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iogann1982 [59]
3 years ago
7

Journalize the following transactions for the buyer, Morgan Company, using the net method to account for purchase discounts. Ass

ume a perpetual inventory system. January 3 Purchased goods from Grieg Company on account, $15,000, terms 5/10, n/30. January 9 Returned defective merchandise to Grieg Company that was previously purchased on account, $2,100. January 13 Paid the amount due to Grieg Company.
Business
1 answer:
Vikentia [17]3 years ago
5 0

Answer:

Morgan Company

Journal Entries:

January 3:

Debit Inventory $15,000

Credit Purchase Discount $750

Credit Accounts Payable (Grieg Company) $14,250

To record the purchase of goods on account, terms 5/10, n/30.

January 9:

Debit Accounts Payable (Grieg Company) $1,995

Debit Purchase Discount (Lost) $105

Credit Inventory $2,100

To record the return of defective merchandise.

January 13:

Debit Accounts Payable (Grieg Company) $12,255

Credit Cash Account $12,255

To record the payment of amount due.

Explanation:

Using the perpetual inventory system, the purchase and return of merchandise are recorded in the Inventory account and not in the Purchases account (periodic inventory system).  The cost of goods sold is also credited to the Inventory account.  The perpetual inventory system operates on the use of technology which is able to record inventory transactions as they occur, instead of waiting till the end of a period.  This means that perpetual inventory is being taken every time a transaction occurs.

Using the net method to account for purchased cash discount, it is assumed that the retailer always takes advantage of the discounted cash price and records the purchased inventory at the discounted price. The net method is a way to record purchases of inventory with a cash discount.

Under the net method, the company will credit Accounts Payable for the invoice amount minus any early payment discount that is offered.  Under the gross method, purchases are recorded at the full invoice price without deduction of any cash discounts.

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Presented below is information for Concord Corporation for the month of March 2020.
Zigmanuir [339]

Answer:

(a) Multiple-step income statement.

Sales revenue                                          $388,710

Less Sales returns and allowances        ($12,620)

Net Sales                                                 $376,090

Less Cost of Goods Sold                      ($215,090)

Gross Profit                                              $161,000

Less Operating Expenses :

<em>Selling and Distribution Expenses :</em>

Freight-out                                 $6,220

Sales discounts                          $7,240  ($13,460)

<em>Administration Expenses :</em>

Rent expense                           $31,270

Salaries and wages expense  $56,180  ($87,450)

Operating Income / (Loss)                        $60,090

Explanation:

A multiple-step income statement, shows separately Income derived from Primary Activities of the Company (Operating Income) and the Income that includes Secondary Activities of the Company (Net Income).

Operating Expenses are further categorized under <em>Selling and Distribution Expenses </em>and<em> Administration Expenses.</em>

3 0
3 years ago
Banks sometimes quote interest rates in the form of "add-on interest." In this case, if a 1-year loan is quoted with a 20% inter
Bess [88]

Answer:

Calculate the true APR:

It is given that the compounding period is 12 as the payment is done monthly. The total loan amount is $1,000 with $100 monthly installments at an interest rate of 20%. Annuity is a stream of cash flows that continues for a given number of years. The interest rate is calculated by following method. Use the following formula to calculate the present value:

Present value of annuity = c[\frac{1}{r}-\frac{1}{r(1+r)^{t} }]  

Where,

c —) Monthly payment

r —> Interest rate

t —> Compounding period

Now,

1000 = 100[\frac{1}{r}-\frac{1}{r(1+r)^{12} }]

We cannot determine the exact value of interest of annuity. Using the trial and error method we can determine the interest rate. We can use the TVM (time value of money) keys in the financial calculator to calculate the value of 'r' as below:

Enter

N = 12

PV = -1000

PMT =100

FV = 0

Now press i and we should find that the monthly rate for this annuity(r) is 2.923% per month.

Effective interest rate is the annualized interest rate using compound interest. Multiply the monthly rate by 12 to obtain APR as below:

APR = Monthly rate x 12

Substitute the values in the formula:

APR = 2.923% x 12

APR = 35.076%

Hence, the APR is 35.076%.

Determine the effective annual rate (EAR):

It is the net annual return received. The monthly rate should be used to calculate the effective annual rate with the help of the formula below:

1+ effective annual rate = (1 + monthly rate)^{12}

1+ effective annual rate = (1 + monthly rate)^{12} -1

1+ effective annual rate = (1 + 0.2923)^{12} -1

Effective annual rate = 0.41302 or 41.302 %

Hence, the effective annual rate is 41.302%.

Finally we may conclude that the true rate would be 20%, if $1,000 was borrowed today and $1,200 was paid back one year from today. It should be noted that the true rate must be greater than 20% because the twelve annual payment of $100 should be made before the end of the year.

8 0
3 years ago
Samantha is a marketing manager and researcher at a beverage company. Her company plans to launch a new health drink in the mark
N76 [4]
B. focus groups
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8 0
3 years ago
Power Drive Corporation designs and produces a line of golf equipment and golf apparel. Power Drive has 100,000 shares of common
notka56 [123]

Answer:

Power Drive Corporation

Journal Entries:

March 1:

Debit Cash Account with $2,548,000

Credit Common Stock with $52,000

Credit APIC - Common Stock with $2,496,000

To record issue of 52,000 additional shares of $1 par value common stock for $49 per share.

May 10:

Debit Treasury Stock with $4,700

Debit APIC - Common Stock with $239,700

Credit Cash Account with 244,400

To record repurchase of 4,700 shares of treasury stock for $52 per share.

June 1:

Debit Dividends- Common Stock with $198,855

Credit Dividends Payable with $198,855

To record cash dividend of $1.35 per share declared (147,300 shares).

June 15:

No records required

July 1:

Debit Dividends Payable with $198,855

Credit Cash Account with $198,855

To record payment of cash dividend.

October 21:

Debit Cash Account with $133,950

Credit Treasury Stock with $2,350

Credit APIC - Common Stock with $131,600

To record reissue of treasury stock for $57 per share.

Explanation:

1. Issue of 52,000 additional shares results to a credit to the Common Stock account with 52,000 x $1 par value.  This is equal to $52,000.  The additional $48 x 52,000 goes to the Additional Paid-in Capital.

2. Treasury stock is the repurchase of outstanding stock by the company.  When repurchase at more than the par value, the difference is a debit to the Additional Paid-in Capital account, when the par value method is adopted.  The other method, which records the whole costs in the Treasury Stock account is the cost method.  Remember that the Treasury Stock account is a contra account to the Common Stock account.

3. Dividends are payable on outstanding stock.  The outstanding stock on June 1 to June 15 is calculated as follows:

Opening balance = 100,000 shares

New issue = 52,000 shares

less Treasury = (4,700)

Total = 147,300 shares

Dividends are then payable on 147,300 shares at $1.35 per share.  This gives a total of $198,855.

4. The resale of Treasury stock reduces the balance of the treasury stock account at par value and increases the Additional Paid-in Capital account with the premium.

3 0
3 years ago
An increase in the expected rate of inflation: shifts the short-run Phillips curve down. shifts the short-run Phillips curve dow
ZanzabumX [31]

Answer:

shifts the short-run Phillips curve up

Explanation:

The Phillips curve is a graph that shows the relationship between inflation and unemployment. In the short run, there is an inverse relationship between inflation and unemployment. The Phillip curve submits that high inflation is the cost to pay for economic growth. economic growth is accompanied by low unemployment. In the long run, there is no trade-off between inflation and unemployment.

An increase in expected inflation leads to an upward shift of the Phillips curve in the short run. Unemployment would stay unchanged. While a decrease in expected inflation leads to a downward shift of the Phillips curve

Stagflation in the 1970s have disproved the Phillips curve. Stagflation is when there is high unemployment and high inflation  

7 0
3 years ago
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