Question

10.) Jamal Adams Corp. uses a perpetual inventory system. On April 1, they purchased goods for $40,000 with credit terms 1/10, n/30. Adams recorded the purchase at the net amount, $39,600. Adams did not pay for the goods until April 24, after the discount period. The journal entries Adams would make to record these transactions would include

11.) Solomon Thomas Corp. is on a calendar year and uses a periodic inventory system. On January 1 of the current year the inventory balance was $75,000. During the year Thomas purchased goods costing them $1,000,000. They reported sales, all on account, amounting to $1,950,000. Of the $1,950,000, $1,800,000 has been collected. Thomas took a physical inventory on December 31 and had goods amounting to $125,000. At the end of the current year Thomas would

12.) Derek Barnett Corp. purchased a $250,000 computer system on January 1, 2017. The expected life of the computer system is 5 years; estimated salvage value is $25,000; Barnett Corp will be depreciating the asset using the double-declining-balance method of depreciation. On December 31, 2018, after the adjusting journal entries for depreciation expense are made, the balance in the accumulated depreciation account is

Answer 1

Answer

10) The goods were purchased on 1April on Credit and the transaction was recorded using Perpetual- Net Method by Debiting Inventory with $39,600 and Crediting Account Payable. But the account is yet not settled until 24 April. When Jamal Adams Corp. will record the following entry.

Date	Account Titles	Debit	Credit
24 April	Discount Lost	$400
	Account Payable		$400
	Discount lost and AP increased

11) Solomon Thomas Corporation did counting of physical inventory as on 31 December and the closing inventory amounted $ 125,000. Thus, under Periodic inventory syste to update merchandising inventory closing entries would be passed as follows.

Date	Account Titles	Debit	Credit
Dec. 31	Cost of Goods Sold	$75,000
	Inventory		$75,000
	Merchandise beginning inventory
	Inventory	$125,000
	Cost of Goods Sold		$125,000
	End merchandise inventory closed

12) The Balance in Accumulated Depreciation Balance on 31Dec. 2018 after adjusting entry is $160,000 as shown in following workout.

Depreciation under Double-Declining Method

       Dep. Expense for the year 31, Dec 2017 = (Cost – Acc. Depreciation) × 2 /Useful life (n)

                                                                         = ($250,000 – $0) × 2/5 = $100,000

       Dep. Expense for the year 31, Dec 2018 = ($250,000 – $100,000) × 2/5

                                                                        = $150,000 × 2/5= $60,000

      Accumulated Depreciation Balance as 31 Dec. 2018 = $100,000 + $60,000

= $160,000