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.

Question

Melford Industries sells a product to a wholesaler for $52. The wholesaler applies a 30% markup based on selling price when selling to a retailer. The retailer then applies a 40% markup based on selling price to determine the final price to the consumer. What is the final selling price to the consumer? Answer

Answer 1

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.

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Melford Industries sells a product to a wholesaler for $52. The wholesaler applies a 30% markup based on selling price when selling to a retailer. The retailer then applies a 40% markup based on selling price to determine the final price to the consumer. What is the final selling price to the consumer? Answer

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If sales revenue is $220 million and accounts receivable decreased by $30 million, the amount of cash received from customers: a. was $150 million. b. was $125 million. c. depends on the mix of cash sales and credit sales. d. was $250 million.