Discounts / returns, damaged goods questions
PE 6-4B a) The amount of money that Gupta Company paid was;
Total invoice amount= $ 13,200
Terms=1/10, n/30
Goods returned=$1,700
Total owed=$13,200-$1,700=$11,500
Discount given=1%; total discount=1% of $11,500=$115
Amount that was paid within discount period=$11,500-$115=$11,385
- b) The transaction will be treated as follows in the accounting books;
Debit: Inventory—–$1,700
Credit: Sales————————-$1,700
This entry will reduce sales by $ 1,700 and record the increase in inventory by $1,700
PE 6-5 A
- Total due- Merchandise=6000 plus transportation by seller =400 which gives $6,400
Returned= $ 1,000
Amount owed= $5400
Discount 1/10; the total discount was/is = $54
Amount to be paid in full settlement within discount period is = $ 5,346
- Total amount owed is Merchandise=2,500
Add; Transportation by seller= 150
Total due (2500+150) = 2,650
Returned & Allowances =900
Amount owed after Returned=1,750
Discount 1% of 1750= 17.5
Total paid to settle account=1,750-17.5=1732.50
PE 6-5 B
- Total owed before returns and allowances=8150+200=8350
Less Returns and allowances= 1300
Amount owed after returns and allowances=7050
Discount 2/10 = 7050*2%=141
Total payable=6909
- Total owed before returns and allowances=12750+625=13375
Less Returns and allowances= 3000
Amount owed after returns and allowances=10375
Discount 2/10 = 10375*2%=207.5
Total payable=10167.50
PE 6-6 A
Goods bought =$5250
Less Goods returned= $ 650
Goods payable = $4600
Discount 2/10=92 Total payable =4600-92=4508
Entries;
Stuckey co ltd;
Debit; Stock—— 4508
Credit; Accounts payable 4508
Bullock co. ltd
Debit; Sales ——————- 4,508
Credit: Inventories ……………….. 4,508
Debit Stock………….390
Credit; Merchandise———————390
PE 6-6 B
Sparks Co. amount owed -8,500
Add transportation= 225
Total owed before discount=8725
Discount 210=1745
Total payable to Boyt Co.=8550.50
Journal entries
Sparks Co; Debit; Purchases———-8550.50
Credit accouts payable ——————-8550.50
Boyt Co:
Debit Sales ——————-8550.50
Accounts Receivable————————————-8550.50
Debit : cash————–5100
Credit: Merchandise———————————-5100
PE-6-7 A
Loss in stock =111500-107400=4100
Entries
Debit; Stock——————–107,400
Write off—————–4,100
Credit; Accounts payable ——————————–111,500
References
http://simplestudies.com/what-do-2-10-n-30-terms-mean.html
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