Prepare journal entries to record the following merchandising transactions of Menards, which applies the perpetual inventory system and gross method. Hint: It will help to identify each receivable and payable; for example, record the purchase on July 3 in Accounts Payable—OLB. July 3 Purchased merchandise from OLB Corp. for $15,000 under credit terms of 1∕10, n∕30, FOB destination, invoice dated July 3. 7 Sold merchandise to Brill Co. for $11,500 under credit terms of 2∕10, n∕60, FOB destination, invoice dated July 7. The merchandise had cost $7,750. 10 Purchased merchandise from Rupert Co. for $14,200 under credit terms of 1∕10, n∕45, FOB shipping point, invoice dated July 10. 11 Paid $300 cash for shipping charges related to the July 7 sale to Brill Co. 12 Brill returned merchandise from the July 7 sale that had cost Menards $1,450 and been sold for $2,000. The merchandise was restored to inventory. 14 After negotiations with Rupert Co. concerning problems with the merchandise purchased on July 10, Menards received a price reduction from Rupert of $1,200. Menards debited accounts payable for $1,200. 15 At OLB’s request, Menards paid $200 cash for freight charges on the July 3 purchase, reducing the amount owed (accounts payable) to OLB. 17 Received balance due from Brill Co. for the July 7 sale less the return on July 12. 20 Paid the amount due Rupert Co. for the July 10 purchase less the price reduction granted on July 14. 21 Sold merchandise to Brown for $11,000 under credit terms of 1∕10, n∕30, FOB shipping point, invoice dated July 21. The merchandise had cost $7,000. 24 Brown requested a price reduction on the July 21 sale because the merchandise did not meet specifications. Menards gave a price reduction (allowance) of $1,000 to Brown and credited Brown’s accounts receivable for that amount. 30 Received Brown’s cash payment for the amount due from the July 21 sale less the price allowance from July 24. 31 Paid OLB Corp. the amount due from the July 3 purchase.
The Effect Of Prepaid Taxes On Assets And Liabilities
Many businesses estimate tax liability and make payments throughout the year (often quarterly). When a company overestimates its tax liability, this results in the business paying a prepaid tax. Prepaid taxes will be reversed within one year but can result in prepaid assets and liabilities.
Final Accounts
Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded.
Ledger Posting
A ledger is an account that provides information on all the transactions that have taken place during a particular period. It is also known as General Ledger. For example, your bank account statement is a general ledger that gives information about the amount paid/debited or received/ credited from your bank account over some time.
Trial Balance and Final Accounts
In accounting we start with recording transaction with journal entries then we make separate ledger account for each type of transaction. It is very necessary to check and verify that the transaction transferred to ledgers from the journal are accurately recorded or not. Trial balance helps in this. Trial balance helps to check the accuracy of posting the ledger accounts. It helps the accountant to assist in preparing final accounts. It also helps the accountant to check whether all the debits and credits of items are recorded and posted accurately. Like in a balance sheet debit and credit side should be equal, similarly in trial balance debit balance and credit balance should tally.
Adjustment Entries
At the end of every accounting period Adjustment Entries are made in order to adjust the accounts precisely replicate the expenses and revenue of the current period. It is also known as end of period adjustment. It can also be referred as financial reporting that corrects the errors made previously in the accounting period. The basic characteristics of every adjustment entry is that it affects at least one real account and one nominal account.
Prepare
perpetual inventory system and gross method. Hint: It will help to identify each receivable and payable;
for example, record the purchase on July 3 in Accounts Payable—OLB.
July 3 Purchased merchandise from OLB Corp. for $15,000 under credit terms of 1∕10, n∕30, FOB
destination, invoice dated July 3.
7 Sold merchandise to Brill Co. for $11,500 under credit terms of 2∕10, n∕60, FOB destination,
invoice dated July 7. The merchandise had cost $7,750.
10 Purchased merchandise from Rupert Co. for $14,200 under credit terms of 1∕10, n∕45, FOB
shipping point, invoice dated July 10.
11 Paid $300 cash for shipping charges related to the July 7 sale to Brill Co.
12 Brill returned merchandise from the July 7 sale that had cost Menards $1,450 and been sold for
$2,000. The merchandise was restored to inventory.
14 After negotiations with Rupert Co. concerning problems with the merchandise purchased on
July 10, Menards received a price reduction from Rupert of $1,200. Menards debited accounts
payable for $1,200.
15 At OLB’s request, Menards paid $200 cash for freight charges on the July 3 purchase, reducing
the amount owed (accounts payable) to OLB.
17 Received balance due from Brill Co. for the July 7 sale less the return on July 12.
20 Paid the amount due Rupert Co. for the July 10 purchase less the price reduction granted on
July 14.
21 Sold merchandise to Brown for $11,000 under credit terms of 1∕10, n∕30, FOB shipping point,
invoice dated July 21. The merchandise had cost $7,000.
24 Brown requested a price reduction on the July 21 sale because the merchandise did not meet
specifications. Menards gave a price reduction (allowance) of $1,000 to Brown and credited
Brown’s
30 Received Brown’s cash payment for the amount due from the July 21 sale less the price allowance
from July 24.
31 Paid OLB Corp. the amount due from the July 3 purchase.
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