Question

OBJ. 2 s. (a) and (b). ment and that w PE 6-4A Freight terms Determine the amount to be paid in full settlement of each of two invoices, (a) and assuming that credit for returns and allowances was received prior to payment and all invoices were paid within the discount period. Freight Paid by Seller Freight Terms FOB shipping point, 1/10, n/30 FOB destination, 2/10, n/30 Returns and Allowances $15,000 Merchandise $ 90,000 110,000 $1,000 1,575 8,500

Answer 1

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Ans PE 6-4A
FOB transaction means buyer has to bear the shipment costs. If seller pays it then buyer has to pay it back to seller.
Answer a	Amount $
Value of merchandise purchased	90,000.00
Less: Returns and allowances	15,000.00
Gross payable	75,000.00
Less: Discount at 1%	750.00
Net payable	74,250.00
Add: freight paid by seller	1,000.00
Amount to be paid in full settlement	75,250.00
Answer b	Amount $
Value of merchandise purchased	110,000.00
Less: Returns and allowances	8,500.00
Gross payable	101,500.00
Less: Discount at 1%	2,030.00
Net payable	99,470.00
Add: freight paid by seller	1,575.00
Amount to be paid in full settlement	101,045.00
Ans EX 9-22
Fasteners Inc.
	Amount $	Note
Note Value	96,000.00	A
Period (days)	60.00	B
Interest rate	3%	C
Interest Income	480.00	D=A*B*C/360
Number of days in fiscal year i.e. from Nov 21 to Dec 31	40.00	E
Accrued Interest	320.00	F=D*E/B
Adjustment Entry
Date	Account	Debit $	Credit $
31-Dec	Interest Receivable	320.00
	Accrued Interest		320.00
Date	Account	Debit $	Credit $
20-Jan	Bank	96,480.00		This is Note value+ Total Interest Income
	Notes Receivable		96,000.00	This is Note value.
	Interest Receivable		320.00	This is Interest Receivable as per 31st Dec journal entry.
	Interest Income		160.00	This is $ 480- $ 320.
		96,480.00	96,480.00