Business
Engineering
Math
Science
Social Science
Cornerstones of Financial Accounti...
Solutions
Cornerstones of Financial Accounti...
Recording Purchases and Shipping Terms
On May 12, Digital Distributors received three shipments of merchandise. The first was shipped F.O.B. shipping point, had a total invoice price of $142,500, and was delivered by a trucking company that charged an additional $8,300 for transportation charges from Digital. The second was shipped F.O.B. shipping point and had a total invoice price of $87,250, including transportation charges of $5,700 that were prepaid by the seller. The third shipment was shipped F.O.B. destination and had an invoice price of $21,650, excluding transportation charges of $1,125 paid by the seller. Digital uses a perpetual inventory system. Digital has not paid any of the invoices.
Required:
Prepare journal entries to record these purchases.
Concept introduction:
Perpetual Inventory System:
The perpetual inventory system records and updates the inventory after each and every transaction. The inventory balance is updated after each transaction and it is kept up to date at every time.
FOB shipping point:
FOB shipping point stands for Free On Board shipping point. It is a term for selling the merchandise, under which the delivery of goods is completed when the goods are shipped from the seller’s place. The goods in transit belong to the buyer and buyer bears the cost of transportation after the shipping point. In case of FOB shipping point, the goods in transit should be included in the buyer’s inventory.
FOB destination:
FOB destination stands for Free On Board destination. It is a term for selling the merchandise, under which the delivery of goods is completed when the goods are reached at buyer’s destination. The goods in transit belong to the seller and seller bears the cost of transportation till the buyer’s destination. In case of FOB destination, the goods in transit should be included in the seller inventory.
To prepare:
The journal entries for the given transactions:
The journal entries for the given transactions are explained as follows:
| Digital Distributors | ||||
| Journal Entries | ||||
| Perpetual Inventory System | ||||
| # | Date | Account Title | Debit | Credit |
| 1 | May. 12 | Merchandise Inventory (142500+8300) | $ 150,800 | |
| Accounts Payable | $ 150,800 | |||
Chapter 6 Solutions
Additional Business Solutions
Find more solutions based on key concepts
Show solutions addSome potential E-business customers have security concerns regarding online purchases. How do Internet security...
Accounting Information Systems
Aging of receivables schedule The accounts receivable clerk for Evers Industries prepared the following partial...
Financial & Managerial Accounting
Explain how a defined contribution pension plan works.
Corporate Financial Accounting
What is the difference between a positive and a normative statement? Give an example of each.
Principles of Economics (MindTap Course List)
Creating an Outline for an Oral Presentation. One of the hardest parts of preparing an oral presentation is dev...
Essentials of Business Communication (MindTap Course List)
(Price Leadership) Why might a price-leadership model of oligopoly not be an effective means of collusion in an...
ECON: MICRO4 (New, Engaging Titles from 4LTR Press)
As described in the chapter, the Federal Reserve in 2008 faced a decrease in aggregate demand caused by the hou...
Brief Principles of Macroeconomics (MindTap Course List)
Five friendsAllison, Beth, Carol, Diane, and Evelyn have identical calculators and are studying for a statistic...
Probability and Statistics for Engineering and the Sciences
FINANCING ALTERNATIVES The Severn Company plans to raise a net amount of 270 million to finance new equipment i...
Fundamentals of Financial Management (MindTap Course List)
CONSTANT GROWTH You are considering an investment in Justus Corporations stock, which is expected to pay a divi...
Fundamentals Of Financial Management, Concise Edition (mindtap Course List)
What are the two main causes of market failure? Give an example of each.
Principles of Microeconomics (MindTap Course List)
FINANCIAL STATEMENTS, CASH FLOW, AND TAXES Laiho Industriess 2015 and 2016 balance sheets (in thousands of doll...
Fundamentals of Financial Management, Concise Edition (MindTap Course List)
Briefly describe four contributions of small business to the American economy.
Foundations of Business (MindTap Course List)
What are the three categories into which the Bureau of Labor Statistics divides everyone? How does the BLS comp...
Principles of Macroeconomics (MindTap Course List)
A manager of a large corporation recommends a 10,000 raise be given to keep a valued subordinate from moving to...
STATISTICS F/BUSINESS+ECONOMICS-TEXT
The Hershey Company (HSY) is the largest producer of chocolate in North America under the Hersheys and Reeses b...
Financial And Managerial Accounting
What Web resources can aid an organization in developing best practices as part of a security framework?
Principles of Information Security (MindTap Course List)
What is data independence, and why is it lacking in file systems?
Database Systems: Design, Implementation, & Management
What is an entity?
A Guide to SQL
What is Hadoop? What are its primary components, and what does each do?
Fundamentals of Information Systems
Define each of the following terms: a. data b. field c. record d. file
Database Systems: Design, Implementation, & Management
What is informatics?
Fundamentals of Information Systems
Which of the following is not an objective of an organizations batch transaction processing system? a. Capture,...
Principles of Information Systems (MindTap Course List)
The Z-section of Example D-7 is subjected to M = 5 kN · m, as shown. Determine the orientation of the neutral a...
Mechanics of Materials (MindTap Course List)
The data given in the accompanying table represents the cooling temperature of a plate as a function of time du...
Engineering Fundamentals: An Introduction to Engineering (MindTap Course List)
Which of the following is not a true statement regarding the use of virtual teams? a. Virtual teams enable the ...
Principles of Information Systems (MindTap Course List)
In a hydrometer test, the results are as follows: Gs = 2.60, temperature of water = 24, and hydrometer reading ...
Fundamentals of Geotechnical Engineering (MindTap Course List)
A power-steering hose transmits fluid under pressure from the ___ to the ___ ____ ___.
Automotive Technology: A Systems Approach (MindTap Course List)
The horizontal band saw is ideal for cutting _______________ _________________.
Precision Machining Technology (MindTap Course List)
Describe modular design, and explain the two main prototyping methods.
Systems Analysis and Design (Shelly Cashman Series) (MindTap Course List)
What are the advantages and disadvantages to preparing the SETA program in-house or in hiring a consulting firm...
Management Of Information Security
Who is to install the range hood? __________________________________________ __________________________________...
EBK ELECTRICAL WIRING RESIDENTIAL
For a gravel with D60 = 0.48 mm, D30 = 0.25 mm, and D10 = 0.11 mm, calculate the uniformity coefficient and the...
Principles of Geotechnical Engineering (MindTap Course List)
Why do many industrial machines use gear motors instead of low rpm induction motors?
Electric Motor Control
In Sample Problem 5.4, determine the tension TAC using the equation MDB=0.
International Edition---engineering Mechanics: Statics, 4th Edition
A horizontal hammermill shredder is to process 8 tons/hour of MSW to a characteristic size (x0) of 0.7 in. 1.st...
Solid Waste Engineering
The furlong is a unit of length, equal to one-eighth of a mile, which today is most commonly associated with ho...
Fundamentals of Chemical Engineering Thermodynamics (MindTap Course List)
When the throttle plates are closed in a port injection system, where does the air needed for idle speeds come ...
Automotive Technology
The frame shown in Figure P47-11 unbraced against sidesway. Relative moments of inertia of the members have bee...
Steel Design (Activate Learning with these NEW titles from Engineering!)
A data collection device reads and scans data from a source document.
Enhanced Discovering Computers 2017 (Shelly Cashman Series) (MindTap Course List)
What is the fundamental distinction between a node and a host?
Network+ Guide to Networks (MindTap Course List)
