Question

Sales-Related Transactions

Steritech Co., a furniture wholesaler, sells merchandise to Butler Co. on account, $86,000, terms 2/10, n/30. The cost of the merchandise sold is $51,600. Steritech Co. issues a credit memorandum for $5,000 ($4,900 net of the 2% discount) for merchandise that was damaged in shipment. Butler Co. agreed to keep the damaged merchandiise. Illustrate the effects on the accounts and financial statements of Steritech Co.

If no account or activity is affected, select "No effect" from the dropdown and leave the corresponding number entry box blank.

a. The sale, including the cost of the merchandise sold. Enter account decreases, cash outflows, and the cost of merchandise sold as negative amounts.

   
Statement of Cash Flows   Balance Sheet   Income Statement
Assets   =   Liabilities   +   Stockholders' Equity
Accounts Receivable
+  
Inventory
=  
No Effect
+     
Retained Earnings
   
   
-51,600
   
0
      

Statement of Cash Flows      Income Statement
No effect

0
   
Sales

   
Cost of goods sold

-51,600
   
Net income

b. The credit memorandum. Enter account decreases as negative amounts. When entering the income statement effects, enter amounts that decrease net income as negative values.

   
Statement of Cash Flows   Balance Sheet   Income Statement
Assets   =   Liabilities   +   Stockholders' Equity
Accounts Receivable
+  
No Effect
=  
Cust. Refunds Payable
+     
No Effect
   
   
0
   
      
0

Statement of Cash Flows      Income Statement
No effect

0
   
No effect

0

c. The receipt of the check for the amount due from Butler Co. Enter account decreases as negative amounts. When entering the income statement effects, enter amounts that decrease net income as negative values.

   
Statement of Cash Flows   Balance Sheet   Income Statement
Assets   =   Liabilities   +   Stockholders' Equity
Cash
+  
Accounts Receivable
=  
No Effect
+     
No Effect
   
   
   
0
      
0

Statement of Cash Flows      Income Statement
Operating

   
No effect

0

Answer 1

Steritech Co Statement of Cashflows Assets Liabilities Stockholders Equity Income Statement Transaction Accounts Receivable + Inventory = Accounts Payable + Common Stock Retained Earnings Revenue - Expenses = Net Income 86000 86000 - ts. 51600 51600 -5000 86000 -56600 51600 5000 29400 C. 5000 81000 51600 C) 0 C)