Adjusting Entries : The accounting entries which are passed at the end of an accounting period to change the closing balances of various general ledger accounts. They are made to align the reported results and financial position of the business in accordance with the accounting framework, such as GAAP or IFRS. Sales Discount: It is a type of cash discount which seller of the product gives on its sale of products. The seller of the product often refers to it as a sales discount. Contra Asset: It is a negative asset account which offsets the balance with the one it is paired. In other words it is a credit balance in the asset side as opposite to the natural one which is a debit balance. Contra Liabilities: It is a negative liability account which offsets the balance with the one it is paired. In other words it is a debit balance in the liability side as opposite to the natural one which is a credit balance. a. To prepare: Adjusting entries. The adjusting entry for future sales discount: Date Account Title and Explanation Post ref Debit ($) Credit ($) Dec 31 Sales discount 20 Allowance for sales discount 20 (To record expected sales discount) Table(1) Sales discount is an expense account. Since it is given to the customers, means expense is increasing. Therefore, sales discount account is debited. Allowance for sales discount is a contra asset account. It will be set off against account receivables in future as it has credit balance. Therefore, allowance for sales discount is credited. Working notes: Computation of sales discount, Future period discount = Account receivable × Discount rate = $ 1 , 000 × 2 % = $ 20

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Answer 1

Question

Chapter 4, Problem 25E

To determine

Adjusting Entries:

The accounting entries which are passed at the end of an accounting period to change the closing balances of various general ledger accounts. They are made to align the reported results and financial position of the business in accordance with the accounting framework, such as GAAP or IFRS.

Sales Discount:

It is a type of cash discount which seller of the product gives on its sale of products. The seller of the product often refers to it as a sales discount.

Contra Asset:

It is a negative asset account which offsets the balance with the one it is paired. In other words it is a credit balance in the asset side as opposite to the natural one which is a debit balance.

Contra Liabilities:

It is a negative liability account which offsets the balance with the one it is paired. In other words it is a debit balance in the liability side as opposite to the natural one which is a credit balance.

a.

To prepare: Adjusting entries.

The adjusting entry for future sales discount:

Date Account Title and Explanation Post ref Debit ($) Credit ($)
Dec 31 Sales discount 20
Allowance for sales discount 20
(To record expected sales discount)
Table(1)
Sales discount is an expense account. Since it is given to the customers, means expense is increasing. Therefore, sales discount account is debited.

Allowance for sales discount is a contra asset account. It will be set off against account receivables in future as it has credit balance. Therefore, allowance for sales discount is credited.

Working notes:

Computation of sales discount,

Future period discount =Account receivable×Discount rate =$1,000×2% =$20

b.

To determine

To prepare: Adjusting entries.

c.

To determine

To identify: Allowance for sales discount is a contra asset or contra liability account.

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Consolidation after Several Years On January 1, 2016, Adams Corporation acquired all of the stock of Baker Company. The fair value of Adams’ shares used in the exchange was $37,500,000. At the time of acquisition, the book value of Baker’s shareholders’ equity was $5,000,000, and the book value of Baker’s building (25-year life) exceeded its fair value by $1,000,000. From the date of acquisition to December 31, 2021, Baker had cumulative net income of $1,300,000. For 2022, Baker reported net income of $300,000. Adams uses the complete equity method to account for its investment in Baker. There is no goodwill impairment loss for the period 2016 through 2021, but there is impairment loss of $100,000 in 2022. Baker declared no dividends during the period 2016–2022. Required Prepare the working paper eliminating entries necessary to consolidate the financial statements of Adams and Baker at December 31, 2022. Enter numerical answers using all zeros (do not abbreviate in thousands or in…

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Answer 2

Question

Chapter 4, Problem 25E

To determine

Adjusting Entries:

The accounting entries which are passed at the end of an accounting period to change the closing balances of various general ledger accounts. They are made to align the reported results and financial position of the business in accordance with the accounting framework, such as GAAP or IFRS.

Sales Discount:

It is a type of cash discount which seller of the product gives on its sale of products. The seller of the product often refers to it as a sales discount.

Contra Asset:

It is a negative asset account which offsets the balance with the one it is paired. In other words it is a credit balance in the asset side as opposite to the natural one which is a debit balance.

Contra Liabilities:

It is a negative liability account which offsets the balance with the one it is paired. In other words it is a debit balance in the liability side as opposite to the natural one which is a credit balance.

a.

To prepare: Adjusting entries.

The adjusting entry for future sales discount:

Date Account Title and Explanation Post ref Debit ($) Credit ($)
Dec 31 Sales discount 20
Allowance for sales discount 20
(To record expected sales discount)
Table(1)
Sales discount is an expense account. Since it is given to the customers, means expense is increasing. Therefore, sales discount account is debited.

Allowance for sales discount is a contra asset account. It will be set off against account receivables in future as it has credit balance. Therefore, allowance for sales discount is credited.

Working notes:

Computation of sales discount,

Future period discount =Account receivable×Discount rate =$1,000×2% =$20

b.

To determine

To prepare: Adjusting entries.

c.

To determine

To identify: Allowance for sales discount is a contra asset or contra liability account.

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Answer 3

Question

Chapter 4, Problem 25E

To determine

Adjusting Entries:

The accounting entries which are passed at the end of an accounting period to change the closing balances of various general ledger accounts. They are made to align the reported results and financial position of the business in accordance with the accounting framework, such as GAAP or IFRS.

Sales Discount:

It is a type of cash discount which seller of the product gives on its sale of products. The seller of the product often refers to it as a sales discount.

Contra Asset:

It is a negative asset account which offsets the balance with the one it is paired. In other words it is a credit balance in the asset side as opposite to the natural one which is a debit balance.

Contra Liabilities:

It is a negative liability account which offsets the balance with the one it is paired. In other words it is a debit balance in the liability side as opposite to the natural one which is a credit balance.

a.

To prepare: Adjusting entries.

The adjusting entry for future sales discount:

Date Account Title and Explanation Post ref Debit ($) Credit ($)
Dec 31 Sales discount 20
Allowance for sales discount 20
(To record expected sales discount)
Table(1)
Sales discount is an expense account. Since it is given to the customers, means expense is increasing. Therefore, sales discount account is debited.

Allowance for sales discount is a contra asset account. It will be set off against account receivables in future as it has credit balance. Therefore, allowance for sales discount is credited.

Working notes:

Computation of sales discount,

Future period discount =Account receivable×Discount rate =$1,000×2% =$20

b.

To determine

To prepare: Adjusting entries.

c.

To determine

To identify: Allowance for sales discount is a contra asset or contra liability account.

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Answer 4

Question

Chapter 4, Problem 25E

To determine

Adjusting Entries:

The accounting entries which are passed at the end of an accounting period to change the closing balances of various general ledger accounts. They are made to align the reported results and financial position of the business in accordance with the accounting framework, such as GAAP or IFRS.

Sales Discount:

It is a type of cash discount which seller of the product gives on its sale of products. The seller of the product often refers to it as a sales discount.

Contra Asset:

It is a negative asset account which offsets the balance with the one it is paired. In other words it is a credit balance in the asset side as opposite to the natural one which is a debit balance.

Contra Liabilities:

It is a negative liability account which offsets the balance with the one it is paired. In other words it is a debit balance in the liability side as opposite to the natural one which is a credit balance.

a.

To prepare: Adjusting entries.

The adjusting entry for future sales discount:

Date Account Title and Explanation Post ref Debit ($) Credit ($)
Dec 31 Sales discount 20
Allowance for sales discount 20
(To record expected sales discount)
Table(1)
Sales discount is an expense account. Since it is given to the customers, means expense is increasing. Therefore, sales discount account is debited.

Allowance for sales discount is a contra asset account. It will be set off against account receivables in future as it has credit balance. Therefore, allowance for sales discount is credited.

Working notes:

Computation of sales discount,

Future period discount =Account receivable×Discount rate =$1,000×2% =$20

b.

To determine

To prepare: Adjusting entries.

c.

To determine

To identify: Allowance for sales discount is a contra asset or contra liability account.

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Answer 5

Chapter 4, Problem 25E

To determine

Adjusting Entries:

The accounting entries which are passed at the end of an accounting period to change the closing balances of various general ledger accounts. They are made to align the reported results and financial position of the business in accordance with the accounting framework, such as GAAP or IFRS.

Sales Discount:

It is a type of cash discount which seller of the product gives on its sale of products. The seller of the product often refers to it as a sales discount.

Contra Asset:

It is a negative asset account which offsets the balance with the one it is paired. In other words it is a credit balance in the asset side as opposite to the natural one which is a debit balance.

Contra Liabilities:

It is a negative liability account which offsets the balance with the one it is paired. In other words it is a debit balance in the liability side as opposite to the natural one which is a credit balance.

a.

To prepare: Adjusting entries.

The adjusting entry for future sales discount:

Date Account Title and Explanation Post ref Debit ($) Credit ($)
Dec 31 Sales discount 20
Allowance for sales discount 20
(To record expected sales discount)
Table(1)
Sales discount is an expense account. Since it is given to the customers, means expense is increasing. Therefore, sales discount account is debited.

Allowance for sales discount is a contra asset account. It will be set off against account receivables in future as it has credit balance. Therefore, allowance for sales discount is credited.

Working notes:

Computation of sales discount,

Future period discount =Account receivable×Discount rate =$1,000×2% =$20

b.

To determine

To prepare: Adjusting entries.

c.

To determine

To identify: Allowance for sales discount is a contra asset or contra liability account.

Answer 6

Chapter 4, Problem 25E

To determine

Adjusting Entries:

The accounting entries which are passed at the end of an accounting period to change the closing balances of various general ledger accounts. They are made to align the reported results and financial position of the business in accordance with the accounting framework, such as GAAP or IFRS.

Sales Discount:

It is a type of cash discount which seller of the product gives on its sale of products. The seller of the product often refers to it as a sales discount.

Contra Asset:

It is a negative asset account which offsets the balance with the one it is paired. In other words it is a credit balance in the asset side as opposite to the natural one which is a debit balance.

Contra Liabilities:

It is a negative liability account which offsets the balance with the one it is paired. In other words it is a debit balance in the liability side as opposite to the natural one which is a credit balance.

a.

To prepare: Adjusting entries.

The adjusting entry for future sales discount:

Date Account Title and Explanation Post ref Debit ($) Credit ($)
Dec 31 Sales discount 20
Allowance for sales discount 20
(To record expected sales discount)
Table(1)
Sales discount is an expense account. Since it is given to the customers, means expense is increasing. Therefore, sales discount account is debited.

Allowance for sales discount is a contra asset account. It will be set off against account receivables in future as it has credit balance. Therefore, allowance for sales discount is credited.

Working notes:

Computation of sales discount,

Future period discount =Account receivable×Discount rate =$1,000×2% =$20

Answer 7

Chapter 4, Problem 25E

To determine

Adjusting Entries:

The accounting entries which are passed at the end of an accounting period to change the closing balances of various general ledger accounts. They are made to align the reported results and financial position of the business in accordance with the accounting framework, such as GAAP or IFRS.

Sales Discount:

It is a type of cash discount which seller of the product gives on its sale of products. The seller of the product often refers to it as a sales discount.

Contra Asset:

It is a negative asset account which offsets the balance with the one it is paired. In other words it is a credit balance in the asset side as opposite to the natural one which is a debit balance.

Contra Liabilities:

It is a negative liability account which offsets the balance with the one it is paired. In other words it is a debit balance in the liability side as opposite to the natural one which is a credit balance.

a.

To prepare: Adjusting entries.

The adjusting entry for future sales discount:

Date Account Title and Explanation Post ref Debit ($) Credit ($)
Dec 31 Sales discount 20
Allowance for sales discount 20
(To record expected sales discount)
Table(1)
Sales discount is an expense account. Since it is given to the customers, means expense is increasing. Therefore, sales discount account is debited.

Allowance for sales discount is a contra asset account. It will be set off against account receivables in future as it has credit balance. Therefore, allowance for sales discount is credited.

Working notes:

Computation of sales discount,

Future period discount =Account receivable×Discount rate =$1,000×2% =$20

Answer 8

b.

To determine

To prepare: Adjusting entries.

Answer 9

b.

To determine

To prepare: Adjusting entries.

Answer 10

c.

To determine

To identify: Allowance for sales discount is a contra asset or contra liability account.

Answer 11

c.

To determine

To identify: Allowance for sales discount is a contra asset or contra liability account.

Answer 12

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Answer 13

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Answer 15

Ch. 4 - Prob. 1QS Ch. 4 - Prob. 2QS Ch. 4 - Merchandise accounts and computations C2 Use the...Ch. 4 - Computing net invoice amounts P1 Compute the...Ch. 4 - Recording purchases, returns, and discounts taken...Ch. 4 - Prob. 6QS Ch. 4 - Prob. 7QS Ch. 4 - Prob. 8QS Ch. 4 - Prob. 9QS Ch. 4 - Prob. 10QS

Date	Account Title and Explanation	Post ref	Debit ($)	Credit ($)
Dec 31	Sales discount		20
	Allowance for sales discount			20
	(To record expected sales discount)

To prepare: Adjusting entries.

To identify: Allowance for sales discount is a contra asset or contra liability account.

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