Question

Baby Trails Toys had the following transactions during the first half of 2009:
January 2 Sold merchandise on account to Thumbelina & Company, $14,000. The cost of the merchandise sold was $8,000.
February 3 Accepted a 90-day (three month), 10% note for $14,000 from Thumbelina & Company on account from the January 2 sale
February 4 Sold merchandise on account to Teddy Bears, Inc., $12,500. The cost of the merchandise sold was $7,500.
February 9 Received $1,000 of the amount due from Teddy Bears, Inc., from the February 4 sale
March 22 Accepted a 60-day (two month), 8% note for the remaining balance on Teddy Bears, Inc.’s, account from the February 4 sale
March 25 Sold merchandise on account to Tots R Us, $12,000. The cost of the merchandise sold was $6,250.
March 31 Baby Trails began accepting MasterCard on March 1 with deposits submitted monthly. The deposits for the month totaled $24,000.
MasterCard charges a 3% fee. The cost of merchandise sold was $13,000.
April 30 Wrote off the Tots R Us account as uncollectible after receiving news that the company declared bankruptcy. Baby Trails Toys uses the allowance method for accounting for uncollectible accounts.
April 30 April’s MasterCard sales totaled $30,000. The cost of the merchandise sold was $16,000.
May 4 Received payment in full from Thumbelina & Company
May 21 Received payment in full from Teddy Bears, Inc.
May 31 May’s MasterCard sales totaled $45,000. Cost of goods sold was $18,000.
June 5 Sold merchandise on account to Thumbelina & Company for $12,000.
The cost of the merchandise was $6,850.
June 10 Sold merchandise on account to Teddy Bears, Inc., $15,000. The cost of the merchandise sold was $9,000.
June 15 Collected the amount due from Thumbelina & Company for the June 5 sale
June 22 Collected the amount due from Teddy Bears, Inc. for the June 10 sale
June 30 June’s MasterCard sales totaled $40,000. Cost of goods sold was $25,000.
June 30 Baby Trails Toys has $250,000 in accounts receivable and an allowance account with a negative balance of $1,500. The net credit sales for the first six months of the year were $890,000, and cash sales were $95,000.
Assume that Baby Trails Toys uses the sales method of accounting for uncollectible accounts. The firm’s historical data indicates that approximately 3% of net credit sales are uncollectible.

Requirement
Prepare the accounting equation entries to record the transactions. Round to the nearest dollar.



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  • CreatedSeptember 01, 2014
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