In: Accounting
17. On October 1, Robertson Company sold inventory in the amount of $5,800 to Alberta, Inc. with credit terms of 2/10, n/30. The cost of the items sold is $4,000. Robertson uses a periodic inventory system. Alberta pays the invoice on October 8 and takes the appropriate discount. What journal entry will be recorded by Robertson on October 8 if they use the gross method?
A) Debit Cash and credit Accounts Receivable for $5,800.
B) Debit Cash and credit Accounts Receivable for $4,000.
C) Debit Cash for $3,920, debit Sales Revenue for $80, and credit Accounts Receivable for $4,000.
D) Debit Cash for $5,684, debit Sales Revenue for $116, and credit Accounts Receivable for $5,800.
19. Maxell Company uses the FIFO method to assign costs to inventory and cost of goods sold. The company uses a periodic inventory system. Consider the following information:
Date Description # of units Cost per unit
January 1 Beginning inventory 100 $5
June 2 Purchase 75 $4
November 5 Sales 125
What amounts would be reported as the cost of goods sold and ending inventory balances for the year?
Cost of goods sold $625; Ending inventory $175
Cost of goods sold $755; Ending inventory $225
Cost of goods sold $550; Ending inventory $250
Cost of goods sold $600; Ending inventory $200
24. Beyer Company bought inventory from Sellar Company, FOB destination. On December 31, the last day of the accounting year, the goods were on a truck owned by Common Carrier, Inc., and not expected to arrive until January 2. Which company should include these goods in its December 31 inventory?
Sellar
Beyer
Common Carrier
None of them should include these goods in inventory.
Solution 17:
Option D is correct.
Explantion
Debit Cash $5,684
Debit Sales discounts $116
Credit Accounts Receivable $5,800
Sales discount = $5,800 × .02 = $116
Cash: $5,800 - $116 = $5,684
Solution 19:
Cost of goods sold $600; Ending inventory $200
Explanation
Cost of goods sold= 100*$5+(125-100)*$4=$600
Ending Inventory=Beginning Inventory + Purchase-Sale=100+75-125=50units
Cost of Ending Inventory=50 units *$4= $200
Solution 24:
Beyer
On 31st December, the real owner would be company Beyer because Sellar has transferred all risks and rewards relating to the inventory before 31st December. Therefore, Beyer should include cost of the inventory in its 31st December inventory.