entity’s major ongoing operations. |
3. Vendor | c. Excess of Net Sales Revenue over Cost of Goods Sold. |
4. Periodic inventory system | d. The cost of merchandise inventory that the business has sold to customers. |
5. Operating expenses | e. The individual or business from whom a company purchases goods. |
6. Gross profit | f. An inventory system that keeps a running computerized record of merchandise inventory. |
Journalize the following transactions that occurred in February 2018 for Oceanic. No explanations are needed. Identify each accounts payable and accounts receivable with the vendor or customer name. Oceanic estimates sales returns at the end of each month.
Feb. 3 Purchased merchandise inventory on account from Silton Wholesalers, \(5,200. Terms 2/15, n/EOM, FOB shipping point.
4 Paid freight bill of \)70 on February 3 purchase.
4 Purchased merchandise inventory for cash of \(1,500.
6 Returned \)900 of inventory from February 3 purchase.
8 Sold merchandise inventory to Herenda Company, \(5,600, on account. Terms 3/15, n/35. Cost of goods, \)2,352.
9 Purchased merchandise inventory on account from Teddy Wholesalers, \(7,000. Terms 1/10, n/30, FOB destination.
10 Made payment to Silton Wholesalers for goods purchased on February 3, less return and discount.
12 Received payment from Herenda Company, less discount.
13 After negotiations, received a \)500 allowance from Teddy Wholesalers.
15 Sold merchandise inventory to Jordon Company, \(3,400, on account. Terms n/EOM. Cost of goods, \)1,496.
22 Made payment, less allowance, to Teddy Wholesalers for goods purchased on February 9.
23 Jordon Company returned \(1,000 of the merchandise sold on February 15. Cost of goods, \)440.
25 Sold merchandise inventory to Smith for \(1,700 on account that cost \)663. Terms of 2/10, n/30 were offered, FOB shipping point. As a courtesy to Smith, $70 of freight was added to the invoice for which cash was paid by Oceanic.
27 Received payment from Smith, less discount.
28 Received payment from Jordon Company, less return.
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