P5-3A Presented here are selected transactions for Norlan Inc. during September of the current year. Norlan uses a perpetual inventory system. Sept. 2 Purchased equipment on account for $65,000, terms n/30, FOB destination. 3 Freight charges of $950 were paid by the appropriate party on the September 2 purchase of equipment. 4 Purchased supplies for $4,000 cash. 6 Purchased inventory on account from Hillary Corp. at a cost of $65,000, terms 1/15, n/30, FOB shipping point. 7 Freight charges of $1,600 were paid by the appropriate party on the September 6 inventory purchase. 8 Returned damaged goods costing $5,000 that were originally purchased from Hillary on September 6. Received a credit on account. 9 Sold goods costing $15,000 to Fischer Limited for $20,000 on account, terms 2/10, n/30, FOB destination. 10 Freight charges of $375 were paid by the appropriate party on the September 9 sale of inventory. 17 Received the balance due from Fischer. 20 Paid Hillary the balance due. 21 Purchased inventory for $6,000 cash. 22 Sold inventory costing $20,000 to Kun-Tai Inc. for $27,000 on account, terms n/30, FOB shipping point. 23 Freight charges of $500 were paid by the appropriate party on the September 22 sale of inventory. 28 Kun-Tai returned goods sold for $10,000 that cost $7,500. The merchandise was restored to inventory. Instructions (a) Record the September transactions on Norlan’s books. (b) Assume that Norlan did not take advantage of the 1% purchase discount offered by Hillary Corp. and paid Hillary on October 3 instead of September 20. Record the entry that Norlan would make on October 3 and determine the cost of missing this purchase discount to Norlan.
P5-12A Data for Norlan Inc. are presented in P5–3A. Instructions (a) Record the September transactions on Norlan’s books, assuming it uses a periodic inventory system instead of a perpetual inventory system. (b) Assume that Norlan did not take advantage of the 1% purchase discount offered by Hillary Corp. and paid Hillary on October 3 instead of September 20. Record the entry that Norlan would make on October 3 and determine the cost of missing this purchase discount to Norlan.
P5-3A
Date | Account Titles | Debit | Credit | |
Sep-02 | Equipment | $ 65,000 | ||
Accounts Payable | $ 65,000 | |||
(Equipment purchased on account) | ||||
Sep-03 | Equipment | $ 950 | ||
Cash | $ 950 | |||
(Payment of freight on equipment) | ||||
Sep-04 | Supplies | $ 4,000 | ||
Cash | $ 4,000 | |||
(Supplies purchased for cash) | ||||
Sep-06 | Inventory | $ 65,000 | ||
Accounts Payable | $ 65,000 | |||
(Payment of inventory on account) | ||||
Sep-07 | Inventory | $ 1,600 | ||
Cash | $ 1,600 | |||
(Paid freight in cash) | ||||
Sep-08 | Accounts Payable | $ 5,000 | ||
Inventory | $ 5,000 | |||
(Returnd damaged goods) | ||||
Sep-09 | Accounts Receivable | $ 20,000 | ||
Sales Revenue | $ 20,000 | |||
(Sales made on account) | ||||
Cost of Goods Sold | $ 15,000 | |||
Inventory | $ 15,000 | |||
(Cost of goods sold recorded) | ||||
Sep-10 | Delivery Expense | $ 375 | ||
Cash | $ 375 | |||
(Paid freight on FOB Destination sale) | ||||
Sep-17 | Cash | $ 19,600 | =20000*98% | |
Sales Discount | $ 400 | =20000*2% | ||
Accounts receivable | $ 20,000 | |||
(Cash collected net of 2% discount) | ||||
Sep-20 | Accounts Payable | $ 60,000 | =65000-5000 | |
Cash | $ 59,400 | =60000*99% | ||
Inventory | $ 600 | =60000*1% | ||
(Paid net of 1% discount) | ||||
Sep-21 | Inventory | $ 6,000 | ||
Cash | $ 6,000 | |||
(Purchased inventory for cash) | ||||
Sep-22 | Accounts Receivable | $ 27,000 | ||
Sales Revenue | $ 27,000 | |||
(Sales made on account) | ||||
Cost of Goods Sold | $ 20,000 | |||
Inventory | $ 20,000 | |||
(Cost of goods sold recorded) | ||||
Sep-23 | No entry | |||
Sep-28 | Sales Returns and allowances | $ 10,000 | ||
Accounts receivable | $ 10,000 | |||
(Sales returns) | ||||
Inventory | $ 7,500 | |||
Cost of Goods Sold | $ 7,500 | |||
(Inventory added back) |
Part 5-12A
Date | Account Titles | Debit | Credit | |
Sep-02 | Equipment | $ 65,000 | ||
Accounts Payable | $ 65,000 | |||
(Equipment purchased on account) | ||||
Sep-03 | Equipment | $ 950 | ||
Cash | $ 950 | |||
(Payment of freight on equipment) | ||||
Sep-04 | Supplies | $ 4,000 | ||
Cash | $ 4,000 | |||
(Supplies purchased for cash) | ||||
Sep-06 | Purchases | $ 65,000 | ||
Accounts Payable | $ 65,000 | |||
(Payment of inventory on account) | ||||
Sep-07 | Freight In | $ 1,600 | ||
Cash | $ 1,600 | |||
(Paid freight in cash) | ||||
Sep-08 | Accounts Payable | $ 5,000 | ||
Purchase Returns and allowances | $ 5,000 | |||
(Returned damaged goods) | ||||
Sep-09 | Accounts Receivable | $ 20,000 | ||
Sales Revenue | $ 20,000 | |||
(Sales made on account) | ||||
Sep-10 | Delivery Expense | $ 375 | ||
Cash | $ 375 | |||
(Paid freight on FOB Destination sale) | ||||
Sep-17 | Cash | $ 19,600 | =20000*98% | |
Sales Discount | $ 400 | =20000*2% | ||
Accounts receivable | $ 20,000 | |||
(Cash collected net of 2% discount) | ||||
Sep-20 | Accounts Payable | $ 60,000 | =65000-5000 | |
Cash | $ 59,400 | =60000*99% | ||
Purchase Discount | $ 600 | =60000*1% | ||
(Paid net of 1% discount) | ||||
Sep-21 | Purchases | $ 6,000 | ||
Cash | $ 6,000 | |||
(Purchased inventory for cash) | ||||
Sep-22 | Accounts Receivable | $ 27,000 | ||
Sales Revenue | $ 27,000 | |||
(Sales made on account) | ||||
Sep-23 | No entry | |||
Sep-28 | Sales Returns and allowances | $ 10,000 | ||
Accounts receivable | $ 10,000 | |||
(Sales returns) |
Date | Account Titles | Debit | Credit |
Oct-03 | Accounts Payable | $ 60,000 | |
Cash | $ 60,000 |
Cost of missing purchase discount = $600
In percentage = 1%/99% x 365/13 = 28.36%
Since payment is made by 13 days late from end of discount period,
denominator is taken as 13 days
P5-3A Presented here are selected transactions for Norlan Inc. during September of the current year. Norlan...
P5-3A Presented here are selected transactions for Norlan Inc. during September of the current year. Norlan uses a perpetual inventory system. Sept. 2 Purchased equipment on account for $65,000, terms n/30, FOB destination. 3 Freight charges of $950 were paid by the appropriate party on the September 2 purchase of equipment. 4 Purchased supplies for $4,000 cash. 6 Purchased inventory on account from Hillary Corp. at a cost of $65,000, terms 1/15, n/30, FOB shipping point. 7 Freight charges of $1,600...
Question 2: P5-3A Presented here are selected transactions for Norlan Inc. during September of the current year. Norlan uses a perpetual inventory system. Sept. 2 Purchased equipment on account for $65,000, terms n/30, FOB destination. 3 Freight charges of $950 were paid by the appropriate party on the September 2 purchase of equipment. 4 Purchased supplies for $4,000 cash. 6 Purchased inventory on account from Hillary Corp. at a cost of $65,000, terms 1/15, n/30, FOB shipping point. 7 Freight charges...
Question 1: P5-3A Presented here are selected transactions for Norlan Inc. during September of the current year. Norlan uses a perpetual inventory system. Sept. 2 Purchased equipment on account for $65,000, terms n/30, FOB destination. 3 Freight charges of $950 were paid by the appropriate party on the September 2 purchase of equipment. 4 Purchased supplies for $4,000 cash. 6 Purchased inventory on account from Hillary Corp. at a cost of $65,000, terms 1/15, n/30, FOB shipping point. 7 Freight charges...
es P5-3A Presented here are selected transactions for Norlan Inc. during September of the current year. Norlan uses a perpetual inventory system. Purchased equipment on account for $65,000, terms n/30, FOB destination. Freight charges of $950 were paid by the appropriate party on the September 2 purchase of equipment. Sept. 2 3 Purchased supplies for $4,000 cash. 4 Purchased inventory on account from Hillary Corp. at a cost of $65,000, terms 1/15, n/30, FOB shipping point. Freight charges of $1,600...
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P5-3A Presented here are selected transactions for Norlan Inc. during September of the current year. Norlan uses a perpetual inventory system. Sept. 2 Purchased equipment on account for $65,000, terms n/30, FOB destination. 3 Freight charges of $950 were paid by the appropriate party on the September 2 purchase of equipment. 4 Purchased supplies for $4,000 cash. 6 Purchased inventory on account from Hillary Corp. at a cost of $65,000, terms 1/15, n/30, FOB shipping point. 7 Freight charges of $1,600...
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