1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
zhenek [66]
3 years ago
7

E7.5 (LO 2) (Recording Sales Gross and Net) On June 3, Arnold Company sold to Chester Company merchandise having a sale price of

$3,000 with terms of 2/10, n/60, f.o.b. shipping point_______An invoice totaling $90, terms n/30, was received by Chester on June 8 from John Booth Transport Service for the freight cost. On June 12, the company received a check for the balance due from Chester Company.
Business
1 answer:
Assoli18 [71]3 years ago
4 0

Answer:

See explanation

Explanation:

Requirement 1 (A)

If the sales and receivables are at gross selling price, the discount will not be deducted from the selling amount during the recording process.

i) June 3. Debit    Accounts receivable       $3,000

               Credit            Sales revenue                           $3,000

Since the cost of goods sold is not given, it is assumed that the company uses periodic inventory system. Sales inventory on account with a term of 2/10, n/60. It means that if Chester pays the bill within 10 days, the seller will give 2% discount to the buyer. However, the bill has to be paid within 60 days.

ii) June 12.  Debit    Cash/Bank          $2,940

                  Debit     Sales discount           60

                 Credit               Accounts receivable          $3,000

As Chester company pays the bill within 10 days, according to the terms and conditions, Chester receives sales discount of $3,000 × 2% = $60.

Requirement 1 (B)

If the sales and receivables are at net selling price, the discount will be deducted from the selling amount during the recording process.

i) June 3. Debit    Accounts receivable       $2,940

               Credit            Sales revenue                           $2,940

Note: <em>Sales are on account with a term of 2/10, n/60. In net selling method, the discount was deducted during the selling time. If Chester pays the bill within 10 days, the seller will give 2% discount to the buyer. If the company fails to provide, the discount will become forfeited.</em>

ii) June 12.  Debit    Cash/Bank          $2,940

                  Credit               Accounts receivable          $2,940

As Chester company pays the bill within 10 days, according to the terms and conditions, Chester receives sales discount.

Requirement 2

As Chester company has paid the bill on July 29, the company are not getting the discount from Arnold Company. To record the payment entry -

a) Gross selling method -

July 29. Debit    Cash/Bank          $3,000

                  Credit               Accounts receivable          $3,000

No discount was provided.

b) Net selling method -

July 29. Debit    Cash/Bank          $3,000

                  Credit               Accounts receivable          $2,940

                  Credit               Sales discount forfeited            60

As Chester failed to pay within discount period, sales discount was forfeited.

You might be interested in
Huprey Co. is the defendant in the following legal claims. For each of following claims, does Huprey (a) Record liability, (b) D
const2013 [10]

Answer:

a) Disclose in the notes

b) no Disclosure

c) Record a liability

Explanation:

There are three scenarios to be considered

1) It is reasonably possible that Huprey will lose a pending lawsuit. The loss cannot be estimable

First, premise is that Huprey Co. is facing a lawsuit and the possibility of a loss is most possible. If Huprey Co is able to recognize the amount of loss, then he would have been able to record a liability but the inability to estimate the loss means, the company can o<u>nly make appropriate disclosure in notes</u>

2)Huprey is being used for damages of $2 million. It is very unlikely (remote) that Huprey will lose the case.

This second premise is also a lawsuit on damages for $2 million, however, it is most reasonably acceptable that Huprey will win the lawsuit. As such there is no loss, that way there will be no disclosure in Huprey Co's books.

3.  Huprey can reasonably estimate that a pending lawsuit will result in damages of $1.25 million, it is probable that Huprey will lose the case.

The probability of losing a case means that there will be a loss to be recorded in the books and since the damages are already estimable to be $1.25 million. Huprey Co should record a liability

4 0
3 years ago
A graph titled Change in U S Unemployment and Inflation from 1971 to 2001 has the year on the x-axis and percentage change on th
disa [49]

Answer:

falling unemployment and rising inflation.

Explanation:

Stagflation means that both the inflation and unemployment rate are rising. Before the 1970s, classical economists stated that an inverse relationship existed between the inflation rate and the unemployment rate. This means that when the inflation rate was increasing, the unemployment rate should be decreasing. But reality does not follow theoretical rules.

5 0
3 years ago
Read 2 more answers
A manufacturer shipped units of a certain product to two locations. The equation above shows the total shipping cost TTT, in dol
andriy [413]

Answer: 2,200 units.

Explanation:

The complete exercise is:

T = 5c + 12 f

A manufacturer shipped units of a certain product to two locations. The equation above shows the total shipping cost T, in dollars, for shipping c units to the closer location and shipping f units to the farther location. If the total shipping cost was $47,000 and 3,000 units were shipped to the farther location, how many units were shipped to the closer location?

Given the following equation:

T = 5c + 12 f

You know that "T" is the total shipping cost (in dollars), "c" is the number of units shipped to the closer location and "f" is the number of units shipped to the farther location.

Based on the information given in the exercise, you can identify that, in this case:

T=47,000\\\\f=3,000

Then, knowing those values, you need to substitute them into the given equation:

47,000 = 5c + 12(3,000)

And finally, you must solve for "c" in order to calculate the number of units that  were shipped to the closer location.

You get that this is:

47,000 = 5c + 12(3,000)\\\\47,000-36,000 = 5c\\\\11,000=5c\\\\\frac{11,000}{5}\\\\c=2,200

3 0
3 years ago
Read 2 more answers
The types of resources needed by a business are financial, physical, and labor resources.
sukhopar [10]

Answer:

a. True

Explanation:

The above is true because financial resources are needed to enable a business meet up with its daily activities in terms of funding. Also, physical resources are buildings, machineries and assets in general which are required to carry a business daily operations. The labor resources, which is the most important resources are the workforce that carry out the day to day operations of a business.

8 0
3 years ago
Power Company issued a $ 1,000,000​, 5 %​, 10​-year bond payable at at face value on January​ 1, 2016. Requirements
Anettt [7]

Answer and Explanation:

The journal entries are shown below:

1. Cash Dr $1,000,000

         To Bond payable $1,000,000

(Being the issuance of the bond is recorded)

For recording this we debited the cash as it increased the assets and credited the bond payable as it also increased the liabilities

2. Interest Expense Dr ($1,000,000 × 5% × 1 ÷ 2) $25,000

             To Cash $25,000

(Being the interest expense is recorded)

For recording this we debited the interest expense as it increased the expense and credited the cash as it decreased the asset

4 0
3 years ago
Other questions:
  • The balance sheet of Cattleman's Steakhouse shows assets of $86,800 and liabilities of $15,300. The fair value of the assets is
    9·1 answer
  • As brett prepares to open his new business, he has identified the tasks that need to be accomplished and has assigned employees
    12·1 answer
  • Webster is a talented baker and has a degree in business management. He wants to own his own chain of incorporated bakeries one
    6·1 answer
  • which of the following is the guiding economic philosophy of the free enterprise system? socialism communism marxism capitalism
    14·2 answers
  • Profits and losses play an important role in helping a. to signal to government which businesses are suffering losses so that th
    6·1 answer
  • A customer finds a bone in a boneless chicken
    10·1 answer
  • Name FIVE factors that must be considered when choosing a form of ownership.
    15·1 answer
  • If, at some interest rate, the quantity of money demanded is less than the quantity of money supplied, people will desire to
    6·2 answers
  • What is the purpose of a thesis?
    13·1 answer
  • A start-up chemical company has an average cost of capital of 15% per year. Additionally, it has a long-term goal of making at l
    5·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!