(a) Explanation Journal entries in the books of T Company. On June 10, purchased merchandise on account for $8,000, terms 2/10, n/30 . Date Account Title and Explanation Post ref Debit ($) Credit ($) 10 June Inventory 8,000 Accounts Payable 8,000 (To record purchase of inventory on account) Inventory is an asset account. Since the Inventory is purchased, the value of assets is increased. So, debit the Inventory account. Accounts Payable is a liability account. Since the Inventory purchased on credit (cash not paid), the liability has arises. So, credit the Accounts Payable account. Freight paid on inventory of $400. Date Account Title and Explanation Post ref Debit ($) Credit ($) 11 June Inventory 400 Cash 400 (To record the freight paid) Inventory is an asset account. Since the amount of freight paid is added to inventory, the value of assets is increased. So, debit the Inventory account. Cash is an asset account. Since the cash is paid, the value of assets is decreased. So, credit the Cash account On June 12, T Company returned goods of $300. Date Account Title and Explanation Post ref Debit ($) Credit ($) 12 June Accounts payable 300 Inventory 300 (To record purchase return) Accounts Payable is a liability account. Since the Inventory purchased on credit is returned to supplier, the liability has decreased. So, debit the Accounts Payable account. Inventory is an asset account. Since the Inventory is returned, the value of assets is decreased. So, credit the Inventory account On June 19, T Company paid to E Company in full settlement. Date Account Title and Explanation Post ref Debit ($) Credit ($) 12 March. Accounts Payable 7,700 Inventory 154 Cash 7,546 (To record payment within 2/10, n/30 discount period) Accounts Payable is a liability account. Since the payment is made for accrued expense related to Accounts Payable, the liability has decreased. So, debit the Accounts payable account. Inventory is an asset account. Since the purchase discount is received, the value of assets is decreased. So, credit the Inventory account. Cash is an asset account. Since the cash is paid, the value of assets is decreased. So, credit the Cash account. Working Note: Net Purchase (before discount) = Purchase - Purchase Returns and Allowances = $ 8,000 - 300 (b) To determine To Record: Journal entries in the books of E Company.

10th Edition

ISBN: 9781119298229

Author: Weygandt, Jerry J.; Kieso, Donald E.; Kimmel, Paul D.

Publisher: WILEY

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Question

Chapter 5, Problem 5.4E

(a)

To determine

Perpetual Inventory System: Perpetual Inventory System refers to the inventory system that maintains the detailed records of every inventory transactions related to purchases and sales on a continuous basis. It shows the exact on-hand-inventory at any point of time.

Journal entries: Journal is the book of original entry whereby all the financial transactions are recorded in chronological order. Under this method each transaction has two sides, debit side and credit side. Total amount of debit side must be equal to the total amount of credit side. In addition, it is the primary books of accounts for any entity to record the daily transactions and processed further till the presentation of the financial statements.

Accounting rules for journal entries:

a) To Increase balance of the account: Debit assets, expenses, losses and credit all liabilities, capital, revenue and gains.

b) To Decrease balance of the account: Credit assets, expenses, losses and debit all liabilities, capital, revenue and gains.

To Record: Journal entries in the books of T Company.

(b)

To determine

To Record: Journal entries in the books of E Company.

Expert Solution & Answer

Chapter 5 Solutions

Financial Accounting

Ch. 5 - Prob. 1Q Ch. 5 - Prob. 2Q Ch. 5 - Prob. 3Q Ch. 5 - Prob. 4Q Ch. 5 - 5. When is cost of goods sold determined in a...Ch. 5 - 6. Distinguish between FOB shipping point and FOB...Ch. 5 - 7. Explain the meaning of the credit terms 2/10,...Ch. 5 - 8. Goods costing $2,000 are purchased on account...Ch. 5 - 9. Ming Xu believes revenues from credit sales may...Ch. 5 - 10. (a) What is the primary source document for...

Ch. 5 - Prob. 11Q Ch. 5 - Prob. 12Q Ch. 5 - Prob. 13Q Ch. 5 - Prob. 14Q Ch. 5 - Prob. 15Q Ch. 5 - Prob. 16Q Ch. 5 - Prob. 17Q Ch. 5 - 18. Identify the sections of a multiple-step...Ch. 5 - 19. How does the single-step form of income...Ch. 5 - 20. Determine Apple’s gross profit rate for 2015...Ch. 5 - Prob. 21Q Ch. 5 - Prob. 22Q Ch. 5 - *23.Goods costing $3,000 are purchased on account...Ch. 5 - BE5-1 Presented below are the components in...Ch. 5 - BE5-2 Presented below are the components in Gates...Ch. 5 - BE5-3 Radomir Company buys merchandise on account...Ch. 5 - BE5-4 Prepare the journal entries to record the...Ch. 5 - BE5-5 From the information in BE5-5, prepare the...Ch. 5 - BE5-6 At year-end, the perpetual inventory records...Ch. 5 - BE5-7 Hudson Company has the follow account...Ch. 5 - Prob. 5.8BE Ch. 5 - BE5-9 Explain where each of the following items...Ch. 5 - BE5-10 Assume Kader Company has the following...Ch. 5 - *BE5-11 Presented below is the format of the...Ch. 5 - *BE5-12 Assume Chat Gallant Company uses a...Ch. 5 - *BE5-13 Assume the same information as in BE5-12...Ch. 5 - Prob. 5.14BE Ch. 5 - Prob. 5.15BE Ch. 5 - Prob. 5.16BE Ch. 5 - Prob. 5.1DIE Ch. 5 - Prob. 5.2DIE Ch. 5 - Prob. 5.3DIE Ch. 5 - DO IT!5-4 The trial balance of Optique Boutique at...Ch. 5 - Prob. 5.5DIE Ch. 5 - E5-1 Mr. Etemadi has prepared the following list...Ch. 5 - Prob. 5.2E Ch. 5 - Prob. 5.3E Ch. 5 - Prob. 5.4E Ch. 5 - Prob. 5.5E Ch. 5 - Prob. 5.6E Ch. 5 - Prob. 5.7E Ch. 5 - Prob. 5.8E Ch. 5 - Prob. 5.9E Ch. 5 - Prob. 5.10E Ch. 5 - Prob. 5.11E Ch. 5 - E5-12 In 2019, Matt Cruz Company had net sales of...Ch. 5 - Prob. 5.13E Ch. 5 - E5-14 Financial information is presented below for...Ch. 5 - Prob. 5.15E Ch. 5 - Prob. 5.16E Ch. 5 - Prob. 5.17E Ch. 5 - Prob. 5.18E Ch. 5 - *E5-19 Below is a series of cost of goods sold...Ch. 5 - Prob. 5.20E Ch. 5 - Prob. 5.21E Ch. 5 - *E5-22 Presented below are selected accounts for...Ch. 5 - Prob. 5.1AP Ch. 5 - P5-2A Latona Hardware Store completed the...Ch. 5 - P3-3A The Deluxe store is located in midtown...Ch. 5 - P5-4A Adam Nichols, a former disc golf star,...Ch. 5 - *P5-5A The trial balance of Valdez Fashion Center...Ch. 5 - Prob. 5.6AP Ch. 5 - *P5-7A Alana Inc, operates a retail operation that...Ch. 5 - Prob. 5.8AP Ch. 5 - ACR5-1 On December 1, 2019, Prosen Distributing...Ch. 5 - Prob. 5.1EYCT Ch. 5 - CT5-2 PepsiCo’s financial statements are presented...Ch. 5 - Prob. 5.3EYCT Ch. 5 - Prob. 5.4EYCT Ch. 5 - Prob. 5.5EYCT Ch. 5 - Prob. 5.6EYCT Ch. 5 - Prob. 5.7EYCT Ch. 5 - Prob. 5.8EYCT Ch. 5 - Prob. 5.1IFRS Ch. 5 - Prob. 5.2IFRS Ch. 5 - Prob. 5.3IFRS Ch. 5 - Prob. 5.4IFRS

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