Under the net method of recording accounts payable to suppliers, purchase discounts are recorded on the...
Under the net method of recording accounts payable to suppliers, purchase discounts are recorded on the income statements as:
Interest expense
A component of "other income and expense"
A reduction in the value of inventory
An increase in cost of goods sold
Homework Answers
| Option B is the answer | ||
|
When net method is used, when the discounts are given to customers, these are treated as expenses and recorded as such in the income statement Comment if you face any issues |
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Under the net method of recording accounts payable to suppliers,
purchase discounts are recorded on the...
E6-22 (Supplement 6A) Recording Journal Entries for Purchases, Purchase Discounts (Net Method), and Purchase Returns Using...
E6-22 (Supplement 6A) Recording Journal Entries for Purchases, Purchase Discounts (Net Method), and Purchase Returns Using a Perpetual Inventory System [LO 6-S1] During the month of June, Ace Incorporated purchased goods from two suppliers. The sequence of events was as follows: June 3 Purchased goods for $4,100 from Diamond Inc. with terms 2/10, n/30. June 5 Returned goods costing $1,100 to Diamond Inc. for credit on account. June 6 Purchased goods from Club Corp. for $1,000 with terms 2/10, n/30....
PURCHASE DISCOUNTS INVENTORY NET METHOD Please explain the following transactions for periodic and perpetcual Discounts using...
PURCHASE DISCOUNTS INVENTORY NET METHOD
Please explain the following transactions for periodic and
perpetcual Discounts using the Net Method.
Receipt of Invoice Periodic Dr. Purchases 980 Cr. Accounts Payable 980 Perpetual Dr. Inventory 980 Cr. Accounts Payable 980 Payment within discount period Periodic Dr. Accounts Payable 980 Cr. Cash 980 Perpetual Dr. Inventory 980 Cr. Cash 980 Payment after discount period Periodic Dr. Accounts Payable 980 Dr. Interest Expense 20 Cr. Cash 1000 Perpetual Dr. Accounts Payable 980 Cr. Interest...
Under the revenue treatment of recording discounts, which procedure is used to record the discount on...
Under the revenue treatment of recording discounts, which procedure is used to record the discount on an invoice for food purchases of $300 with a 2% discount? a. The discount is recorded to a Cash Discounts Earned account. b. The discount is recorded as a reduction of food cost. c. The discount is recorded as an increase to sales revenue. d. The discount is not recorded. Alison's Resorts buys uniforms from McGuire Manufacturing. Alison purchased uniforms from McGuire on July...
5) A purchase return or allowance under a perpetual inventory system is credited to: A) Accounts...
5) A purchase return or allowance under a perpetual inventory system is credited to: A) Accounts Payable B) Purchase Returns and Allowances C) Inventory D) Purchases 6) Which of the following accounts is not a contra account? A. Inventory B. Accumulated Amortization C. Sales Returns and Allowances D. Sales Discounts 7) To calculate the gross margin percentage, A. Divide net sales by net income B. Divide current assets by current liabilities C. Divide total liabilities by total assets D. Divide...
Answer choices given on the left side: (Indirect Method) Decrease in accounts payable Decrease in accounts...
Answer choices given on the left side: (Indirect Method)
Decrease in accounts payable
Decrease in accounts receivable
Decrease in income tax payable
Decrease in inventory
Decrease in prepaid rent
Decrease in salaries payable
Depreciation expense
Increase in accounts payable
Increase in accounts receivable
Increase in income tax payable
Increase in inventory
Increase in prepaid rent
Increase in salaries payable
Net income
Net loss
Operating expense
Portions of the financial statements for Alliance Technologies are provided below. $405,000 ALLIANCE TECHNOLOGIES Income...
Brief Exercise 6-34 Recording Purchase and Sales Transactions Raymond Company and Geeslin Company both use a...
Brief Exercise 6-34 Recording Purchase and Sales Transactions Raymond Company and Geeslin Company both use a perpetual inventory system. The following transactions occurred during the month of January: Jan. 1 8 10 30 Raymond purchased $5,000 of merchandise on account from Geeslin with credit terms of 2/10, n/30. The cost of the merchandise was $3,750. Assume that Geeslin uses the net method to record sales discounts. Raymond returned $500 of themerchandise to Geeslin. The cost of the merchandise returned was...
Journalize the following transactions for Perez Company using the gross method of accounting for purchase discounts....
Journalize the following transactions for Perez Company using the gross method of accounting for purchase discounts. Assume a perpetual inventory system. October 9 Purchased goods from Long Company on account, $6,000, terms 2/10, n/30. October 15 Returned merchandise to Long Company that was previously purchased on account, $600. October 20 Paid the amount due to Long Company. Date Account Title Debit Credit ✓ (Choose one) Accounts Payable Accounts Receivable Cash Cost of Goods Sold Purchase Discounts Last Freight Out Merchandise...
1. Which of the following accounts are used when recording a purchase using a periodic inventory...
1. Which of the following accounts are used when recording a purchase using a periodic inventory system? a. cash, purchases b. accounts payable, sales c. accounts payable, accounts receivable d. cash, merchandise inventory 2. A multi-step income statement ________. a. separates cost of goods sold from operating expenses b. considers interest revenue an operating activity c. is another name for a simple income statement d. combines cost of goods sold and operating expenses 3. A customer returns $870 worth of...
Which of the following accounts usually has a debit balance? Purchase Discounts Sales Tax Payable Allowance...
Which of the following accounts usually has a debit balance? Purchase Discounts Sales Tax Payable Allowance for Doubtful Accounts Freight In Isaac Co. sells merchandise on credit to Sonar Co in the amount of $9,600. The invoice is dated on April 15 with terms of 1/15, net 45. If Sonar Co. chooses not to take the discount, by when should Sonar make the payment? May 30 May 15 April 25 None of the above. Under the periodic inventory system, all...
Recording a Loss in Applying Lower-of-Cost-or-Net Realizable Value On December 31, 2020, Vale Inc. estimated the...
Recording a Loss in Applying Lower-of-Cost-or-Net Realizable Value On December 31, 2020, Vale Inc. estimated the cost of inventory under the average cost method to be $88,000 and the net realizable value of inventory to be $85,000. The company has not previously recorded a holding loss on inventory. a. Prepare the journal entry to record the holding loss on inventory using an allowance account to reduce inventory and cost of goods sold to adjust expense. b. Prepare the journal entry...
PURCHASE DISCOUNTS INVENTORY NET METHOD
Please explain the following transactions for periodic and
perpetcual Discounts using the Net Method.
Receipt of Invoice Periodic Dr. Purchases 980 Cr. Accounts Payable 980 Perpetual Dr. Inventory 980 Cr. Accounts Payable 980 Payment within discount period Periodic Dr. Accounts Payable 980 Cr. Cash 980 Perpetual Dr. Inventory 980 Cr. Cash 980 Payment after discount period Periodic Dr. Accounts Payable 980 Dr. Interest Expense 20 Cr. Cash 1000 Perpetual Dr. Accounts Payable 980 Cr. Interest...
Answer choices given on the left side: (Indirect Method)
Decrease in accounts payable
Decrease in accounts receivable
Decrease in income tax payable
Decrease in inventory
Decrease in prepaid rent
Decrease in salaries payable
Depreciation expense
Increase in accounts payable
Increase in accounts receivable
Increase in income tax payable
Increase in inventory
Increase in prepaid rent
Increase in salaries payable
Net income
Net loss
Operating expense
Portions of the financial statements for Alliance Technologies are provided below. $405,000 ALLIANCE TECHNOLOGIES Income...
Brief Exercise 6-34 Recording Purchase and Sales Transactions Raymond Company and Geeslin Company both use a perpetual inventory system. The following transactions occurred during the month of January: Jan. 1 8 10 30 Raymond purchased $5,000 of merchandise on account from Geeslin with credit terms of 2/10, n/30. The cost of the merchandise was $3,750. Assume that Geeslin uses the net method to record sales discounts. Raymond returned $500 of themerchandise to Geeslin. The cost of the merchandise returned was...
Journalize the following transactions for Perez Company using the gross method of accounting for purchase discounts. Assume a perpetual inventory system. October 9 Purchased goods from Long Company on account, $6,000, terms 2/10, n/30. October 15 Returned merchandise to Long Company that was previously purchased on account, $600. October 20 Paid the amount due to Long Company. Date Account Title Debit Credit ✓ (Choose one) Accounts Payable Accounts Receivable Cash Cost of Goods Sold Purchase Discounts Last Freight Out Merchandise...
Recording a Loss in Applying Lower-of-Cost-or-Net Realizable Value On December 31, 2020, Vale Inc. estimated the cost of inventory under the average cost method to be $88,000 and the net realizable value of inventory to be $85,000. The company has not previously recorded a holding loss on inventory. a. Prepare the journal entry to record the holding loss on inventory using an allowance account to reduce inventory and cost of goods sold to adjust expense. b. Prepare the journal entry...
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