6 4 Analyze and Record Transactions for the Sale of Merchandise Using the Perpetual Inventory System Principles of Accounting, Volume 1: Financial Accounting

There is no change to the Inventory account. Whistling Flutes has the same amount of value in inventory that it had before the transaction. First, let’s look at this from the perspective of Medici Music, the buyer. Medici is returning inventory, which means the balance in the inventory account is decreasing. Medici also owes less money to Whistling Flutes because the merchandise is returned. The chart in Figure 6.12 represents the journal entry requirements based on various merchandising sales transactions.

Otherwise, they have 30 days to pay in full but do not receive a discount. If the customer is able to pay the account within the discount window, the company records a credit to Accounts Receivable, a debit to Cash, and a debit to Sales Discounts. For example, when a shoe store sells 150 pairs of athletic cleats to a local baseball league for $1,500 (cost of $900), the league may pay with cash or credit. If the baseball league elects to pay with cash, the shoe store would debit Cash as part of the sales entry. If the baseball league decides to use a line of credit extended by the shoe store, the shoe store would debit Accounts Receivable as part of the sales entry instead of Cash. With the sales entry, the shoe store must also recognize the $900 cost of the shoes sold and the $900 reduction in Merchandise Inventory. A purchase return occurs when merchandise is returned and a full refund is issued.

Sales Discount Transaction Journal Entries

The folhttps://www.tadpoletraining.com/category/sales-training/page/4/wing entries show the sale and subsequent return. Cash increases and Accounts Receivable decreases by $16,800. The customer paid on their account outside of the discount window but within the total allotted timeframe for payment. The customer does not receive a discount in this case but does pay in full and on time. Since the customer paid on August 10, they made the 10-day window and received a discount of 2%. Cash increases for the amount paid to CBS, less the discount.

On August 1, a http://kinofanonline.net/5792-gryaznye-mokrye-dengi-dirty-sexy-money-sezon-1-2-2007-2009.html purchases 56 tablet computers on credit. The payment terms are 2/10, n/30, and the invoice is dated August 1.

How is a journal entry for purchase returns different from a journal entry for a return of merchandise purchased for cash?

A http://www.it-net.pl/author/admin/page/2/ returned some defective supplies that it had previously purchased on account. When companies purchase supplies on account, they have to create several journal entries to record the transaction in their financial statements. These entries change the balance of the fundamental accounting equation, which is a pivotal part of the bookkeeping process.

• A company paid $877 for office rent for the month.
• However, the IRS permits you to use a different method for tax purposes.
• A general journalis used to record special entries at the end of an accounting period.
• When preparing financials for a company, the owner makes sure that the expense transactions are kept separate from expenses of the other company that he owns.
• Explain how this transaction would increase, decrease, or not affect total assets, total liabilities, and total stockholders’ equity.

Office supplies are not considered assets like office machinery, vehicles or equipment used for revenue generation. Expenses are not capitalized as fixed assets are, and accounting discrepancies often arise over the misclassification of operating expenses as capital assets. Allowances are described as reductions in price granted by the seller when a merchant decides to keep unsatisfactory merchandise rather than return it. The supplier records the credit memo with a debit to Sales Allowances and a credit to Accounts Receivable.

Purchase Return Journal Entry

Describe the effect (e.g. increase/decrease) of the following transaction on assets, liabilities, and owner’s equity. The company purchased $13,800 of merchandise on account under terms 2/10, n/30. ABC Company pays $29,000 on existing supplier invoices.

• The supplier records the credit memo with a debit to Sales Allowances and a credit to Accounts Receivable.
• Contra‐expense accounts normally have credit balances.
• Prepare the necessary journal entries to record these transactions.
• B) Paid cash for transportation-out costs.
• 19.LO 3.3The step-by-step process to record business activities and events to keep financial records up to date is ________.
• A company received $1,253 cash for services provided.