Question

Prepare the following journal entries for Dice Company, which uses a perpetual inventory system.

(a) On January 3, 2018, Dice Company sold $40,000 of goods on account with terms 3/10, n/30. The goods cost $26,000.

(b) On January 5, 2018, the customer returned $2,000 of the merchandise purchased in (a) above; the cost of the merchandise is $550.

(c) On January 9, 2018, the customer paid for the goods purchased in (a) above (net of the returned goods).

(d) On March 1, Dice Company loaned $25,000 to XYZ Company at 12% interest. XYZ Company signed a promissory note and will pay back the principal plus interest in one year. Record the journal entry for the loan.

(e) Prepare the journal entry to record the accrual of interest on March 31.

Answer 1

a]	Accounts receivable	$          40,000
	Sales		$        40,000
	Cost of goods sold	$          26,000
	Merchandise inventory		$        26,000
b]	Sales	$            2,000
	Accounts receivable		$           2,000
	Merchandise inventory	$                550
	Cost of goods sold		$              550
c]	Cash [(40000-2000)*97%]	$          36,860
	Sales discounts	$            1,140
	Accounts receivable		$        38,000
d]	Notes receivable	$          25,000
	Cash		$        25,000
e]	Interest receivable [25000*12%*10/12]	$            2,500
	Interest income		$           2,500