Question

1. This information relates to Wildhorse Co.

1.		On April 5, purchased merchandise from Sandhill Company for $35,000 on account.
2.		On April 7, purchased equipment on account for $36,600.
3.		On April 8, returned $4,900 of April 5 merchandise to Sandhill Company.
4.		On April 15, paid the amount due to Sandhill Company in full.

Prepare a tabular summary to record the transactions listed above for Wildhorse Co. using a perpetual inventory system. Include margin explanations for the changes in revenues and expenses. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

2. Ayayai Company buys merchandise on account from Whispering Winds Company for $472. Ayayai sells the goods to Ellis for $720 cash. Use a tabular summary to record the transactions for Ayayai Company using a perpetual inventory system. Include margin explanations for the changes in revenues and expenses. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

3. Use a tabular summary to record the following transactions for Carla Vista Co. using a perpetual inventory system. Include margin explanations for the changes in revenues and expenses.

(a)		On March 2, Carla Vista Co. sold $944,000 of merchandise to Wildhorse Co. on account. The cost of the merchandise sold was $637,200.
(b)		On March 6, Wildhorse Co. returned $165,200 of the merchandise purchased on March 2. The cost of the merchandise returned was $110,920.
(c)		On March 12, Carla Vista Co. received the balance due from Wildhorse Co..

(Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (4

Answer 1

1. Journal Entries -

Wildhorse Co. Journal Entries Credit Date Accounts Title Debit Apr 5 Merchandise Inventory $ 35,000 Accounts Payable (Being Inventory Purchased on account) $ 35,000 Apr 7 Equipment $ 36,600 Accounts Payable (Being Equipment Purchased) $ 36,600 Apr 8 Accounts Payable $ 4,900 Merchandise Inventory (Being Inventory Returned) $ 4,900 $ 30,100 Apr 15 Accounts Payable Cash $ 30,100

2. Accounting Equation -

Wildhorse Co. Assets Merchandise Equipment Inventory $ 30,100 $ 36,600 Cash + + 11 Liabilities Accounts Payable $ 36,600 $ (30,100) $ $ 36,600 $ 36,600

2. Journal Entries -

Credit Date 1 Ayayai Company Journal Entries Accounts Title Debit Merchandise Inventory $ 472 Accounts Payable (Being Inventory Purchased on Account) $ 472 2 Cash $ 720 Sales Revenue $ (Being Inventory Sold and revenue earned) 720 3 Cost of Goods Sold $ 472 Merchandise Inventory (Being Cost of Good Sold Incurred) $ 472

3. Accounting Equation -

Income Statement Ayayai Company Liabilities Accounts + Payable $ 472 Assets Merchandise + Inventory $ Cash = COGS Sales Revenue $ 720 $ 720 $ 472 $ 720 II $ 720

4. Journal Entries -

Date Credit Carla Vista Co. Journal Entries Accounts Title Debit Accounts Receivable $944,000 Sale Revenue (Being Sale revenue earned on account) Mar 2 $944,000 Mar 2 Cost of Goods Sold $637,200 Merchandise Inventory (Being Cost of Goods Sold Incurred) $637,200 Mar 6 Sale Return & Allowance $165,200 Accounts Receivable (Being Goods Returned) $ 165,200 Mar 6 Merchandise Inventory $110,920 Cost of Goods Sold (Being Cost of Goods Sold Reversed) $ 110,920 Mar 6 Cash $778,800 Accounts Receivable (Being amount received on account) $ 778,800

5. Accounting Equation -

Carla Vista Co. Cash + Assets Merchandise Inventory $ (526,280) + = Accounts Receivable $ Income Statement Sales COGS Revenue $ 778,800 $ 526,280 $ 778,800 $ 252,520 = $ 252,520