Intermediate Accounting
9th Edition
ISBN: 9781259722660
Author: J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Videos
Textbook Question
Chapter 8, Problem 8.4BE
Purchas e discounts; gross method
• LO8–3
On December 28, 2018, Videotech Corporation (VTC) purchased 10 units of a new satellite uplink system from Tristar Communications for $25,000 each. The terms of each sale were 1/10, n/30. VTC uses the gross method to account for purchase discounts and a perpetual inventory system. VTC paid the net-of-discount amount on January 6, 2019. Prepare the
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
P16-2 P16–2 Cost of giving up early payment discounts Determine the cost of giving up the dis-count under each of the following terms of sale. (Note: Assume a 365-day year.)
a. 2/10 net 30?
MF2
9 Purchased merchandise from Keene Co. for $9,100 under credit terms of 2/15, n/60, FOB destination.
Analysis Component:
As the senior purchaser for Belton Company, you are concerned that the purchase discounts you have negotiated are not being taken advantage of by the accounts payable department. Calculate the cost of the lost discount regarding the July 9 purchase. Assume a 6% interest rate. (Do not round intermediate calculations. Round your final answer to 2 decimal places. Assume 365 days a year.)
1
nts
eBook
→
Print
5
eferences
Mc
Graw
Hill
Sales
Cost of goods sold
Accounts receivable
2021:
2020:
2019:
Numerator:
Base year cost of goods sold
2021
$ 719,206
376,387
34,953
Numerator:
Compute trend percents for the above accounts, using 2017 as the base year. For each of the three accounts, state whether the
situation as revealed by the trend percents appears to be favorable or unfavorable.
Numerator:
2018:
2017:
Is the trend percent for Net Sales favorable or unfavorable?
2020
$ 467,017
244,349
27,274
Trend Percent for Net Sales:
1
Denominator:
/Base year accounts receivable
1
1
7
/
1
1
1
1
1
Trend Percent for Cost of Goods Sold:
1
Denominator:
2021:
2020:
2019:
2018:
2017:
Is the trend percent for Cost of Goods Sold favorable or unfavorable?
2019
$ 379,689
200,588
26,085
1
1
7
1
Trend Percent for Accounts Receivable:
Denominator:
2021:
2020:
2019:
2018:
2017:
1
Is the trend percent for Accounts Receivable favorable or unfavorable?
1
2018
$ 253,126
132,876
14,808
=
=
=
=
=
=
=
=…
Chapter 8 Solutions
Intermediate Accounting
Ch. 8 - Describe the three types of inventory of a...Ch. 8 - What is the main difference between a perpetual...Ch. 8 - The Cloud Company employs a perpetual inventory...Ch. 8 - The Bockner Company shipped merchandise to Laetner...Ch. 8 - What is a consignment arrangement? Explain the...Ch. 8 - Prob. 8.6QCh. 8 - The Esquire Company employs a periodic inventory...Ch. 8 - Prob. 8.8QCh. 8 - Its common in the electronics industry for unit...Ch. 8 - Explain why proponents of LIFO argue that it...
Ch. 8 - Prob. 8.11QCh. 8 - Describe the ratios used by financial analysts to...Ch. 8 - Prob. 8.13QCh. 8 - Prob. 8.14QCh. 8 - The Austin Company uses the dollar-value LIFO...Ch. 8 - Identify any differences between U.S. GAAP and...Ch. 8 - Determining ending inventory; periodic system ...Ch. 8 - Prob. 8.2BECh. 8 - Prob. 8.3BECh. 8 - Purchas e discounts; gross method LO83 On...Ch. 8 - Prob. 8.5BECh. 8 - Prob. 8.6BECh. 8 - Inventor y cost flow methods; perpetual system ...Ch. 8 - LIFO method LO84 Esquire Inc. uses the LIFO...Ch. 8 - LIFO method LO84 AAA Hardware uses the LIFO...Ch. 8 - LIFO liquidation LO86 Refer to the situation...Ch. 8 - Prob. 8.11BECh. 8 - Ratio analysis LO87 Selected financial statement...Ch. 8 - Dollar-value LIFO LO88 At the beginning of 2018,...Ch. 8 - Perpetual inventory system; journal entries LO81...Ch. 8 - Prob. 8.2ECh. 8 - Determining cost of goods sold; periodic inventory...Ch. 8 - Perpetual and periodic inventory systems compared ...Ch. 8 - Prob. 8.6ECh. 8 - Goods in transit; consignment LO82 The December...Ch. 8 - Physical quantities and costs included in...Ch. 8 - Prob. 8.9ECh. 8 - Prob. 8.10ECh. 8 - Prob. 8.11ECh. 8 - FASB codification research LO82, LO83 Access the...Ch. 8 - Inventory cost flow methods; periodic system ...Ch. 8 - Inventory cost flow methods; perpetual system ...Ch. 8 - Comparison of FIFO and LIFO; periodic system ...Ch. 8 - Average cost method; periodic and perpetual...Ch. 8 - FIFO, LIFO, and average cost methods LO81, LO84...Ch. 8 - Supplemental LIFO disclosures; LIFO reserve; AEP...Ch. 8 - LIFO liquidation LO81, LO84, LO86 The Reuschel...Ch. 8 - Dollar-value LIFO LO88 On January 1, 2018, the...Ch. 8 - Dollar-value LIFO LO88 Mercury Company has only...Ch. 8 - Dollar-value LIFO LO88 Carswell Electronics...Ch. 8 - Concepts; terminology LO81 through LO85 Listed...Ch. 8 - Various inventory transactions; journal entries ...Ch. 8 - Prob. 8.2PCh. 8 - Prob. 8.4PCh. 8 - Various inventory costing methods LO81, LO84...Ch. 8 - Various inventory costing methods LO81, LO84...Ch. 8 - Supple mental LIFO disclosures; Caterpillar LO84,...Ch. 8 - LIFO liquidation LO84, LO86 Taylor Corporation...Ch. 8 - LIFO liquidation LO84, LO86 Cansela Corporation...Ch. 8 - Prob. 8.11PCh. 8 - Integrating problem; inventories and accounts...Ch. 8 - Dollar-value LIFO LO88 On January 1, 2018, the...Ch. 8 - Dollar-value LIFO LO88 Kingston Company uses the...Ch. 8 - Dollar-value LIFO LO88 On January 1, 2018,...Ch. 8 - Prob. 8.1BYPCh. 8 - Real World Case 82 Physical quantities and costs...Ch. 8 - Judgment Case 83 The specific identification...Ch. 8 - Prob. 8.4BYPCh. 8 - Prob. 8.5BYPCh. 8 - Judgment Case 86 Goods in transit LO82 At the end...Ch. 8 - Ethics Case 87 Profit manipulation LO84 In 2017...Ch. 8 - Real World Case 88 Effects of inventory valuation...Ch. 8 - Real World Case 89 Effects of inventory valuation...Ch. 8 - Communication Case 810 Dollar-value LIFO method ...Ch. 8 - Prob. 8.11BYPCh. 8 - Prob. 8.CCTCCh. 8 - Prob. CCIFRS
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.Similar questions
- Exercise 6.10 (Algo) Cash Discounts (LO6-6) Golf World sold merchandise to Mulligans for $93,000, offering terms of 1/15, n/30. Mulligans paid for the merchandise within the discount period. Both companies use perpetual inventory systems. a. Prepare journal entries in the accounting records of Golf World to account for this sale and the subsequent collection. Assume the original cost of the merchandise to Golf World had been $60,450. b. Prepare journal entries in the accounting records of Mulligans to account for the purchase and subsequent payment. Mulligans records purchases of merchandise at net cost. c. Assume that, because of a change in personnel, Mulligans failed to pay for this merchandise within the discount period. Prepare the journal entry in the accounting records of Mulligans to record payment after the discount period.arrow_forwardUse the same information in RE9-1 except that the note is not interest bearing. Assume that the note is discounted at a 15% rate. RE9-1 Rescue Sequences LLC purchased inventory by issuing a 30,000, 10%, 60-day note on October 1. Prepare the journal entries for Rescue Sequences to record the purchase and payment assuming it uses a perpetual inventory system and a 360-day calendar fiscal year. Rescue Sequences LLC uses a perpetual inventory system.arrow_forwardacct6arrow_forward
- ACTIVITY 5: Comprehensive Application Jungkook Enterprises made a sale of goods to Namjoon Enterprises on October 1, 2020. The list price of the goods is P150,000, with trade discounts of 4% and 5%, FOB Shipping Point. Credit terms are 5/15, n/30. Cost of the goods is 70% of the invoice price. Freight of P5,000 was paid by Namjoon. Namjoon returned goods with invoice price of P30,000 on October 9, 2020, still with the 70% cost. On October 11, 2020, Namjoon settled his account in full. In separate Excel sheets, record (a) Journal entries in Jungkook Enterprises' books under the periodic method Journal entries in Jungkook Enterprises' books under the perpetual method Journal entries in Namjoon Enterprises' books under the periodic method Journal entries in Namjoon Enterprises' books under the perpetual methodarrow_forwardQuestion 5 An item that a store originally sold for R6950,82 was offered at a discount of 8,5%. The store still made a 20% profit on sale. The price that the store originally paid for the item is [1] R1 272,00. (2) R5 300,00. (3] R5 088,00. [4] R4 726,00.arrow_forwardProblem #11 Transportation Costs On June 16, 2021, llano sold merchandise to Pascual for P6,000, terms 2/10, n/30. Shipping costs were P600. Pascual received the goods and llano's invoice on June 17. On June 24, Pascual sent the payment to llano, which llano received on June 25. Both lano and Pascual use the periodic inventory system. The following are several arrangements regarding the shipping costs: a. Shipping terms are F.O.B. shipping point, freight collect. Pascual paid the shipping costs on June 17 and remitted P5,880 on June 24. Required: 1. Prepare the entries for llano to record the sale and the cash receipt. 2. Prepare the entries for Pascual to record the purchase, the payment of shipping costs, and the cash remittance. b. Shipping terms are F.O.B. destination, freight prepaid. llano paid the shipping costs on June 16. Pascual remitted P5,880 on June 24. Required: 1. Prepare the entries for llano to record the sale, the payment of shipping costs, and the cash receipt. 2.…arrow_forward
- Shark, Inc. was organized on January 1, 2022. On December 31, 2023, the company lost most of its inventory in a warehouse fire just before the year-end count of inventory was to take place. The company records disclosed the following data: Inventory, January 1 Purchases 2022 PO 860,000 2023 P 204,000 692,000arrow_forwardAnswer Problem #5 : item 18arrow_forwardsolve The Arc 95-9876556 Income Statement For the Year Ended December 31, 2021 Revenue: Gross Sales $144,000.00 Less: Sales Returns and Allowances - Net Sales $144,000.00 Cost of Goods Sold: Beginning Inventory $10,500.00 Add: Purchases 62,200.00 $72,700.00 Less: Ending Inventory 10,100.00 Cost of Goods Sold 62,600.00 Gross Profit (Loss) $81,400.00 Expenses: Dues and Subscriptions - Estimated Federal Tax Payments 4,000.00 Estimated State Tax Payments 3,900.00 Insurance 3,950.00 Meals and Entertainment 1,500.00 Miscellaneous - Payroll Taxes 3,800.00 Professional Fees 1,700.00 Rent 8,400.00 Travel 1,250.00 Utilities 1,300.00 Vehicle Expenses - Wages 25,000.00 Total Expenses 54,800.00 Net Operating Income $26,600.00 How to calculate capital gain step by step answerarrow_forward
- QUESTION 1 On 5 December 2021, J Mart bought merchandise on account from Jerai Ria. The selling price of the goods was RM15,000, and the cost to Jerai Ria was RM8,000. On 8 December 2022, J Mart returned defective goods with a selling price of RM2,000, and the cost was RM300. REQUIRED: Record the transactions for Jerai Ria under the perpetual inventory system.arrow_forward2 Required information (The following information applies to the questions displayed below.] On July 15, 2021, the Nixon Car Company purchased 1,700 tires from the Harwell Company for $50 each. The terms of the sale were 3/10, n/30. Nixon uses a perpetual inventory system and the gross method of accounting for purchase discounts. Required: 1. Prepare the journal entries to record the purchase on July 15 and payment on July 23, 2021. 2. Prepare the journal entry for the payment, assuming instead that it was made on August 15, 2021. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare the journal entries to record the purchase on July 15 and payment on July 23, 2021. (If no entry Is requlred for a transaction/event, select "No journal entry required" in the first account field.) July 15 Record purchase of tires. July 23 Record payment of July 15 purchase. t Predictions: On * Accessibility: Investigatearrow_forwardSh12 Please help me Solutionarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage Learning
Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
Cornerstones of Financial Accounting
Accounting
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning
Debits and credits explained; Author: The Finance Storyteller;https://www.youtube.com/watch?v=n-lCd3TZA8M;License: Standard Youtube License