Effect of sales returns and allowances and freight costs on the journal, ledger, and financial statements: Perpetual system
Cain Company began the 2011 accounting period with $18,000 cash, $60,000 inventory, $50,000 common stock, and $28,000 retained earnings. During the 2011 accounting period, Cain experienced the following events:
1. Sold merchandise costing $38,200 for $74,500 on account to Jones’s General Store.
2. Delivered the goods to Jones under terms FOB destination. Freight costs were $400 cash.
3. Received returned goods from Jones. The goods cost Cain Company $2,000 and were sold to Jones for $3,800.
4. Granted Jones a $1,000 allowance for damaged goods that Jones agreed to keep.
5. Collected partial payment of $52,000 cash from accounts receivable.
Required
a. Record the transactions 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 Cain grant the $1,000 allowance to Jones? 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.