Explanation Purchases is an activity of acquiring the merchandise inventory of a business. Sales is an activity of selling the merchandise inventory of a business. Record the journal entry for the sale of inventory on account. Date Accounts and Explanation Debit ($) Credit ($) Accounts Receivable 31,164 (1) To Sales 31,164 (To record the sale of inventory on account after discount) Table (1) Working Note 1: Calculate the amount of accounts receivable. Sales = $31,800 Discount Percentage = 2% Amount of accounts receivable } = Sales − Discount = Sales − ( Sales × 2 % ) = $31,800 – ( $ 31 , 800 × 2 % ) = $31,800 − $ 636 = $ 31 , 164 Accounts Receivable is an asset and it is increased by $31,164. Therefore, debit account receivable with $31,164. Sales is revenue and it increases the value of equity by $31,164. Therefore, credit sales with $31,164. Record the journal entry for cost of goods sold. Date Accounts and Explanation Debit ($) Credit ($) Cost of Merchandise Sold 19,000 Merchandise Inventory 19,000 (To record the cost of merchandise sold) Table (2) Cost of merchandise sold is an expense account and it decreases the value of equity by $19,000. Therefore, debit cost of merchandise sold account with $19,000. Merchandise Inventory is an asset and it is decreased by $19,000. Therefore, credit inventory account with $19,000. Record the journal entry for the balance amount received. Date Account Title and Explanation Post Ref. Debit ($) Credit ($) Cash 31,164 Accounts Receivable 31,164 (To record cash received less discount) Table (3) Cash is an asset and it is increased by $31,164

14th Edition

ISBN: 9781305088436

Author: Carl Warren, Jim Reeve, Jonathan Duchac

Publisher: Cengage Learning

See similar textbooks

Concept explainers

Financial Transaction Analysis

The transaction analysis is done with the help of the accounting equation. The basic accounting equation is alternatively known as the balance sheet equation is based on the double-entry system which says that for each transaction happening in a business…

Videos

Question

Chapter 6, Problem 5PEA

To determine

Record the sales transactions in the books of Company S.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Chapter 6, Problem 4PEB

Chapter 6, Problem 5PEB

Students have asked these similar questions

Please solve this General accounting questions step by step

Given solution for General accounting question not use ai

I need the correct answer to this general accounting problem using the standard accounting approach.

Chapter 6 Solutions

Financial Accounting

Ch. 6 - Prob. 1DQ Ch. 6 - Can a business earn a gross profit but incur a net...Ch. 6 - The credit period during which the buyer of...Ch. 6 - What is the meaning of (a) 1/15, n/60; (b) n/30;...Ch. 6 - Prob. 5DQ Ch. 6 - Prob. 6DQ Ch. 6 - Prob. 7DQ Ch. 6 - Name four accounts that would normally appear in...Ch. 6 - Prob. 9DQ Ch. 6 - Assume that Audio Outfitter Inc. in Discussion...

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Record the sales transactions in the books of Company S.

Solution Summary: The author calculates the amount of accounts receivable, sales, revenue, and cost of goods sold.

Concept explainers

Videos

Record the sales transactions in the books of Company S.

Want to see the full answer?

Chapter 6 Solutions