Gross Method: Under this method, all the purchases are recorded in the books of account without taking into account the trade discount, returns and allowances. T he purchases are to be recorded at full cost. Journal Entry : It means recording of financial data related to business transactions in a journal in a manner so that debit equals credit. They provide an audit trail to the auditor and a means to analyze the effects of transactions to an organization’s financial health. Rules of Journal Entry: To increase the balance of account one needs to debit assets, expenses, losses and credit all the liabilities, revenues and gains including capital. To decrease the balance of account credit all assets, expenses, losses and debit all liabilities, revenues and gains including capital. Perpetual Inventory System: It is an inventory system wherein accounts related to inventory are updated on each purchase and sale activity. Quantities of inventory are updated on continuous basis. This can be done by integrating the inventory system to order entry and to the retail sale point of system. To prepare: Journal entries in the books of Company S.

Question

Want to see the full answer?

Answer 1

Question

Chapter 4, Problem 9E

To determine

Gross Method:

Under this method, all the purchases are recorded in the books of account without taking into account the trade discount, returns and allowances. T
he purchases are to be recorded at full cost.

Journal Entry:

It means recording of financial data related to business transactions in a journal in a manner so that debit equals credit. They provide an audit trail to the auditor and a means to analyze the effects of transactions to an organization’s financial health.

Rules of Journal Entry:

To increase the balance of account one needs to debit assets, expenses, losses and credit all the liabilities, revenues and gains including capital. To decrease the balance of account credit all assets, expenses, losses and debit all liabilities, revenues and gains including capital.

Perpetual Inventory System:

It is an inventory system wherein accounts related to inventory are updated on each purchase and sale activity. Quantities of inventory are updated on continuous basis. This can be done by integrating the inventory system to order entry and to the retail sale point of system.

To prepare: Journal entries in the books of Company S.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

Please give me true answer this financial accounting question

Can you please give me correct solution this general accounting question?

Michael McDowell Co. establishes a $108 million liability at the end of 2025 for the estimated site-cleanup costs at two of its manufacturing facilities. All related closing costs will be paid and deducted on the tax return in 2026. Also, at the end of 2025, the company has $54 million of temporary differences due to excess depreciation for tax purposes, $7.56 million of which will reverse in 2026. The enacted tax rate for all years is 20%, and the company pays taxes of $34.56 million on $172.80 million of taxable income in 2025. McDowell expects to have taxable income in 2026. Assuming that the only deferred tax account at the beginning of 2025 was a deferred tax liability of $5,400,000, draft the income tax expense portion of the income statement for 2025, beginning with the line "Income before income taxes." (Hint: You must first compute (1) the amount of temporary difference underlying the beginning $5,400,000 deferred tax liability, then (2) the amount of temporary differences…