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Accounting (Text Only)

26th Edition
Carl Warren + 2 others
ISBN: 9781285743615

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BuyFindarrow_forward

Accounting (Text Only)

26th Edition
Carl Warren + 2 others
ISBN: 9781285743615
Textbook Problem
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Sales transactions

Journalize the following merchandise transactions:

a.    Sold merchandise on account, $72,500 with terms 2/10, n/30. The cost of the merchandise sold was $43,500.

b.    Received payment less the discount.

c.    Issued a credit memo for returned merchandise that was sold for $2,300 terms n/30. The cost of the merchandise returned was $1,600.

(a)

To determine

Transportation Costs: The costs of delivering the merchandise inventory from the manufacturer to the buyer are termed as transportation cost and are differentiated on the basis of terms of the payment of transportation charges or freight by the buyer or the seller.

To Calculate: The amount to be paid in full settlement under the terms of FOB shippling point, 1/10, n/30.

Explanation

FOB (Free on Board) Shipping point means that the buyer pays all costs incurred for the delivery of goods once the goods is left from the supplier’s warehouse. The cost of transportation or shipment charges or freight from the point of origin of shipment to the point of destination is beard by the buyer.

Calculate the amount to be paid in full settlement under the terms of FOB shippling point, 1/10, n/30.

Merchandise purchased = $90,000

Freight charges = $1,000

Discount percentage = 1% (Term 1/10, n/30)

Returns and allowances = $15,000

Amount to be paidin full settlement] = [Netmerchandise purchased on accountDiscount]+Freightcharges=[(Merchandise purchased on accountPurchasereturns)(

 (b)

To determine

To Calculate: The amount to be paid in full settlement under the terms of FOB destination, 2/10, n/30.

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