Question

In: Accounting

Kingbird Industries purchased $ 12,200 of merchandise on February 1, 2017, subject to a trade discount...

Kingbird Industries purchased $ 12,200 of merchandise on February 1, 2017, subject to a trade discount of 10% and with credit terms of 3/15, n/60. It returned $ 2,500 (gross price before trade or cash discount) on February 4. The invoice was paid on February 13.

(a)

Partially correct answer iconYour answer is partially correct.

Assuming that Kingbird uses the perpetual method for recording merchandise transactions, record the purchase, return, and payment using the gross method. (If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places, e.g. 6,578. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date	Account Titles and Explanation	Debit	Credit
Feb. 1Feb. 4Feb. 13

Feb. 1Feb. 4Feb. 13

Feb. 1Feb. 4Feb. 13

List of Accounts

eTextbook and Media

Solution

Attempts: 3 of 3 used

(b)

Assuming that Kingbird uses the periodic method for recording merchandise transactions, record the purchase, return, and payment using the gross method. (If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places, e.g. 6,578. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date	Account Titles and Explanation	Debit	Credit
Feb. 1Feb. 4Feb. 13

Feb. 1Feb. 4Feb. 13

Feb. 1Feb. 4Feb. 13

List of Accounts

Attempts: 0 of 3 used

Check Answer

(c)

Incorrect answer iconYour answer is incorrect.

At what amount would the purchase on February 1 be recorded if the net method were used? (Round answer to 0 decimal places, e.g. 6,578.)

Net price

$

Expert Solution

		Debit	Credit
Feb. 1	Inventory	10980		=12200*(1-10%)
	Accounts Payable		10980

Feb. 4	Accounts Payable	2250		=2500*(1-10%)
	Inventory		2250

Feb. 13	Accounts Payable	8730
	Inventory		262	=8730*3%
	Cash		8468

b
Feb. 1	Purchases	10980
	Accounts Payable		10980

Feb. 4	Accounts Payable	2250
	Purchase Returns and Allowances		2250

Feb. 13	Accounts Payable	8730
	Purchase Discounts		262
	Cash		8468

c
	Purchase price (list)	12200
	Less: Trade discount	-1220		=12200*10%
	Price for cash discount	10980
	Less: Cash discount	-329		=10980*3%
	Net price	10651

ekkarill92 answered 2 years ago

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