PA8. 12.4 Serene Company purchases fountains for its inventory from Kirkland Inc. The following transactions take place during the current year. A. On July 3, the company purchases thirty fountains for $1,200 per fountain, on credit. Terms of the purchase are 2/10, n/30, invoice dated July 3. B. On August 3, Serene does not pay the amount due and renegotiates with Kirkland. Kirkland agrees to convert the debt owed into a short-term note, with an 8% annual interest rate, payable in two months from August 3. C. On October 3, Serene Company pays its account in full. Record the journal entries to recognize the initial purchase, the conversion, and the payment.

PA8. 12.4 Serene Company purchases fountains for its inventory from Kirkland Inc. The following transactions take place during the current year. A. On July 3, the company purchases thirty fountains for $1,200 per fountain, on credit. Terms of the purchase are 2/10, n/30, invoice dated July 3. B. On August 3, Serene does not pay the amount due and renegotiates with Kirkland. Kirkland agrees to convert the debt owed into a short-term note, with an 8% annual interest rate, payable in two months from August 3. C. On October 3, Serene Company pays its account in full. Record the journal entries to recognize the initial purchase, the conversion, and the payment.

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter12: Current Liabilities

Section: Chapter Questions

Problem 8PA: Serene Company purchases fountains for its inventory from Kirkland Inc. The following transactions...

See similar textbooks

Similar questions

Air Compressors Inc. purchases compressor parts for its inventory from a supplier. The following transactions take place during the current year: A. On April 5, the company purchases 400 parts for $8.30 per part, on credit. Terms of the purchase are 4/ 10, n/30, invoice dated April 5. B. On May 5, Air Compressors does not pay the amount due and renegotiates with the supplier. The supplier agrees to $400 cash immediately as partial payment on note payable due, converting the debt owed into a short-term note, with a 7% annual interest rate, payable in three months from May 5. C. On August 5, Air Compressors pays its account in full. Record the journal entries to recognize the initial purchase, the conversion plus cash, and the payment.
10. Serene Company purchases fountains for its inventory from Kirkland Inc. The following transactions take place during the current year. A. On July 3, the company purchases thirty fountains for $3114 per fountain, on credit. Terms of the purchase are 2/10, n/30, invoice dated July 3. B. On August 3, Serene does not pay the amount due and renegotiates with Kirkland. Kirkland agrees to convert the debt owed into a short-term note, with an 8% annual interest rate, payable in two months from August 3. C. On October 3, Serene Company pays its account in full. Record the journal entries to recognize the initial purchase, the conversion, and the payment.
Serene Company purchases fountains for its inventory from Kirkland Inc. The following transactions take place during the current year. A. On July 3, the company purchases 30 fountains for $2,200 per fountain, on credit. Terms of the purchase are 2/10, n/30, invoice dated July 3. B. On August 3, Serene does not pay the amount due and renegotiates with Kirkland. Kirkland agrees to convert the debt owed into a short-term note, with an 9% annual interest rate, payable in two months from August 3. C. On October 3, Serene Company pays its account in full. Record the journal entries to recognize the initial purchase, the conversion, and the payment. If an amount box does not require an entry, leave it blank. When required, round your answers to the nearest dollar. July 3 Aug. 3 Oct. 3 Accounts Payable Cash Interest Expense Merchandise Inventory Short-Term Notes Payable II II 1II II II III
Serene Company purchases fountains for its inventory from Kirkland Inc. The following transactions take place during the current year. A. On July 3, the company purchases 30 fountains for $1,700 per fountain, on credit. Terms of the purchase are 2/10, n/30, invoice dated July 3. B. On August 3, Serene does not pay the amount due and renegotiates with Kirkland. Kirkland agrees to convert the debt owed into a short-term note, with an 10% annual interest rate, payable in two months from August 3. C. On October 3, Serene Company pays its account in full. Record the journal entries to recognize the initial purchase, the conversion, and the payment. If an amount box does not require an entry, leave it blank. When required, round your answers to the nearest dollar. July 3 fill in the blank 2 fill in the blank 3 fill in the blank 5 fill in the blank 6 Aug. 3 fill in the blank 8 fill in the blank 9 fill in the blank 11 fill in the blank 12 Oct. 3 fill in the blank 14…
Siomai Corp. sells gift certificates redeemable only when merchandise is purchased. The certificates have an expiration date two years after issuance. Upon redemption or expiration, Siomai recognizes the unearned revenue as realized. Data for the year are as follows:  Unearned revenue, January 1, 2021- P3,000,000 Gift certificates sold- P10,000,000  Gift certificates redeemed- P8,200,000 Expired gift certificates- P600,000  Cost of goods sold- 60% On December 31, 2021, Siomai should report unearned revenues of:
Regal Company sells gift certificates, redeemable for store merchandise. The gift certificates have no expiration date. The entity has the following information pertaining to the gift certificate sales and redemptions: Unearned revenue on January 1, 2020 = 750,000; 2020 sales = 2,500,000; 2020 redemptions of prior year sales = 250,000; 2020 redemptions of current year sales = 1,750,000. What amount should be reported as unearned revenue on December 31, 2020?
ABC Company sells gift certificates which can be use to purchase their merchandise. The gift certificates have an expiration date of 3 years from the date of issuance. Upon redemption or expiration, ABC recognizes the unearned revenue as realized. Some data are as follows:Unearned revenue from gift certificates outstanding, January 1 - P 500,000Gift certificates sold during 2019 - P 400,000The Unearned revenue from gift certificates outstanding has decreased by P 200,000 during the year. The gift certificates redeemed during the year was twice the value of the gift certificates expired for the year 2019.The gross profit rate based on sales is 30%.How much revenue must be recognized related to the gift certificates redeemed during the year 2019?
ABC Company sells gift certificates which can be use to purchase their merchandise. The gift certificates have an expiration date of 3 years from the date of issuance. Upon redemption or expiration, ABC recognizes the unearned revenue as realized. Some data are as follows:Unearned revenue from gift certificates outstanding, January 1 - P 500,000Gift certificates sold during 2019 - P 400,000The Unearned revenue from gift certificates outstanding has decreased by P 200,000 during the year. The gift certificates redeemed during the year was twice the value of the gift certificates expired for the year 2019.The gross profit rate based on sales is 30%.How much is the liability outstanding related to gift certificates not yet redeemed as of December 31,2019? How much revenue must be recognized related to the gift certificates redeemed during the year 2019?
Window World extended credit to customer Nile Jenkins in the amount of $130,900 for his purchase of window treatments on April 2. Terms of the sale are 2/60, n/150. The cost of the purchase to Window World is $56,200. On September 4, Window World determined that Nile Jenkinss account was uncollectible and wrote off the debt. On December 3, Mr. Jenkins unexpectedly paid in full on his account. Record each Window World transaction with Nile Jenkins. In order to demonstrate the write-off and then subsequent collection of an account receivable, assume in this example that Window World rarely extends credit directly, so this transaction is permitted to use the direct write-off method. Remember, however, that in most cases the direct write-off method is not allowed.
Spath Company borrows 75,000 by issuing a 4-year, noninterest-bearing note to a customer on January 1, 2019. In addition, Spath agrees to sell inventory to the customer at reduced prices over a 5-year period. Spaths incremental borrowing rate is 12%. The customer agrees to purchase an equal amount of inventory each year over the 5-year period so that a straight-line method of revenue recognition is appropriate. Required: Prepare the journal entries on Spaths books for 2019 and 2020. (Round answers to 2 decimal places.)
On December 1 of the current year, Jordan Inc. assigns 125,000 of its accounts receivable to McLaughlin Company for cash. McLaughlin Company charges a 750 service fee, advances 85% of Jordans accounts receivable, and charges an annual interest rate of 9% on any outstanding loan balance. Prepare the related journal entries for Jordan. Refer to RE6-10. On December 31, Jordan Inc. received 50,000 on assigned accounts. Prepare Jordans journal entries to record the cash receipt and the payment to McLaughlin.
Laminate Express extended credit to customer Amal Sunderland in the amount of $244,650 for his January 4 purchase of flooring. Terms of the sale are 2/30, n/120. The cost of the purchase to Laminate Express is $88,440. On April 5, Laminate Express determined that Amal Sunderlands account was uncollectible and wrote off the debt. On June 22, Amal Sunderland unexpectedly paid 30% of the total amount due in cash on his account. Record each Laminate Express transaction with Amal Sunderland. In order to demonstrate the write-off and then subsequent collection of an account receivable, assume in this example that Laminate Express rarely extends credit directly, so this transaction is permitted to use the direct write-off method. Remember, though, that in most cases the direct write-off method is not allowed.