Acct 201 test 2

Topics: Inventory, Balance sheet, Accounts receivable Pages: 96 (5365 words) Published: April 17, 2015

A.
Sales discount
E.
FOB shipping point
H.
Purchase discount
B.
Credit period
F.
Gross profit
I.
Cash discount
C.
Discount period
G.
Merchandise inventory
J.
Trade discount
D.
FOB destination

1.Goods a company owns and expects to sell to its customers.G 2.Time period that can pass before a customer’s payment is due.B 3.Seller’s description of a cash discount granted to buyers in return for early payment.A 4.Reduction below list or catalog price that is negotiated in setting the price of goods.J 5.Ownership of goods is transferred when the seller delivers goods to the carrier.E 6.Purchaser’s description of a cash discount received from a supplier of goods.H 7.Reduction in a receivable or payable if it is paid within the discount period.I 8.Difference between net sales and the cost of goods sold.F 9.Time period in which a cash discount is available.C

10.Ownership of goods is transferred when delivered to the buyer’s place of business.D

Apr. 2   
Purchased merchandise from Lyon Company under the following terms: $4,600 price, invoice dated April 2, credit terms of 2/15, n/60, and FOB shipping point. 3   
Paid $300 for shipping charges on the April 2 purchase.
4   
Returned to Lyon Company unacceptable merchandise that had an invoice price of $600. 17   
Sent a check to Lyon Company for the April 2 purchase, net of the discount and the returned merchandise. 18   
Purchased merchandise from Frist Corp. under the following terms: $8,500 price, invoice dated April 18, credit terms of 2/10, n/30, and FOB destination. 21   
After negotiations, received from Frist a $1,100 allowance on the April 18 purchase. 28   
Sent check to Frist paying for the April 18 purchase, net of the discount and allowance.   
Prepare journal entries to record the above transactions for a retail store. Assume a perpetual inventory system.

Apr.   2
Merchandise Inventory
4,600
 
 
Accounts Payable—Lyon
 
4,600
 
Purchased merchandise on credit.
 
 
          3
Merchandise Inventory
300
 
 
Cash
 
300
 
Paid shipping charges on purchased merchandise.
 
 
          4
Accounts Payable—Lyon
600
 
 
Merchandise Inventory
 
600
 
Returned unacceptable merchandise.
 
 
        17
Accounts Payable—Lyon
4,000
 
 
Merchandise Inventory*
 
80
 
Cash
 
3,920
 
*[($4,600 - $600) x 2%]
 
 
 
Paid balance (less 2%) within discount period.
 
 
        18
Merchandise Inventory
8,500
 
 
Accounts Payable—Frist
 
8,500
 
Purchased merchandise on credit.
 
 
        21
Accounts Payable—Frist
1,100
 
 
Merchandise Inventory
 
1,100
 
Received an allowance on purchase.
 
 
        28
Accounts Payable—Frist
7,400
 
 
Merchandise Inventory*
 
148
 
Cash
 
7,252
 
*[($8,500 - $1,100) x 2%]
 
 
 
 Paid balance (less 2%) within discount period.

The following unadjusted trial balance is prepared at fiscal year-end for Nelson Company.   
NELSON COMPANY
Unadjusted Trial Balance
January 31, 2013
 
Debit
Credit
  Cash
$
1,000  
 
 
  Merchandise inventory
 
12,500  
 
 
  Store supplies
 
5,800  
 
 
  Prepaid insurance
 
2,400  
 
 
  Store equipment
 
42,900  
 
 
  Accumulated depreciation—Store equipment
 
 
$
15,250  
  Accounts payable
 
 
 
10,000  
  Common stock
 
 
 
5,000
  Retained earnings
 
 
 
27,000  
  Dividends
 
2,200  
 
 
  Sales
 
 
 
111,950  
  Sales discounts
 
2,000  
 

  Sales returns and allowances
 
2,200  
 
 
  Cost of goods sold
 
38,400  
 
 
  Depreciation expense—Store equipment
 
0  
 
 
  Salaries expense
 
35,000  
 
 
  Insurance expense
 
0  
 
 
  Rent expense
 
15,000  
 
 
  Store supplies expense
 
0  
 
 
  Advertising expense
 
9,800  
 
 
 

  Totals
$
169,200  
$
169,200  
 

  
Rent expense and salaries expense...
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