The beginning account balances for Terry's Auto Shop as of January 1, Year 2, follow:BeginningBalances$ 6,1203,1007,4501,770Account TitlesCashInventoryCommon StockRetained EarningsThe following events affected the company during the Year 2 accounting period:1. Purchased merchandise on account that cost $4,270.2. The goods in Event 1 were purchased FOB shipping point with transportation cost of $230 cash.3. Returned $410 of damaged merchandise.4. Agreed to keep other damaged merchandise for which the company received a $285 allowance.5. Sold merchandise that cost $2,580 for $4,790 cash.6. Delivered merchandise to customers in Event 5 under terms FOB destination with transportation costs amounting to$165 cash.7. Paid $2,960 on the merchandise purchased in Event 1.Required:a. Organize appropriate accounts under an accounting equation. Record the beginning balances and the transaction data in theaccounts. In the last column of the table, provide appropriate input neededs for the Retained Earnings amounts.Note: Enter any decreases to account balances with a minus sign. Not all cells in the "Accounts Titles for Retained Earnings"column may require an input - leave cells blank if there is no corresponding Retained Earnings input needed.EventsBeginning Balance1. Purchased Inventory2. Transport3. Returned Inventory4. Allowance5a. Sales5b. Cost6. Transportation7. Paid Accounts PayableEnding BalanceCashAssets+ Inventory =+++++TERRY'S AUTO SHOPEffect of Events on the Financial Statements= Liabilities +AccountsPayable+++0 +==0=++++++++0 +Stockholders' EquityRetainedEarningsCommonStock++++++++0 +0Accounts Titles for RetainedEarnings

The accounting equation states that assets equal to sum of liabilities and equity. The transactions…

The beginning account balances for Terry's Auto Shop as of January 1, Year 2, follow: Beginning Balances $ 6,120 3,100 7,450 1,770 Account Titles Cash Inventory Common Stock Retained Earnings The following events affected the company during the Year 2 accounting period: 1. Purchased merchandise on account that cost $4,270. 2. The goods in Event 1 were purchased FOB shipping point with transportation cost of $230 cash. 3. Returned $410 of damaged merchandise. 4. Agreed to keep other damaged merchandise for which the company received a $285 allowance. 5. Sold merchandise that cost $2,580 for $4,790 cash. 6. Delivered merchandise to customers in Event 5 under terms FOB destination with transportation costs amounting to $165 cash. 7. Paid $2,960 on the merchandise purchased in Event 1. red:

The beginning account balances for Terry's Auto Shop as of January 1, Year 2, follow: Beginning Balances $ 6,120 3,100 7,450 1,770 Account Titles Cash Inventory Common Stock Retained Earnings The following events affected the company during the Year 2 accounting period: 1. Purchased merchandise on account that cost $4,270. 2. The goods in Event 1 were purchased FOB shipping point with transportation cost of $230 cash. 3. Returned $410 of damaged merchandise. 4. Agreed to keep other damaged merchandise for which the company received a $285 allowance. 5. Sold merchandise that cost $2,580 for $4,790 cash. 6. Delivered merchandise to customers in Event 5 under terms FOB destination with transportation costs amounting to $165 cash. 7. Paid $2,960 on the merchandise purchased in Event 1. red:

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Jan. 2 Purchased merchandise on account from Nunez Company, $27,600, terms 3/10, n/30. (Wildhorse uses the perpetual inventory system.) 1 Issued a 9%, 2-month, $27,600 note to Nunez in payment of account. Feb. Mar. 31 Accrued interest for 2 months on Nunez note. Apr. 1 Paid face value and interest on Nunez note. July 1 Purchased equipment from Marson Equipment paying $10,200 in cash and signing a 10%, 3-month, $68,400 note. Sept. 30 Accrued interest for 3 months on Marson note. Oct. 1 Paid face value and interest on Marson note. Dec. 1 Borrowed $27,600 from the Paola Bank by issuing a 3-month, 8% note with a face value of $27,600. Dec. 31 Recognized interest expense for 1 month on Paola Bank note. Prepare Journal entries for the listed transactions and events. Post the accounts Notes Payable, Interest payable, and Interest Expense. Show the balance sheet presentation of notes and interest payable at December 31. What is the total interest expense for the year?
c. On 9/12 Year 7 $2,000 of ACCOUNTS PAYABLE is paid after the discount period. Phrase 1st: 2nd: Phrase 1st: Account 2nd: Accounts Account Category AL SER E contra AL SER E contra + Accounts Debit Affect d. On 9/28 Year 7 INVENTORY originally purchased for $4,000 on 9/1 Year 7 and was paid for on 9/10 Year 7 is returned by the purchaser and a debit memorandum (a debit to A/P) is received from the seller. [Hint: the amount of cash involved in this transaction must take the 2% discount into account.] Debit + Category AL SE RE contra AL SE RE contra + - + Affect Dr. or Cr. Dr Cr Dr Cr Credit Dr. or Cr. Credit Dr Cr Dr Cr
Using the following information, what is the amount of net income? Purchases $25,987 Selling expenses $693 Merchandise inventory, September 1 7,575 Merchandise inventory, September 30 8,525 Administrative expenses 955 Sales 50,914 Rent revenue 1,194 Interest expense 848 a.$17,000b.$26,271c.$24,575d.$33,100
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Purchase-Related Transactions Journalize entries for the following related transactions of Manville Heating & Air Company: a. Purchased $22,000 of merchandise from Wright Co. on account, terms 2/10, n/30. Merchandise Inventory Accounts Payable-Wright Co. b. Paid the amount owed on the invoice within the discount period. Accounts Payable-Wright Co. Cash c. Discovered that $4,400 of the merchandise purchased in (a) was defective and returned items, receiving credit. Accounts Receivable-Wright Co. Merchandise Inventory d. Purchased $3,400 of merchandise from Wright Co. on account, terms n/30. Merchandise Inventory Accounts Payable-Wright Co. e. Received a refund from Wright Co. for return in (c) less the purchase in (d). Sales Returns and Allowances
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Computing Gross Profit The following data were taken from the accounts of Fluter Hardware, a small retail business. Sales $120,700 Sales returns and allowances 810 Sales discounts 680 Merchandise inventory, January 1 34,800 Purchases during the period 77,000 Purchases returns and allowances during the period 3,840 Purchases discounts taken during the period 2,310 Freight-in on merchandise purchased during the period 1,390 Merchandise inventory, December 31 31,500 Determine the gross profit.
The accounting records of Wall's China Shop reflected the following balances as of January 1, Year 2 Cash Beginning inventory Common stock Retained earnings $ 17,600 14,260 (155 units @ $92) 14,700 17,160 The following five transactions occurred in Year 2 1. First purchase (cash): 120 units @ $94 2. Second purchase (cash): 205 units @ $102 3. Sales (all cash): 425 units @ $197 4. Paid $15,000 cash for salaries expenses 5. Paid cash for income tax at the rate of 40 percent of income before taxes Required a. Compute the cost of goods sold and ending inventory, assuming (1) FIFO cost flow. (2) LIFO cost flow, and (3) weighted-average cost flow. Compute the income tax expense for each method. b. Record the above transactions in general journal form and post to T-accounts assuming each of the cost flows listed. Assume perpetual inventory system is used. 1. FIFO 2 LIFO 3. Weighted Average c. Use a vertical model to show the Year 2 income statement, balance sheet, and statement of cash flows…
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JOURNAL TRANSACTION: Sold $45,500 in inventory to a customer for $68,250 on account, 2/10, n/30. Transaction for $68,250:
Instructions The following items were selected from among the transactions completed by Sherwood Co. during the current year: Mar. Apr. Jun. Jul. Aug. Dec. 1 Purchased merchandise on account from Kirkwood Co., $390,000, terms n/30. 31 Issued a 30-day, 10% note for $390,000 to Kirkwood Co., on account. 30 Paid Kirkwood Co. the amount owed on the note of March 31. 1 Borrowed $156,000 from Triple Creek Bank, issuing a 45-day, 8% note. 1 Purchased tools by issuing a $216,000, 60-day note to Poulin Co., which discounted the note at the rate of 6%. 16 15 Paid Triple Creek Bank the amount due on the note of July 16. 30 Paid Poulin Co. the amount due on the note of July 1. 1 Purchased equipment from Greenwood Co. for $500,000, paying $150,000 cash and issuing a series of ten 8% notes for $35,000 each, coming due at 30-day intervals. Settled a product liability lawsuit with a customer for $310,000, payable in January. Accrued the loss in a litigation claims payable account. Paid the amount due…