(a)
Sales discounts:
The term
Gross method:
Under this method, the revenues are recorded at gross amount of sales i.e. without taking the effect of any discount at the time of sales.
The journal entries for Spartan Inc. for recording the sales at gross.
Answer to Problem 88BPSB
The journal entries for sales transactions at gross amount are recoded properly.
Explanation of Solution
The Spartan Inc. provided two services. One at the amount of
The
Date | Particulars | Debit ($) | Credit ($) |
Accounts Receivable…………………… Sales…………………………………(Record the sales service |
(b)
Sales discounts:
The term
Gross method:
Under this method, the revenues are recorded at gross amount of sales i.e. without taking the effect of any discount at the time of sales.
The journal entry for the receiving payment within
Answer to Problem 88BPSB
The
Explanation of Solution
The Spartan Inc. provided two services. One at the amount of
The journal entry for Spartan Inc. is as follows:
Date | Particulars | Debit ($) | Credit ($) |
Cash………………………………Sales discount……………………. Accounts Receivable………………(Record the receiving of revenue of service contact within the discount period of |
(c)
Sales discounts:
The term
Gross method:
Under this method, the revenues are recorded at gross amount of sales i.e. without taking the effect of any discount at the time of sales.
The journal entry for the receiving payment after
Answer to Problem 88BPSB
The adjusting entry for recording the payment receivable of sales is recorded properly.
Explanation of Solution
The Spartan Inc. provided two services. One at the amount of
The journal entry for Spartan Inc. is as follows:
Date | Particulars | Debit ($) | Credit ($) |
Cash……………………………… Accounts Receivable………………(Record the receiving of revenue of service contact within the discount period of |
(d)
Sales discounts:
The term
To calculate:
The implied annual interest rate which the Grieder has to incur after failing to take benefit of sale discount.
Answer to Problem 88BPSB
The implied annual interest rate is
Explanation of Solution
The Grieder did not pay the amount of
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Chapter 5 Solutions
Cornerstones of Financial Accounting
- The following transactions were completed by Nelsons Hardware, a retailer, during September. Terms on sales on account are 1/10, n/30, FOB shipping point. Sept. 4Received cash from M. Alex in payment of August 25 invoice of 275, less cash discount. 7Issued Ck. No. 8175, 915.75, to Top Tools, Inc., for invoice. no. 2256, recorded previously for 925, less cash discount of 9.25. 10Sold merchandise in the amount of 175 on a credit card. Sales tax on this sale is 8%. The credit card fee the bank deducted for this transaction is 5. 11Issued Ck. No. 8176, 653.40, to Snap Tools, Inc. for invoice no. 726, recorded previously on account for 660. A trade discount of 15% was applied at the time of purchase, and Snap Tools, Inc.s credit terms are 1/10, n/45. 15Received 95 cash in payment of August 20 invoice from N. Johnson. No cash discount applied. 19Received 1,165 cash in payment of a 1,100 note receivable and interest of 65. 22Voided Ck. No. 8177 due to error. 26Received and paid telephone bill, 62; Ck. No. 8178, payable to Southern Telephone Company. 30Paid wages recorded previously for the month, 3,266, Ck. No. 8179. Required 1. Journalize the transactions for September in the cash receipts journal, the general journal (for the transaction on Sept. 10th), or the cash payments journal as appropriate. Assume the periodic inventory method is used. 2. If you are using Working Papers, total and rule the journals. Prove the equality of debit and credit totals.arrow_forwardThe following transactions were completed by Nelsons Boutique, a retailer, during July. Terms of sales on account are 2/10, n/30, FOB shipping point. July 3Received cash from J. Smith in payment of June 29 invoice of 350, less cash discount. 6Issued Ck. No. 1718, 742.50, to Designer, Inc., for invoice. no. 2256, recorded previously for 750, less cash discount of 7.50. July 9Sold merchandise in the amount of 250 on a credit card. Sales tax on this sale is 6%. The credit card fee the bank deducted for this transaction is 5. 10Issued Ck. No. 1719, 764.40, to Smart Style, Inc., for invoice no. 1825, recorded previously on account for 780. A trade discount of 25% was applied at the time of purchase, and Smart Style, Inc.s credit terms are 2/10, n/30. 12Received 180 cash in payment of June 20 invoice from R. Matthews. No cash discount applied. 18Received 1,575 cash in payment of a 1,500 note receivable and interest of 75. 21Voided Ck. No. 1720 due to error. 25Received and paid utility bill, 152; Ck. No. 1721, payable to City Utilities Company. 31Paid wages recorded previously for the month, 2,586, Ck. No. 1722. Required 1. Journalize the transactions for July in the cash receipts journal, the general journal (for the transaction on July 9th), or the cash payments journal as appropriate. Assume the periodic inventory method is used. 2. If you are using Working Papers, total and rule the journals. Prove the equality of debit and credit totals.arrow_forwardPrepare journal entries for the following sales and cash receipts transactions. (a) Merchandise is sold on account for 300 plus 3% sales tax, with 2/10, n/30 cash discount terms. (b) Part of the merchandise sold in transaction (a) for 70 plus sales tax is returned for credit. (c) The balance on account for the merchandise sold in transaction (a) is paid in cash within the discount period.arrow_forward
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