Effect of sales returns and allowances and freight costs on the journal, ledger, and financial statements: Perpetual system
Stark Company began the 2011 accounting period with $10,000 cash, $38,000 inventory, $25,000 common stock, and $23,000 retained earnings. During 2011, Stark experienced the following I events:
1. Sold merchandise costing $28,000 for $46,000 on account to Jack’s Furniture Store.
2. Delivered the goods to Jack’s under terms FOB destination. Freight costs were $500 cash.
3. Received returned goods from Jack’s. The goods cost Stark $2,000 and were sold to Jack’s for $3,000.
4. Granted Jack’s a $2,000 allowance for damaged goods that Jack’s agreed to keep.
5. Collected partial payment of $25,000 cash from accounts receivable.
Required
a. Record the events in general journal format.
b. Open general ledger T-accounts with the appropriate beginning balances and post the journal entries to the T-accounts.
c. Prepare an income statement, balance sheet, and statement of cash flows.
d. Why would Jack’s agree to keep the damaged goods? Who benefits more?
We need at least 10 more requests to produce the solution.
0 / 10 have requested this problem solution
The more requests, the faster the answer.