Chapter 5Exercises

Accounting for

Merchandising Operations

Merchandising TransactionsMerchandising TransactionsMerchandising TransactionsMerchandising Transactions

• In-Class Exercises:

Exercise No. Page 5-1 211 Merchandise purchases

• In-Class Exercises:

Exercise No. Page 5-1 211 Merchandise purchases

Merchandise PurchasesMerchandise PurchasesMerchandise PurchasesMerchandise Purchases

Prepare journal entries to record the following transactions for a retail store. Assume a perpetual inventory system.

Apr. 2 Purchased merchandise from Blue Company under the following terms: $3,600 price, invoice dated April 2, credit terms of 2/15,n/60, and FOB shipping point.

3 Paid $200 for shipping charges on the April 2 purchase.

4 Returned to Blue Company unacceptable merchandise that had an invoice price of $600.

17 Sent a check to Blue Company for the April 2 purchase, net of the discount and the returned merchandise.

18 Purchased merchandise from Fox Corp. under the following terms: $7,500 price, invoice dated April 18, credit terms of 2/10,n/30, and FOB destination.

21 After negotiations, received from Fox a $2,100 allowance on the April 18 purchase.

28 Sent check to Fox paying for the April 18 purchase, net of the discount and allowance.

Prepare journal entries to record the following transactions for a retail store. Assume a perpetual inventory system.

Apr. 2 Purchased merchandise from Blue Company under the following terms: $3,600 price, invoice dated April 2, credit terms of 2/15,n/60, and FOB shipping point.

3 Paid $200 for shipping charges on the April 2 purchase.

4 Returned to Blue Company unacceptable merchandise that had an invoice price of $600.

17 Sent a check to Blue Company for the April 2 purchase, net of the discount and the returned merchandise.

18 Purchased merchandise from Fox Corp. under the following terms: $7,500 price, invoice dated April 18, credit terms of 2/10,n/30, and FOB destination.

21 After negotiations, received from Fox a $2,100 allowance on the April 18 purchase.

28 Sent check to Fox paying for the April 18 purchase, net of the discount and allowance.

Merchandise PurchasesMerchandise PurchasesMerchandise PurchasesMerchandise Purchases

Merchandise PurchasesMerchandise PurchasesMerchandise PurchasesMerchandise Purchases

Discount ($3,000 x 2% = $60)Discount ($3,000 x 2% = $60)Discount ($3,000 x 2% = $60)Discount ($3,000 x 2% = $60)

End of ExerciseEnd of Exercise

Merchandise PurchasesMerchandise PurchasesMerchandise PurchasesMerchandise Purchases

Seller TransactionsSeller TransactionsSeller TransactionsSeller Transactions

Exercise No. Page 5-2 211 Seller transactions only

Exercise No. Page 5-2 211 Seller transactions only

Seller TransactionsSeller TransactionsSeller TransactionsSeller Transactions

Taos Company purchased merchandise for resale from Tuscon Company with an invoice price of $22,000 and credit terms of 3/10, n/60. The merchandise had cost Tuscon $15,000. Taos paid within the discount period. Assume that Tuscon uses a perpetual inventory System.

Prepare entries that the seller (Tuscon) should record for:

a. The sale.

b. The cash collection.

Taos Company purchased merchandise for resale from Tuscon Company with an invoice price of $22,000 and credit terms of 3/10, n/60. The merchandise had cost Tuscon $15,000. Taos paid within the discount period. Assume that Tuscon uses a perpetual inventory System.

Prepare entries that the seller (Tuscon) should record for:

a. The sale.

b. The cash collection.

Seller TransactionsSeller TransactionsSeller TransactionsSeller Transactions

Discount ($22,000 x 3% = $660)Discount ($22,000 x 3% = $660)Discount ($22,000 x 3% = $660)Discount ($22,000 x 3% = $660)

Seller TransactionsSeller TransactionsSeller TransactionsSeller Transactions

End of ExerciseEnd of Exercise

Seller TransactionsSeller TransactionsSeller TransactionsSeller Transactions