During 2021, your company completed the following summarized transactions. Prepare journal entries for the following events. 1. Your company sold $60,000 of merchandise to various customers for $150,000 on account, terms 2/10, n/30. Assume your company uses a PERIODIC inventory system and the GROSS method of discounts. 2. Accounts from transaction “#1." above for which the original amount was $70,000 were collected within the 10 day period. 3. Accounts from transaction “#1." above for which the original amount was $40,000 were collected 27 days after the sale. 4. One customer from transaction “#1" above returned a product which cost $410 and had been sold for $1,000. This customer had NOT paid his account so you credited his account. On December 1, 2021, you loaned $80,000 to another company and received a nine- month, 6% note. 5. 6. Your company wrote off $2,100 of past due accounts receivable. 7. At the end of the year, your company estimated bad debts would be 1% of GROSS sales for the year. 8. At the end of the year, you accrued interest on the note in #5 above.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
icon
Concept explainers
Topic Video
Question
100%
### Summary of 2021 Transactions for Journal Entries

#### Transactions:

1. **Merchandise Sale on Credit**
   - Sold $60,000 worth of merchandise for $150,000 on account.
   - Terms: 2/10, n/30.
   - Uses a PERIODIC inventory system and GROSS method of discounts.

2. **Early Payment Discount**
   - Collected $70,000 from transaction #1 within 10 days.

3. **Payment Without Discount**
   - Collected $40,000 from transaction #1, 27 days after sale.

4. **Product Return**
   - Customer returned a product costing $410, sold for $1,000.
   - Credit issued as account not yet paid.

5. **Loan to Another Company**
   - Loaned $80,000 on December 1, 2021.
   - Received a nine-month, 6% note.

6. **Write-off of Accounts Receivable**
   - Wrote off $2,100 of past due accounts.

7. **Estimated Bad Debts**
   - Estimated bad debts as 1% of GROSS sales for the year.

8. **Interest Accrual**
   - Accrued interest on note from #5 at year-end.
Transcribed Image Text:### Summary of 2021 Transactions for Journal Entries #### Transactions: 1. **Merchandise Sale on Credit** - Sold $60,000 worth of merchandise for $150,000 on account. - Terms: 2/10, n/30. - Uses a PERIODIC inventory system and GROSS method of discounts. 2. **Early Payment Discount** - Collected $70,000 from transaction #1 within 10 days. 3. **Payment Without Discount** - Collected $40,000 from transaction #1, 27 days after sale. 4. **Product Return** - Customer returned a product costing $410, sold for $1,000. - Credit issued as account not yet paid. 5. **Loan to Another Company** - Loaned $80,000 on December 1, 2021. - Received a nine-month, 6% note. 6. **Write-off of Accounts Receivable** - Wrote off $2,100 of past due accounts. 7. **Estimated Bad Debts** - Estimated bad debts as 1% of GROSS sales for the year. 8. **Interest Accrual** - Accrued interest on note from #5 at year-end.
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps with 1 images

Blurred answer
Knowledge Booster
Financial Statements
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education