Financial Accounting Exam 2

Debit Merchandise Inventory $6,000, Credit Accounts Payable $6,000

Purchased merchandise from Boden Company for $6,000 under credit terms of 1/15, n/30, FOB shipping point, invoice dated July 1.

Debit Accounts Receivable $900, Debit Sales $900. Then Debit Cost of Goods Sold $500, Credit Merchandise Inventory $500

Sold merchandise to Creek Co. for $900 under credit terms of 2/10, n/60, FOB shipping point, invoice dated July 2. The merchandise had cost $500.

Debit Merchandise Inventory $125, Credit Cash $125

Paid $125 cash for freight charges on the purchase of July 1.

Debit Cash $1,700, Credit Sales $1,700. Then Debit Cost of Goods Sold $1,300, Credit Merchandise Inventory $1,300

Sold merchandise that had cost $1,300 for $1,700 cash.

Debit Merchandise Inventory $2,200, Credit Accounts Payable $2,200

Purchased merchandise from Leight Co. for $2,200 under credit terms of 2/15, n/60, FOB destination, invoice dated July 9.

Debit Accounts Payable $200, Credit Merchandise Inventory $200

Returned $200 of merchandise purchased on July 9 from Leight Co. and debited its account payable for that amount.

Debit Cash $882 and Sales Discounts $18, Credit Accounts Receivable $900

Received the balance due from Creek Co. for the invoice dated July 2, net of the discount.

Debit Accounts Payable $6,000, Credit Merchandise Inventory $60 and Cash $5940

Paid the balance due to Boden Company within the discount period.

Debit Accounts Receivable $1,200, Credit Sales $1,200. Then Debit Cost of Goods Sold $800, Credit Merchandise Inventory $800

Sold merchandise that cost $800 to Art Co. for $1,200 under credit terms of 2/15, n/60, FOB shipping point, invoice dated July 19.

Debit Sales Returns and Allowances $100, Credit Accounts Receivable $100

Gave a price reduction (allowance) of $100 to Art Co. for merchandise sold on July 19 and credited Art’s accounts receivable for that amount.

Debit Accounts Payable $2,000, Credit Merchandise Inventory $40 and Cash $1,960

Paid Leight Co. the balance due, net of discount.

Debit Cash $1,078 and Sales Discounts $22, Credit Accounts Receivable $1,100

Received the balance due from Art Co. for the invoice dated July 19, net of discount.

Debit Accounts Receivable $7,000, Credit Sales $7,000. Then Debit Cost of Goods Sold $4,800, Merchandise Inventory $4,800

Sold merchandise that cost $4,800 to Creek Co. for $7,000 under credit terms of 2/10, n/60, FOB shipping point, invoice dated July 31.

Debit

On the trial balance, cash is a

Debit

On the trial balance, accounts receivable is a

Debit

On the trial balance, merchandise inventory is a

Credit

On the trial balance, common stock is a

Credit

On the trial balance, sales is a

Debit

On the trial balance, sales returns and allowances is a

Debit

On the trial balance, sales discounts is a

Debit

On the trial balance, cost of goods sold is a

No Impact

Net Income Impact: Purchased merchandise from Boden Company for $6,000 under credit terms of 1/15, n/30, FOB shipping point, invoice dated July 1.

Increases $900

Net Income Impact: Sold merchandise to Creek Co. for $900 under credit terms of 2/10, n/60, FOB shipping point, invoice dated July 2

Decreases $500

Net Income Impact: The cost of the merchandise sold to Creek Co. was $500.

No Impact

Net Income Impact: Paid $125 cash for freight charges on the purchase of July 1.

Increases $1,700

Net Income Impact: Sold merchandise for $1,700 cash

Decreases $1,300

Net Income Impact: The cost of the merchandise sold was $1,300.

No Impact

Net Income Impact: Purchased merchandise from Leight Co. for $2,200 under credit terms of 2/15, n/60, FOB destination, invoice dated July 9.

No Impact

Net Income Impact: Received a $200 credit memorandum from Leight Co. for the return of part of the merchandise purchased on July 9.

Decreases $18

Net Income Impact: Received the balance due from Creek Co. for the invoice dated July 2, net of the discount

No Impact

Net Income Impact: Paid the balance due to Boden Company within the discount period

Increases $1,200

Net Income Impact: Sold merchandise to Art Co. for $1,200 under credit terms of 2/15, n/60, FOB shipping point, invoice dated July 19.

Decreases $800

Net Income Impact: The cost of the merchandise sold to Art Co. was $800.

Decreases $100

Net Income Impact: Issued a $100 credit memorandum to Art Co. for an allowance on goods sold on July 19.

No Impact

Net Income Impact: Paid Leight Co. the balance due, net of discount

Decreases $22

Net Income Impact: Received the balance due from Art Co. for the invoice dated July 19, net of discount.

Increases $7,000

Net Income Impact: Sold merchandise to Creek Co. for $7,000 under credit terms of 2/10, n/60, FOB shipping point, invoice dated July 31.

Decreases $4,800

Net Income Impact: The cost of the merchandise sold to Creek Co. was $4,800.

Debit Merchandise Inventory $7,500, Credit Accounts Payable $7,500

Purchased merchandise from Aron Company for $7,500 under credit terms of 1/10, n/30, FOB destination, invoice dated August 1.

Debit Accounts Receivable $5,200, Credit Sales $5,200. Then Debit Cost of Goods Sold $4,000, and Credit Merchandise Inventory $4,000

Sold merchandise to Baird Corp. for $5,200 under credit terms of 2/10, n/60, FOB destination, invoice dated August 5. The merchandise had cost $4,000.

Debit Merchandise Inventory $5,400, Credit Accounts Payable $5,400

Purchased merchandise from Waters Corporation for $5,400 under credit terms of 1/10, n/45, FOB shipping point, invoice dated August 8.

Debit Delivery Expense $125, Credit Cash $125

Paid $125 cash for shipping charges related to the August 5 sale to Baird Corp.

Debit Sales Returns and Allowances $600, Credit Accounts Receivable $600. Then Debit Merchandise Inventory $400, Credit Cost of Goods Sold $400

Baird returned merchandise from the August 5 sale that had cost Lowe's $400 and was sold for $600. The merchandise was restored to inventory.

Debit Accounts Payable $400, Credit Merchandise Inventory $400

After negotiations with Waters Corporation concerning problems with the purchases on August 8, Lowe's received a credit memorandum from Waters granting a price reduction of $400 off the $5,400 of goods purchased.

Debit Accounts Payable $200, Credit Cash $200

At Aron's request, Lowe's paid $200 cash for freight charges on the August 1 purchase, reducing the amount owed to Aron.

Debit Cash $4,508 and Sales Discounts $92, Credit Accounts Receivable $4,600

Received balance due from Baird Corp. for the August 5 sale less the return on August 10.

Debit Accounts Payable $5,000, Credit Merchandise Inventory $50 and Cash $4,950

Paid the amount due Waters Corporation for the August 8 purchase less the price allowance from August 12.

Debit Accounts Receivable $4,800, Credit Sales $4,800. Then Debit Cost of Goods Sold $2,400, Credit Merchandise Inventory $2,400

Sold merchandise to Tux Co. for $4,800 under credit terms of n/10, FOB shipping point, invoice dated August 19. The merchandise had cost $2,400.

Debit Sales Return and Allowance $500, Credit Accounts Receivable $500

Tux requested a price reduction on the August 19 sale because the merchandise did not meet specifications. Lowe's sent Tux a $500 credit memorandum toward the $4,800 invoice to resolve the issue.

Debit Cash $4,300, Credit Accounts Receivable $4,300

Received Tux's cash payment for the amount due from the August 19 sale less the price allowance from August 22.

Debit Accounts Payable $7,300, Credit Cash $7,300

Paid Aron Company the amount due from the August 1 purchase.

No Impact

Impact on Net Income: Purchased merchandise from Aron Company for $7,500 under credit terms of 1/10, n/30, FOB destination, invoice dated August 1

Increases by $5,200

Impact on Net Income: Sold merchandise to Baird Corp. for $5,200 under credit terms of 2/10, n/60, FOB destination, invoice dated August 5.

Decreases by $4,000

Impact on Net Income: The merchandise sold to Baird had cost $4,000.

No Impact

Impact on Net Income: Purchased merchandise from Waters Corporation for $5,400 under credit terms of 1/10, n/45, FOB shipping point, invoice dated August 8

Decreases by $125

Impact on Net Income: Paid $125 cash for shipping charges related to the August 5 sale to Baird Corp.

Decreases by $600

Impact on Net Income: Baird returned merchandise from the August 5 sale that had sold for $600.

Increases by $400

Impact on Net Income: The cost of the merchandise returned by Lowe's was $400. The merchandise was restored to inventory.

No Impact

Impact on Net Income: After negotiations with Waters Corporation concerning problems with the purchases on August 8, Lowe's eceived a credit memorandum from Waters granting a price reduction of $400 off the $5,400 of goods purchased.

No Impact

Impact on Net Income: At Aron request, Lowes paid $200 cash for freight charges on the August 1 purchase, reducing the amount owed to Aron.

Decreases by $92

Impact on Net Income: Received balance due from Baird Corp. for the August 5 sale less the return on August 10.

No Impact

Impact on Net Income: Paid the amount due Waters Corporation for the August 8 purchase less the price allowance from August 12.

Increases by $4,800

Impact on Net Income: Sold merchandise to Tux Co. for $4,800 under credit terms of n/10, FOB shipping point, invoice dated August 19. The merchandise had cost $2,400.

Decreases by $500

Impact on Net Income: Tux requested a price reduction on the August 19 sale because the merchandise did not meet specifications. Lowes sent Tux a $500 credit memorandum toward the $4,800 invoice to resolve the issue.

Decreases by $2,400

Impact on Net Income: The cost of the merchandise sold merchandise to Tux was $2,400

No Impact

Impact on Net Income: Received Tuxs cash payment for the amount due from the August 19 sale less the price allowance from August 22.

No Impact

Impact on Net Income: Paid Aron Company the amount due from the August 1 purchase.