198.From the adjusted trial balance given below for the Grayson Company, Inc., prepare a multiple-step income statement in good form. Salaries expense and building depreciation expense should be equally divided between selling activities and the general and administrative activities.
Grayson Company, Inc.
Adjusted Trial Balance
December 31
DebitCredit
Cash$19,500
Accounts receivable27,000
Merchandise inventory38,000
Office supplies1,200
Store equipment80,000
Accumulated depreciation—store equipment$25,000
Building260,000
Accumulated depreciation—building121,600
Accounts payable28,500
Salaries payable10,000
Common stock1,000
Retained earnings168,900
Dividends45,000
Sales450,000
Sales discounts8,000
Sales returns and allowances24,500
Cost of goods sold210,000
Salaries expense38,000
Depreciation expense—store equipment16,000
Depreciation expense—building24,000
Advertising expense12,300
Office supplies expense3,500
Gain on disposal of store equipment3,000
Interest expense1,000
Totals$808,000$808,000
199.Vincent Company, Inc. purchased merchandise from Liu Company with an invoice price of $300,000 and credit terms of 2/10, n/30. Liu Company's cost for the merchandise was $200,000. Vincent Company, Inc. paid within the discount period. Assume that both buyer and seller use a
perpetual
inventory system.
1. Prepare entries that Vincent should record for (a) the purchase and (b) the cash payment.
2. Prepare entries that Liu should record for (a) the sale and (b) the cash collection.
3. Assume that the buyer borrowed enough cash to pay the balance on the last day of the discount period at an annual interest rate of 9% and paid it back on the last day of the credit period. Compute how much the buyer saved by following this strategy. (Assume a 365-day year and round dollar amounts to the nearest cent.)
200.Prepare journal entries to record the following merchandise transactions of Martinez Excavation Equipment, Inc., which applies the
perpetual
inventory system.
May 1Purchased merchandise from Kona Company for $12,700 under credit terms of 2/15, n/45, FOB destination, and invoice dated May 1.
3Sold merchandise to Walton for $8,000 under credit terms of 1/10, n/30, FOB destination, invoice date May 3. The merchandise had cost $5,000.
5Paid $350 cash for shipping charges related to the May 3 sale.
6Returned $2,000 of the merchandise purchased on May 1 to Kona Company.
7Walton returned merchandise from the May 3 sale that had cost Martinez $625 and had been sold for $1,000. The merchandise was restored to inventory.
13Received the balance due from Walton less the return.
14Paid the amount due Kona Company.