Chapter 5: For Journal Entries in questions 1, 2, 3, 4, 5, 6, and 9, use the following account titles: Cash, Inventory, Accounts Receivable, Accounts Payable, Sales, Sales Returns & Allowances, Sales Discounts, Cost of Goods Sold, Freight Expense. Show the account(s) that are debited and the amount and show the account(s) that are credited and the amount.

Buyer Entries:

Katya Company purchased $10,000 worth of merchandise from Jacob Company on account on January 2. What is the journal entry Katya Company will make?

Katya Company paid $250 cash for freight costs (incoming) on January 2. What is the journal entry Katya Company will make?

Katya Company returned $2,000 worth of merchandise on January 3. What is the journal entry Katya Company will make? (Hint: She had not paid for the merchandise yet.)

Seller Entries:

Journal entry for selling merchandise. Jim Company sold $50,000 worth of merchandise to Mike Company on account. The value (cost) of the goods were $27,000 to Jim Company. What are the journal entries Jim Company will make? (A) Record the revenue; (B) Record the merchandise going out.

Journal entry for receiving merchandise that was returned to you from the buyer. Mike Company returned $5,000 worth of merchandise (he has not paid for it yet); the value (cost) of the goods to Jim Company were $2,650. The merchandise was NOT damaged and could be sold to another customer. What is the journal entry Jim Company will make?

(A) Record the return of the merchandise; (B) Record the reduction of the sale.

Journal entry when a seller pays the freight/transportation costs of merchandise. Jim Company paid $500 cash for freight charges to have the merchandise shipped to Mike Company. (A) What is the journal entry Jim Company will make? (B) What type of account is Freight paid by the seller?

Credit terms: 3/15, n/45: Write it in a sentence from the sellers perspective - explain how much discount is given/taken if paid within what amount of time and what happens if it is not paid for within that amount of time. I will give you a __(A)_ percent discount if you pay within __(B)__ days; if you dont, you must pay ____(C)__________ within __(D)_ days.

Credit terms: 1/15, n/30: Write it in a sentence from the sellers perspective - explain how much discount is given/taken if paid within what amount of time and what happens if it is not paid for within that amount of time. I will give you a __(A)_ percent discount if you pay within __(B)__ days; if you dont, you must pay ____(C)__________ within __(D)_ days.

Merchandise is sold on February 1 by Derzon Company on account to Warner Company ($90,000) with the terms 3/15, n/45; On February 7 Warner Company returns ($12,000) of merchandise that cannot be resold (damaged, etc. Hint: if it cant be resold, do you add it back to inventory? Do you reduce the Cost of Goods Sold?); When Warner Company returned the merchandise to Derzon Company (Seller), Warner Company also sent along a check for the balance owed. What is the journal entry/entries Derzon Company would make when it receives the check and the returned merchandise? Remember: The (A) return and the (B) receipt of the payment all happen at the same time. Also, remember that you need to keep in mind what entry was made by Derzon when the merchandise was sold on February 1. Use T-accounts to make sure you do this correctly! Treat this as two separate entries on the same day.

Calculate Gross Profit given: Expenses $25,000; Sales $130,000, Cost of Goods Sold $40,000. Gross Profit = ?

Calculate Net Sales given Expenses ($132,500), Sales Returns & Allowances ($6,700), Sales Discounts ($5,000), Sales Revenue ($536,800) and Cost of Goods Sold ($363,400). Net Sales = ?

Chapter 6:

Information for numbers 12, 13, 14 and 15:

March 2	Beginning Inventory	120 units @ $4.00
March 5	Purchases	500 @ $4.50
March 8	Sale	300 units
March 19	Purchases	200 units @ $4.75
March 30	Sale	400 units

LIFO calculation: Balance of ending inventory in $.

LIFO calculation: Total Cost of Goods Sold.

FIFO calculation: Balance of ending inventory in $.

FIFO calculation: Total Cost of Goods Sold.

Calculation of inventory value using Lower of Cost or Market (LCM) method. Mattie Company produces 4 types of dog food and shows the following value of inventory. If Mattie applies the LCM method, what is the value of the inventory that should be shown on the balance sheet?

Product	Cost	Market
Super Star	$64,000	$61,000
Happy Dog	$290,000	$260,000
Lazy Dog	$152,000	$167,000
Puppy	$50,000	$32,000

QUESTION: If Mattie applies the LCM method, what is the value of the inventory that should be shown on the balance sheet?

Chapter 7:

Bank reconciliation Cuddly Company is preparing the monthly bank reconciliation. The following information is available:

Balance Per Bank
Balance Per Books (Cuddly Companys cash balance in the ledger)
Outstanding Checks
Deposits in Transit
NSF Checks
Bank Service Charge
Interest Earned
Electronic Funds Transfer Received

What is the effect of this information on the companys cash balance? (A)Increase or Decrease? (B) By what amount? (HINT: You only have to consider what affects the balance per books! You can ignore anything that affects the balance per bank.)

Chapter 8:

Journal entry using percentage of receivables method. Taiga-Barrett Company uses the percentage of receivable method for records its Bad Debt Expense. Total credit sales were $3,000,000, of which $400,000 remains uncollected at the end of the year (A/R balance). Taiga estimates that 4.5% will be uncollectible. If the Allowance for Doubtful Accounts had a credit balance of $16,000 before this adjustment, what is the journal entry Taiga should make to bring the balance in the Allowance account up to date?

Interest calculation. Harris borrowed $600,000 from the bank for 30 years. The money will be paid back at the end of the 30 years, but interest will be paid each year. The interest rate is 3.2% per year. (A) What is the amount of interest per year? (B) What is the total amount of interest on the entire loan?

Maturity value calculation. Manning borrowed $50,000 from the bank for 6 months. The interest rate is 8% per year. At the end of 6 months, the entire principal ($50,000) plus all interest will be paid back to the bank. What is the total maturity value of the loan?

Another maturity value calculation. Larry borrowed $100,000 from the bank for 50 days. The interest rate is 10%. All the principal plus interest (maturity value) will be paid at the end of the 50 days. How much will Larry pay? (round up to the nearest dollar)

Exchange A/R for N/R. Raya bought merchandise from Pantera. The total purchase was $10,000. The terms were 2/10, n/30. At the end of 30 days, Raya told Pantera she would not be able to pay right away, but would like to sign a Note to pay the loan in the future. What is the journal entry Pantera will make to convert the Accounts Receivable into a Notes Receivable? (Hint: Remember what the original entry looked like.)

Net Realizable Value. If total Accounts Receivable is $75,000 and the Allowance for Doubtful Accounts is $17,000, what is the NET amount of Accounts Receivable that will be reported on the Balance Sheet?

Bad Debts Expense (A) which financial statement does it appear on and (B) what type of expense account is it? (Hint: Look at the statement in Chapter 5.)