Problem 4-2A (Static) Preparing journal entries for merchandising activities LO P1, P2 Prepare journal entries to record the following merchandising transactions of Lowe's, which uses the perpetual inventory system and the gross method. August 1 Purchased merchandise from Aron Company for $7,500 under credit terms of 1/10, n/30, FOB destination, invoice dated August 1. August 5 Sold merchandise to Baird Corporation for $5,200 under credit terms of 2/10, n/60, FOB destination, invoice dated August 5. The merchandise had cost $4,000. August 8 Purchased merchandise from Waters Corporation for $5,400 under credit terms of 1/10, n/45, FOB shipping. point, invoice dated August 8. August 9 Paid $125 cash for shipping charges related to the August 5 sale to Baird Corporation. August 18 Baird returned merchandise from the August 5 sale that had cost Lowe's $488 and was sold for $600. The merchandise was restored to inventory. August 12 After negotiations with Waters Corporation concerning problems with the purchases on August 8, Lowe's received a price reduction from Waters of $400 off the $5,400, of goods purchased. Lowe's debited accounts payable for $400. the August 14 At Aron's request, Lowe's paid $200 cash for freight charges on the August 1 purchase, reducing the amount owed (accounts payable) to Aron. 10. August 15 Received balance due from Baird Corporation for the August 5 sale less the return on August 18 Paid the amount due Waters Corporation for the August 8 purchase less the price allowance from August 12. August 19 Sold merchandise to Tux Company for $4,800 under credit terms of n/10, FOB shipping point, invoice dated August 19. The merchandise had cost $2,400. August 22 Tux requested a price reduction on the August 19 sale because the merchandise did not meet specifications. Love's gave a price reduction (allowance) of $50e to Tux and credited Tux's accounts receivable for that amount. August 29 Received Tux's cash payment for the amount due from the August 19 sale less the price allowance from August 22. August 36 Paid Aron Company the amount due from the August 1 purchase. View transaction list Journal entry worksheet < 1 Note: Enter debits before credits Date 6 General Journal 7 Purchased merchandise from Aron Company for $7,500 under credit terms of 1/10, 1/30, FOB destination, Invoice dated August 1. 8 16 Debit Credit
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.
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