Archie Company uses a perpetual inventory system. May 3. Purchase merchandise on account from Sengbeh Co., $4,000, terms FOB shipping point, 2/10, n/30, with prepaid transaction costs of $120 added to the invoice 5. purchased merchandise on account from McArthur Co. $8,500, terms FOB Destination, 1/10, n/30. 6. Sold merchandise on account to J.A. Morris Co. List price $4,000, trade discount 30%, Terms 2/10, n/30. The cost of the merchandise sold was $1,125. 8. Purchased office supplies for cash, $150. 10. Returned merchandise purchase on May 5 from McArthur Co., $ 1,300. 13. Paid Sengbeh Co., on account for purchase of May 3, less discount. 14. Purchase merchandise for cash, $10,500. 15. Paid McArthur Co. on account for purchase of May 5, less return of May 10. And Discount. 16. Received cash on account from sale of May 6 to J.A. Morris Co. less discount. 19. Sold merchandise on nonbank credit cards and reported accounts to the card company, Liberian Express, $2,450. The cost of the merchandise sold was $980. 22. Sold merchandise on account to Bono Co., $3,480, terms 2/10, n/30. The cost of the Merchandise sold was $1,400. 24. Sold merchandise for cash, $4,350. The cost of the merchandise sold was $1,750. 25. Received merchandise returned by Bono Co. from sales on May 22, $1,480. The cost of The returned merchandise was $600. 31. Received cash from card Company for nonbank credit card sales of May 19, less $140 Service fee. INSTRUCTIONS 1. Journalize the preceding transactions.
following transactions were completed by Archie Company during the month of May
the current year. Archie Company uses a perpetual inventory system.
May 3. Purchase merchandise on account from Sengbeh Co., $4,000, terms FOB shipping point, 2/10, n/30, with prepaid transaction costs of $120 added to the invoice
5. purchased merchandise on account from McArthur Co. $8,500, terms FOB Destination,
1/10, n/30.
6. Sold merchandise on account to J.A. Morris Co. List price $4,000, trade discount 30%,
Terms 2/10, n/30. The cost of the merchandise sold was $1,125.
8. Purchased office supplies for cash, $150.
10. Returned merchandise purchase on May 5 from McArthur Co., $ 1,300.
13. Paid Sengbeh Co., on account for purchase of May 3, less discount.
14. Purchase merchandise for cash, $10,500.
15. Paid McArthur Co. on account for purchase of May 5, less return of May 10. And
Discount.
16. Received cash on account from sale of May 6 to J.A. Morris Co. less discount.
19. Sold merchandise on nonbank credit cards and reported accounts to the card company,
Liberian Express, $2,450. The cost of the merchandise sold was $980.
22. Sold merchandise on account to Bono Co., $3,480, terms 2/10, n/30. The cost of the
Merchandise sold was $1,400.
24. Sold merchandise for cash, $4,350. The cost of the merchandise sold was $1,750.
25. Received merchandise returned by Bono Co. from sales on May 22, $1,480. The cost of
The returned merchandise was $600.
31. Received cash from card Company for nonbank credit card sales of May 19, less $140
Service fee.
INSTRUCTIONS
1. Journalize the preceding transactions.
2. Journalize the adjusting entry for merchandise inventory $3,750.
2. The accounts and their balances in the
are as follows:
Account Titles
Trial Balance
Debit Credit
Cash - - - - - - - - - - - - - $ 5,400
Accounts Receivable - - - - - - - - 2,800
Supplies - - - - - - - - - - - 1,300
Prepaid Insurance - - - - - - - - - 2,400
Equipment - - - - - - - - 60,000
Notes Payable - - - - - - - - - $ 40,000
Accounts Payable - - - - - - - - - 2,400
Owner’s Capital - - - - - - - - - - 30,000
Owner’s Drawing - - - - - - - - - - 1,000
Service Revenue - - - - - - - - - - - 4,900
Salaries & Wages Expense - - - - - 3,200
Utilities Expense - - - - - - - 800
Advertising Expense - - - - - - - - - 400
Totals - - - - - - - - - - - $77,300 $77,300
Data needed for adjustments are as follow:
A. Insurance expires @ the rate of $200 per month.
B. $1,000 of supplies are on hand @ December 31.
C. Monthly
D. Interest of $500 on the notes payable has accrued during December.
INSTRUCTIONS:
1. Prepare a ten column worksheet.
2. Prepare a Classified balance sheet assuming $35,000 of the notes payable are long-term.
3. Journalize the closing entries
4. Journalize the
PART Five:Essay
DISCUSS BRIEFLY ON THE FOLLOWING LISTED BELOW.
a. FOB Shipping Point
b. FOB Destination
c. Perpetual Inventory System
d. Periodic Inventory System
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