Question 1 (8 points) Using the gross method of recording sales, what sales price should be recorded when an item with an $1,100 list price is sold with a 15% trade discount? The sales invoice...

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Answered Same DaySep 04, 2021

Answer To: Question 1 (8 points) Using the gross method of recording sales, what sales price should be recorded...

Yash answered on Sep 06 2021
150 Votes
Question 1 (8 points)
 
Using the gross method of recording sales, what sales price should be recorded when an item with an $1,100 list price is sold with a 15% trade discount?  The sales invoice includes the terms 2/10, n/30?
Question 1 options:
    
    $1,100
    
    $1,078
    
    $916.30
    
    $935
Question 2 (8 points)
 
The expression 3/20, n/60 means:
Question 2 options:
    
    a 3% discount is available if the invoice is paid within 20 to 60 days.
    
    a 15% discount (3 divided by 20) is available if the invoice is paid wit
hin 60 days.
    
    the invoice is paid in 3 to 20 days; otherwise interest for 60 days will be charged.
    
    if the 3% discount is not taken, the net amount is due within 60 days.
Question 3 (8 points)
 
Alpha used a periodic inventory system.  Merchandise was purchased on account for $2,000.  The transaction was F.O.B. shipping point.  Freight of $100 was originally paid by the seller.  Alpha's journal entry to reflect this purchase includes debits to:
Question 3 options:
    
    Accounts Payable for $2,100.
    
    Purchases for $2,100.
    
    Freight-out for $100.
    
    Freight-in for $100.
Question 4 (8 points)
 
Bravo Company had beginning inventory of $75,000, purchased merchandise during the period for $200,000, and had ending inventory of $16,000.  How much was cost of goods sold?
Solution
Cost of goods sold = $2,59,000
Question 5 (8 points)
 
Alpha Company used the periodic inventory system for purchase & sales of merchandise. Discount terms for both purchase & sales are, FOB Destination, 2/10, n30 and the gross method is used.
> Alpha Company purchased on account $2,700 of merchandise from Bravo Company on May 2, 2016.
> Alpha Company returned, to Bravo Company, $200 of this merchandise on May 3, 2016.
> Freight charges related to this transaction of $150 were paid by Bravo Company.
Use this information to prepare Alpha Company's General Journal entry (without explanation) for the payment for merchandise on May 15. If no entry is required then write "No Entry Required."
General Journal:
    Date
    Accounts
    Debit
    Credit
     15 May
    Bravo Company 
    2,500 
     
     
     To Bank
     
    2,500 
     
     
     
     
Question 6 (8 points)
Saved
Alpha Company used the periodic inventory system for purchase & sales of merchandise. Discount terms for both purchase & sales are, FOB Destination, 2/10, n30 and the gross method is used.
> Alpha Company purchased on account $2,500 of merchandise from Bravo Company on May 2, 2016.
> Alpha Company returned, to Bravo Company, $250 of this merchandise on May 3, 2016.
> Freight charges related to this transaction of $150 were paid by Bravo Company.
Use this information to prepare Alpha Company's General Journal entry (without explanation) for the payment for merchandise on May 12. If no entry is required then write "No Entry Required."
General Journal:
    Date
    Accounts
    Debit
    Credit
    May 12 
     Bravo Company
    2,250
     
     
     To Bank
     
    2,205 
     
     To Discount Received
     
    45 
Question 7 (22 points) 
Saved
Alpha Company uses the periodic inventory system for purchase & sales of merchandise. Discount terms for both purchases & sales are, 2/10, n30 and the gross method is used. Unless otherwise noted, FOB Destination will apply to all purchases & sales. The value of inventory is based on periodic system. On January 1, 2016, beginning inventory consisted of 400 units of widgets costing $10 each. Alpha prepares monthly income statements. The following events occurred during the month of Jan.: 
     
    Date
    Activity
    a.
    Jan. 3
    Purchased on account 350 widgets for $11 each. 
    b.
    Jan. 5
    Sold on account 500 widgets for $30 each. Paid freight out with cash of $150.
    c.
    Jan. 10
    Purchased on account 650 widgets for $12 each.
    d.
    Jan. 11
    Shipping cost for the January 10 purchased merchandise was $400 was paid with a cheque by Alpha directly to the freight company. 
    e.
    Jan. 12
    Returned 50 widgets received from Jan. 10 purchase as they were not the correct item ordered.
    f.
    Jan. 13
    Paid for the purchases made on Jan. 3.
    g.
    Jan. 21
    Sold on account 550 widgets for $30 each. Paid freight out with cash of $250.
    h.
    Jan. 22
    Authorize credit without return of goods for 50 widgets sold on Jan. 21 when customer advised that they were received in defective condition.
    i.
    Jan. 25
    Received payment for the sale made on Jan. 5.
    j.
    Jan. 26
    Paid for the purchases made on Jan. 10.
    k.
    Jan. 31
    Received payment for the sale made on Jan. 21.
Use this information to prepare the General Journal entries (without explanation) for the January events. If no entry is required then enter the date and write "No Entry Required."
General Journal:
     
    Date
    Accounts
    Debit
    Credit
    a.
    Jan 3 
    Purchase Account
    3,850 
     
     
     
     To Account Payable
     
    3,850 
     
     
     
     
     
    b.
     Jan 5
     Accounts Receivable
    15,000 
     
     
     
     Freight Out
     150
     
     
     
     To Sales
     
    15,000 
     
     
     To Cash
     
    150 
     
     
     
     
     
    c.
     Jan 10
    Purchase Account
    7,800 
     
     
     
     To Account Payable
     
    7,800 
     
     
     
     
     
    d.
    Jan 11 
    Freight In 
     400
     
     
     
     To Bank
     
    400 
     
     
     
     
     
    e.
     Jan 12
     Account Payable
    600 
     
     
     
     To Purchase...
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