Question

Whispering’s Market recorded the following events involving a recent purchase of inventory: Received goods for $115000,...

Whispering’s Market recorded the following events involving a recent purchase of inventory:

Received goods for $115000, terms 2/10, n/30.
Returned $2600 of the shipment for credit.
Paid $400 freight on the shipment.
Paid the invoice within the discount period.

As a result of these events, the company’s inventory

increased by $110152.

increased by $110544.

increased by $110552.

increased by $112800.

The collection of a $1800 account within the 2 percent discount period will result in a

credit to Cash for $1764.

debit to Accounts Receivable for $1764.

credit to Accounts Receivable for $1764.

debit to Sales Discounts for $36.

Bramble Corp. sells merchandise on account for $7200 to Kingbird, Inc. with credit terms of 2/13, n/30. Kingbird, Inc. returns $1500 of merchandise that was damaged, along with a check to settle the account within the discount period. What is the amount of the check?

$7086

$5586

$7056

$5700

0 0
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Answer #1

1) Calculate amount of inventory

Purchase 115000
Purchase return -2600
Purchase discount (112400*2%) -2248
Freight in 400
Total 110552

So answer is c) increased by $110552.

2) Journal entry

No General Journal Debit Credit
Cash (1800*98%) 1764
Sales discount 36
Account receivable 1800

So answer is d) debit to Sales Discounts for $36.

3) Amount of the Check = (7200-1500)*98% = 5586

So answer is b) $5586

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