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In: Accounting

1Companies make a month-end adjustment for expected returns by decreasing Sales Revenue and decreasing Cost of...

1Companies make a month-end adjustment for expected returns by decreasing Sales Revenue and decreasing Cost of Goods Sold.

Mitchell uses a perpetual inventory system. Mitchell sells a computer from inventory for $1,198 on credit. Mitchell originally bought the computer from IBM for $790. What journal entry (entries) will Mitchell prepare to record the sale? Multiple Choice Debit Cash and credit Sales Revenue for $1,198; debit Cost of Goods Sold and credit Inventory for $790. Debit Accounts Receivable for $1,198, credit Inventory for $790, and credit Gross Profit for $408. Debit Accounts Receivable and credit Sales Revenue for $1,198; debit Cost of Goods Sold and credit Inventory for $790. Debit Inventory for $790, debit Cost of Goods Sold for $408, and credit Accounts Receivable for $1,198.

3 Neakanie Industries sells specialized mountain bikes. Each specialized bike purchased includes free maintenance service for 12 months. The price of the specialized bike is $1,000. When sold separately, a maintenance contract is $200 and a comparable but non-specialized bike is $600. What amount of revenue will Neakanie recognize at the date of sale for each bike?

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Mitchell uses a perpetual inventory system. Mitchell sells a computer from inventory for $1,198 on credit. Mitchell originally bought the computer from IBM for $790. What journal entry (entries) will Mitchell prepare to record the sale?

Answer - Debit Accounts Receivable and credit Sales Revenue for $1,198; debit Cost of Goods Sold and credit Inventory for $790.

Neakanie Industries sells specialized mountain bikes. Each specialized bike purchased includes free maintenance service for 12 months. The price of the specialized bike is $1,000. When sold separately, a maintenance contract is $200 and a comparable but non-specialized bike is $600. What amount of revenue will Neakanie recognize at the date of sale for each bike?

Answer - Entry at the time of sell of specialized bike with maintenance service

Accounts Receivable A/C ...... Dr.1000

To Sales 1000

Entry at the time of selling specialized bike separately

Accounts Receivable A/C ...... Dr.800

To Sales 800

Entry for separate sale of maintenance service

Accounts Receivable A/C ...... Dr.200

To Maintenance Service 200

Entry at the time of selling non-specialized bike

Accounts Receivable A/C ...... Dr.600

To Sales 600

ekkarill92 answered 2 years ago
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