User Rancho Furniture completed the following transactions relating to the purchase of merchandise during August, the first month of operation. It is the policy of the company to record all purchase invoices at the net amount and to pay invoices within the discount period. Aug.1 Purchased merchandise from Carolina Corporation, invoice price, $21,000; terms 2/10, n/30. Aug.8 Purchased merchandise from Thomas Company, $36,000; terms 2/10, n/30. Aug. 8 Merchandise with an invoice price of $3,000 purchased from Carolina Corporation on August 1 was found to be defective. It was returned to the supplier accompanied by debit memorandum no. 118. Aug. 18 Paid Thomas Company's invoice of August 8, less cash discount. Aug. 25 Purchased merchandise from Shenren Company, $22, 800; terms 2/10, n/30. Aug. 30 Paid Carolina Corporation's invoice of August 1, taking into consideration the return of defective goods on August 8. Assume that the inventory of merchandise on August 1 was $79, 400; on August 31, $87,800. Instructions: Journalize the above transactions, in general journal form, recording invoices at the net amount. Prepare the cost of goods sold section of the income statement. What is the amount of the account payable to Shenren Company at the end of August? What would be the amount of this account payable if Rancho Furniture followed the policy of recording purchase invoices at the gross amount?
User Rancho Furniture completed the following transactions relating to the purchase of merchandise during August, the first month of operation. It is the policy of the company to record all purchase invoices at the net amount and to pay invoices within the discount period. Aug.1 Purchased merchandise from Carolina Corporation, invoice price, $21,000; terms 2/10, n/30. Aug.8 Purchased merchandise from Thomas Company, $36,000; terms 2/10, n/30. Aug. 8 Merchandise with an invoice price of $3,000 purchased from Carolina Corporation on August 1 was found to be defective. It was returned to the supplier accompanied by debit memorandum no. 118. Aug. 18 Paid Thomas Company's invoice of August 8, less cash discount. Aug. 25 Purchased merchandise from Shenren Company, $22, 800; terms 2/10, n/30. Aug. 30 Paid Carolina Corporation's invoice of August 1, taking into consideration the return of defective goods on August 8. Assume that the inventory of merchandise on August 1 was $79, 400; on August 31, $87,800. Instructions: Journalize the above transactions, in general journal form, recording invoices at the net amount. Prepare the cost of goods sold section of the income statement. What is the amount of the account payable to Shenren Company at the end of August? What would be the amount of this account payable if Rancho Furniture followed the policy of recording purchase invoices at the gross amount?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:User Rancho Furniture completed the following transactions relating to the purchase of merchandise during August, the first month of operation. It is the policy of the company to record all purchase invoices at the net amount
and to pay invoices within the discount period. Aug.1 Purchased merchandise from Carolina Corporation, invoice price, $21,000; terms 2/10, n/30. Aug.8 Purchased merchandise from Thomas Company, $36,000; terms 2/10,
n/30. Aug. 8 Merchandise with an invoice price of $3,000 purchased from Carolina Corporation on August 1 was found to be defective. It was returned to the supplier accompanied by debit memorandum no. 118. Aug. 18
Paid Thomas Company's invoice of August 8, less cash discount. Aug. 25 Purchased merchandise from Shenren Company, $22, 800; terms 2/10, n/30. Aug. 30 Paid Carolina Corporation's invoice of August 1, taking into
consideration the return of defective goods on August 8. Assume that the inventory of merchandise on August 1 was $79, 400; on August 31, $87,800. Instructions: Journalize the above transactions, in general journal form,
recording invoices at the net amount. Prepare the cost of goods sold section of the income statement. What is the amount of the account payable to Shenren Company at the end of August? What would be the amount of this
account payable if Rancho Furniture followed the policy of recording purchase invoices at the gross amount?
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