Problem 2 - Record accounts receivable transactions Here are the details of transactions that occurred between Garfield Company and MiKi, Inc.: (a) On August 1, Garfield Company sold merchandise on account to MiKi, Inc. for S80,000, terms 5/15, n/30. (b) On August 6, MIKİ, Inc. returned merchandise worth $13,000 to Garfield Company. (c) On August 20, MiKi, Inc. paid for the merchandise. Purpose The purpose of this problem is to demonstrate an understanding of recognizing and recording accounts receivable tran Instructions After analyzing the transactions, record the journal entries for Garfield Company. Guidance For formatting guidance, see the journal entry examples that are provided in Chapter 8 of the textbook. Your Answers:

Problem 2 - Record accounts receivable transactions Here are the details of transactions that occurred between Garfield Company and MiKi, Inc.: (a) On August 1, Garfield Company sold merchandise on account to MiKi, Inc. for S80,000, terms 5/15, n/30. (b) On August 6, MIKİ, Inc. returned merchandise worth $13,000 to Garfield Company. (c) On August 20, MiKi, Inc. paid for the merchandise. Purpose The purpose of this problem is to demonstrate an understanding of recognizing and recording accounts receivable tran Instructions After analyzing the transactions, record the journal entries for Garfield Company. Guidance For formatting guidance, see the journal entry examples that are provided in Chapter 8 of the textbook. Your Answers:

Corporate Financial Accounting

14th Edition

ISBN:9781305653535

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

Chapter5: Accounting For Merchandising Businesses

Section: Chapter Questions

Problem 5.3EX

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Purchases transactions Hoffman Company purchased merchandise on account from a supplier for 65,000, terms 1/10, n/30. Hoffman returned 7,500 of the merchandise and received full credit. A. If Hoffman Company pays the invoice within the discount period, what is the amount of cash required for the payment? B. What account is debited by Hoffman Company to record the rerurn?
Analyzing the Accounts The controller for Summit Sales Inc. provides the following information on transactions that occurred during the year: a. Purchased supplies on credit, $18,600 b. Paid $14,800 cash toward the purchase in Transaction a c. Provided services to customers on credit1 $46,925 d. Collected $39,650 cash from accounts receivable e. Recorded depreciation expense, $8,175 f. Employee salaries accrued, $15,650 g. Paid $15,650 cash to employees for salaries earned h. Accrued interest expense on long-term debt, $1,950 i. Paid a total of $25,000 on long-term debt, which includes $1.950 interest from Transaction h j. Paid $2,220 cash for l years insurance coverage in advance k. Recognized insurance expense, $1,340, that was paid in a previous period l. Sold equipment with a book value of $7,500 for $7,500 cash m. Declared cash dividend, $12,000 n. Paid cash dividend declared in Transaction m o. Purchased new equipment for $28,300 cash. p. Issued common stock for $60,000 cash q. Used $10,700 of supplies to produce revenues Summit Sales uses the indirect method to prepare its statement of cash flows. Required: 1. Construct a table similar to the one shown at the top of the next page. Analyze each transaction and indicate its effect on the fundamental accounting equation. If the transaction increases a financial statement element, write the amount of the increase preceded by a plus sign (+) in the appropriate column. If the transaction decreases a financial statement element, write the amount of the decrease preceded by a minus sign (-) in the appropriate column. 2. Indicate whether each transaction results in a cash inflow or a cash outflow in the Effect on Cash Flows column. If the transaction has no effect on cash flow, then indicate this by placing none in the Effect on Cash Flows column. 3. For each transaction that affected cash flows, indicate whether the cash flow would be classified as a cash flow from operating activities, cash flow from investing activities, or cash flow from financing activities. If there is no effect on cash flows, indicate this as a non-cash activity.
Reversing Entries Thomas Company entered into two transactions involving promissory notes and properly recorded each transaction. 1. On November 1, it purchased land at a cost of 8,000. It made a 2,000 down payment and signed a note payable agreeing to pay the 6,000 balance in 6 months plus interest at an annual rate of 10%. 2. On December 1, it accepted a 4,200, 3-month, 12% (annual interest rate) note receivable from a customer for the sale of merchandise. On December 31, Thomas made the following related adjustments: Required: 1. Assuming that Thomas uses reversing entries, prepare journal entries to record: a. the January 1, reversing entries b. the March 1, 4,326 collection of the note receivable c. the May 1, 6,300 payment of the note payable 2. Assuming instead that Thomas does not use reversing entries, prepare journal entries to record the collection of the note receivable and the payment of the note payable.
Chart of accounts Monet Paints Co. is a newly organized business with a list of accounts arranged in alphabetical order, as follows: Accounts Payable Accounts Receivable Accumulated DepreciationOffice Equipment Accumulated DepreciationStore Equipment Advertising Expense Cash Cost of Merchandise Sold Customer Refunds Payable Delivery Expense Depredation ExpenseOffice Equipment Depreciation ExpenseStore Equipment Estimated Returns Inventory Insurance Expense Interest Expense Kailey Gamer, Capital Kailey Gamer, Drawing Land Merchandise Inventory Miscellaneous Administrative Expense Miscellaneous Selling Expense Notes Payable Office Equipment Office Salaries Expense Office Supplies Office Supplies Expense Prepaid Insurance Rent Expense Salaries Payable Sales Sales Salaries Expense Store Equipment Store Supplies Store Supplies Expense Construct a chart of accounts, assigning account numbers and arranging the accounts in balance sheet and income statement order, as illustrated in Exhibit 2. Each account number is three digits: the first digit is to indicate the major classification (1 for assets. for example); the second digit is to indicate the subclassification (11 for current assets, for example); and the third digit is to identify the specific account (110 for Cash, 112 for Accounts Receivable, 114 for Merchandise Inventory, etc.).
Transaction Analysis Pollys Cards $ Gifts Shop had the following transactions during the year: Pollys purchased inventory on account from a supplier for $8,000. Assume that Pollys uses a periodic inventory system. On May 1, land was purchased for $44,500. A 20% down payment was made, and an 18-month, 8% note was signed for the remainder. Pollys returned $450 worth of inventory purchased in (a), which was found broken when the inventory was received. Pollys paid the balance due on the purchase of inventory. On June 1, Polly signed a one-year, $15,000 note to First State Bank and received $13,800. Pollys sold 200 gift certificates for $25 each for cash. Sales of gift certificates are recorded as a liability. At year-end, 35% of the gift certificates had been redeemed. Sales for the year were $120,000, of which 90% were for cash. State sales tax of 6% applied to all sales must be remitted to the state by January 31. Required Record all necessary journal entries relating to these transactions. Assume that Pollys accounting year ends on December 31. Prepare any necessary adjusting journal entries. What is the total of the current liabilities at the end of the year?