College Accounting, Chapters 1-27
23rd Edition
ISBN: 9781337794756
Author: HEINTZ, James A.
Publisher: Cengage Learning,
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Question
Chapter 23A, Problem 2SEB
To determine
Compute the amount of cash paid for merchandise in 20-2.
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Students have asked these similar questions
The entry to record the sale of $20,000 of merchandise on account with cost of $14,000, would include:
a. credit to accounts receivable for $14,000
b. debit to accounts receivable for $20,000
c. debit to cost of goods sold for $20,000
d. credit to inventory for $20,000
Stockton Company sold goods on account with a sales price of $70,000 on August 17. The terms of the sale were 2/10, n/30.
INSTRUCTIONS:
Record the sale using the gross method of accounting for cash discounts.
Record the sale using the net method of accounting for cash discounts.
Assume that the payment is received on August 25. Record receipt of the payment using both the gross method and the net method.
Assume that payment is received on September 15. Record receipt of the payment using both the gross method and the net method. Is the account used for the net method an asset, liability, revenue, or expense?
Which method makes more theoretical sense—the gross method or the net method? Why? Why don’t more firms use the net method?
Use the following information to determine the amount of cash paid
for merchandise. Show calculations.
Cost of merchandise sold per income statement
262,000
Accounts payable balance change during period
(19,000)
Inventory balance change during period
5,000
Chapter 23A Solutions
College Accounting, Chapters 1-27
Ch. 23A - Describe the direct method of reporting cash flows...Ch. 23A - Prob. 2RQCh. 23A - Prob. 3RQCh. 23A - Under the direct method of preparing a statement...Ch. 23A - Under the direct method of preparing a statement...Ch. 23A - CASH RECEIVED FROM CUSTOMERS Potts Companys sales...Ch. 23A - Prob. 2SEACh. 23A - Prob. 3SEACh. 23A - Prob. 4SEACh. 23A - Prob. 5SPA
Ch. 23A - COMPUTE CASH PROVIDED BY OPERATING ACTIVITIES Horn...Ch. 23A - EXPANDED STATEMENT OF CASH FLOWS Financial...Ch. 23A - CASH RECEIVED FROM CUSTOMERS Boyd Companys sales...Ch. 23A - Prob. 2SEBCh. 23A - Prob. 3SEBCh. 23A - Prob. 4SEBCh. 23A - Prob. 5SPBCh. 23A - COMPUTE CASH PROVIDED BY OPERATING ACTIVITIES...Ch. 23A - EXPANDED STATEMENT OF CASH FLOWS Financial...
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- Prepare journal entries for the following sales and cash receipts transactions. (a) Merchandise is sold on account for 300 plus 3% sales tax, with 2/10, n/30 cash discount terms. (b) Part of the merchandise sold in transaction (a) for 70 plus sales tax is returned for credit. (c) The balance on account for the merchandise sold in transaction (a) is paid in cash within the discount period.arrow_forwardCost of goods sold and related items The following data were extracted from the accounting records of Harkins Company for the year ended April 30, 20Y8: Estimated returns of current year sales 11,600 Inventory, May 1, 20Y7 380,000 Inventory, April 30, 20Y8 415,000 Purchases 3,800,000 Purchases returns and allowances 150,000 Purchases discounts 80,000 Sales 5,850,000 Freight in 16,600 a. Prepare the Cost of goods sold section of the income statement for the year ended April 30, 20Y8, using the periodic inventory system. b. Determine the gross profit to be reported on the income statement for the year ended April 30, 20Y8. c. Would gross profit be different if the perpetual inventory system was used instead of the periodic inventory system?arrow_forwardThe financial statements of Wolverines Company showed the following: Cost of Goods Sold: $725,000 Merchandise Inventory: Beg. Balance $45,000 and Ending Balance$ 56,000 Accounts Payable: Beg. Balance $37,000 and Ending Balance $42,000 Assuming all inventory is purchased on credit, determine the cash paid to suppliers using the direct method. A) $731,000 C) $736,000 B) $719,000 D) $714,000arrow_forward
- On June 1, Meadow Company sold merchandise with a list price of $40,000. For each of the sales terms below, determine the proper amount of cash received: Credit Terms Date Paid 2/10, n/30 June 8 1/10, n/30 June 15 June 14 1/15, n/30 n/30 June 28 1 $ 2 $ 3 $ 4 $arrow_forwardShown below in T-account format are the beginning and ending balances ($ in millions) of both inventory and accounts payable. Debit Beginning balance Ending balance Inventory 150.0 154.2 Credit Accounts Payable Debit Credit 48.0 Beginning balance 53.4 Ending balance Required: 1. Use a T-account analysis to determine the amount of cash paid to suppliers of merchandise during the reporting period if cost of goods sold was $360 million. 2. Prepare a summary entry that represents the net effect of merchandise purchases during the reporting period. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Use a T-account analysis to determine the amount of cash paid to suppliers of merchandise during the reporting period if cost of goods sold was $360 million. Note: Enter your answer in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5). Cash paid to suppliers millionarrow_forwardA company purchased $12,000 of merchandise on June 15 with terms of 3/10, n/45, and FOB shipping point. The freight charge, $1,500, was added to the invoice amount. On June 20, it returned $2,400 of that merchandise. On June 24, it paid the balance owed for the merchandise taking any discount it is entitled to. The cash paid on June 24 equals:arrow_forward
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