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Chapter 5: Q5-4RQ (page 265)
What is the Cost of Goods Sold (COGS), and where is it reported?
The cost of goods sold is the cost of goods that has been sold to the customers by a business, and the same is reported in the income statement.
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Journalize the following transactions that occurred in March 2018 for Faucet. Assume Faucet uses the gross method to record sales revenue. No explanations are needed. Identify each accounts payable and accounts receivable with the vendor or customer name.
Mar. 3 Purchased merchandise inventory on account from Sidecki Wholesalers, \(3,500. Terms 2/15, n/EOM, FOB shipping point.
4 Paid freight bill of \)75 on March 3 purchase.
4 Purchased merchandise inventory for cash of \(2,200.
6 Returned \)800 of inventory from March 3 purchase.
8 Sold merchandise inventory to Harvey Company, \(5,700, on account. Terms 2/15, n/35. Cost of goods, \)2,508.
9 Purchased merchandise inventory on account from Teaton Wholesalers, \(6,000. Terms 2/10, n/30, FOB destination.
10 Made payment to Sidecki Wholesalers for goods purchased on March 3, less return and discount.
13 After negotiations, received a \)100 allowance from Teaton Wholesalers.
15 Sold merchandise inventory to Jackson Company, \(2,900, on account. Terms n/EOM. Cost of goods, \)1,276.
22 Made payment, less allowance, to Teaton Wholesalers for goods purchased on March 9.
25 Sold merchandise inventory to Secker for \(2,000 on account that cost \)880. Terms of 2/10, n/30 were offered, FOB shipping point. As a courtesy to Secker, $85 of freight was added to the invoice for which cash was paid by Faucet.
28 Received payment from Harvey Company.
29 Received payment from Secker, less discount.
30 Received payment from Jackson Company.
What are the four steps involved in the closing process for a merchandising company?
On November 4, 2018, Cain Company sold merchandise inventory on account to Tarin Wholesalers, \(12,000, that cost \)4,800. Terms 3/10, n/30. On November 5, 2018, Tarin Wholesalers paid shipping of $30. Tarin Wholesalers paid the balance to Cain Company on November 13, 2018.
Requirements
1. Journalize Tarin Wholesaler’s November transactions.
2. Journalize Cain Company’s November transactions.
Journalize the following sales transactions for Sanborn Camera Store using the periodic inventory system. Explanations are not required.
Dec. 3, Sanborn sold $41,900 of camera equipment on the account; credit terms are 3/15, n/EOM.
17 Sanborn receives payment from the customer on the amount due to less the discount.
Consider the following transactions for Garman Packing Supplies:
Apr. 10 Garman Packing Supplies buys \(175,000 worth of merchandise inventory on account with credit terms of 1/10, n/30.
12 Garman returns \)15,200 of the merchandise to the vendor due to damage during shipment.
19 Garman paid the amount due, less the return and discount.
Requirements
1. Journalize the purchase transactions assuming Garman Packing Supplies uses the periodic inventory system. Explanations are not required.
2. What is the amount of net purchases?
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