Liberty ACCT 211 Connect Homework Chapter 4 Exercises Answers Complete Solutions
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Allied Merchandisers was organized on May 1. Macy Co. is a major customer (buyer) of Allied (seller) products.
Allied made its first and only purchase of inventory for the period on May 3 for 3,000 units at a price of $7 cash per unit (for a total cost of $21,000).
Allied sold 1,500 of the units in inventory for $11 per unit (invoice total: $16,500) to Macy Co. under credit terms 2/10, n/60. The goods cost Allied $10,500.
Macy returns 150 units because they did not fit the customer’s needs (invoice amount: $1,650). Allied restores the units, which cost $1,050, to its inventory.
Macy discovers that 150 units are scuffed but are still of use and, therefore, keeps the units. Allied sends Macy a credit memorandum for $450 toward the original invoice amount to compensate for the damage.
Allied receives payment from Macy for the amount owed on the May 5 purchase; payment is net of returns, allowances, and any cash discount.
Prepare the appropriate journal entries for Macy Co. to record each of the May transactions. Macy is a retailer that uses the gross method and a perpetual inventory system, and purchases these units for resale. (If no entry is required for a transaction/event, select “No journal entry required” in the first account field.)
Prepare journal entries to record the following transactions for Allied assuming it uses a perpetual inventory system and the gross method. (Allied estimates returns using an adjusting entry at each year-end.)
Sydney Retailing (buyer) and Troy Wholesalers (seller) enter into the following transactions.
Sydney accepts delivery of $29,500 of merchandise it purchases for resale from Troy: invoice dated May 11; terms 3/10, n/90; FOB shipping point. The goods cost Troy $19,765. Sydney pays $330 cash to Express Shipping for delivery charges on the merchandise.
Sydney returns $1,400 of the $29,500 of goods to Troy, who receives them the same day and restores them to its inventory. The returned goods had cost Troy $938.
Sydney pays Troy for the amount owed. Troy receives the cash immediately.
(Both Sydney and Troy use a perpetual inventory system and the gross method.)
1. Prepare journal entries that Sydney Retailing (buyer) records for these three transactions.
2. Prepare journal entries that Troy Wholesalers (seller) records for these three transactions.
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Following are the merchandising transactions for Dollar Store.
Dollar Store purchases merchandise for $2,400 on terms of 2/5, n/30, FOB shipping point, invoice dated November 1.
Dollar Store pays cash for the November 1 purchase.
Dollar Store discovers and returns $200 of defective merchandise purchased on November 1, and paid for on November 5, for a cash refund.
Dollar Store pays $120 cash for transportation costs for the November 1 purchase.
Dollar Store sells merchandise for $2,592 with terms n/30. The cost of the merchandise is $1,296.
Merchandise is returned to the Dollar Store from the November 13 transaction. The returned items are priced at $295 and cost $148; the items were not damaged and were returned to inventory.
Journalize the above merchandising transactions for the Dollar Store assuming it uses a perpetual inventory system and the gross method.
Compute the current ratio and acid-test ratio for each of the following separate cases.