Question

6 Question 3 (10 points) Smithville Furniture sold 15 desks, with a cost of $7500, for $11,250 on account. Smithville uses the periodic inventory system. Which of the following is the correct way to record this transaction? 9 Accounts OA) Debit Credit Accounts Receivable 11,250 Sales Revenue 11,250 Cost of Goods Sold 7500 Merchandise Inventory 7500 B) Accounts Debit Credit Accounts Receivable 11,250 Sales Revenue 11,250 Purchases 7500 Merchandise Inventory 7500 OC) Accounts Debit Credit Accounts Receivable 11.250 Sales Revenue 11.250 OD Accounts Debit Credit Sales Revenue 11.250 Accounts Receivable 11,250

Answer 1

Answer -

3)

Answer -( A )

Explanation -

Incase of Sales of Goods : First Journal entry should be booked to effect sales and Account Receivable ledger by Debit the Account recivable account and credit the sales Account,

Second Journal Entry also need to enter , to reduce the inventory quantity from stock and also to book thee cost of the product sold, entry should be posted , Cost of Goods Sold debit and Inventory Accoutnt credited.

Answer -

Accounts Payable $2000 Dr.

Merchandise Inventory $40 Cr.

Cash $ 1960 Cr.

Explanation -

When a company takes advantage of a purchase discount, it reduces the cost of inventory. Under a perpetual inventory system the credit for purchase discounts is made to the Inventory account.

Here 2/10 means if payment made in 10 days purchaser shall get discount of 2% in case of n/30 means there is no discount.

Here, $2000 X 2% = $40 is discount

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