Question 7, 10 (page.

308)

7. The new contra accounts introduced in this chapter are: Cost of goods sold, Sales Returns and Allowances and Sales Discounts.

10. Inventory ($ 20,000) + purchases total ($ 110,000) + freight ($ 4,000) - Cost of goods sold ? = ending inventory ($ 28,000), then Cost
of goods sold is $ 106,000.

Problem 5-2A (page 321)

Halls Drug Store

Pag. 1
Date

Account title and explanations

Feb. 06

Inventory

Post. Ref.

Debit

Credit

60,000
60,000

Accounts Payable
Purchase inventory on account, terms 1/10, n/30.
Feb. 06

Inventory

1,000

Accounts Payable

1,000

Freight bill.
Feb. 10

Accounts Payable

5,000
5,000

Purchase Returns and Allowances

Returned inventory to seller.
Feb. 15

Accounts Payable

24,242
24,000

Cash

242

Inventory
Paid on account within the discount period. Purchase discount is $ 24,000/99% = $ 242,42
Feb. 27

Accounts Payable
Cash
Paid on account after the discount period.

30,758
30,758

Problem 5-2A (page 321)

Chao Pharmaceuticals
Pag. 1
Date

Account title and explanations

Feb. 06

Account Receivable

Post. Ref.

Debit

Credit

60,000
60,000

Sales Revenue
Sales on account, terms of 1/10, n/30.
Feb. 06

Cost of Goods Sold

36,000

Inventory

36,000

Recorded the cost of goods sold.

Feb. 10

Sales Returns and Allowances

5,000
5,000

Account Receivable
Received returned goods.
Feb. 10

Inventory

3,000
3,000

Cost of Goods Sold

Return goods to inventory.
Feb. 15

Cash
Sales Discounts

24,000
242

Account Receivable

24,242

Cash collection within the discount period. Sales discount is $24,000/99% = $ 242,42
Feb. 27

Cash
Account Receivable
Cash collection after the discount period.

30,758
30,758

Problem 5-3A (page 321-322)

Singh Distributing Company

Pag. 1
Date

Account title and explanations

May 03

Office Supplies

Post. Ref.

Debit

Credit

11,000
11,000

Sales Revenue
Purchased office supplies for cash
May 07

Inventory

76,000

Accounts Payable

76,000

Purchase inventory on account, terms 3/10, eom.

May 08

19,000

Accounts Payable

19,000

Inventory
Returned part of the inventory purchased on may 07.
May 10

17,000

Cash

17,000

Sales Revenue
Sold goods for cash.
May 10

Cost of Goods Sold

10,200

Inventory

10,200

Recorded the cost of goods sold.

May 13

135,720

Accounts Receivable

10,200

Sales Revenue
Sold goods on account, terms 2/15, n/45.
May 13

Cost of Goods Sold

90,480

Inventory

90,480

Recorded the cost of goods sold.

May 16

Accounts Payable

57,000

Cash

55,290

Inventory

1,710

Paid on account within the discount period and less the return. Purchase discount is ($ 76,000 $ 19,000) * 3% = $ 1,710.
May 17

12,400

Sales Returns and Allowances

12,400

Accounts Receivable
Received returned goods.
May 17

Inventory

7,440

Cost of Goods Sold

7,440

Return goods to inventory.

May 18

Inventory

164,000

Accounts Payable

164,000

Purchase inventory on account, terms 2/10, net/30.

May 26

164,000

Accounts Payable

160,720

Cash

3,280

Inventory
Paid on account within the discount period. Purchase discount is ($ 164,000 * 2% = $ 3,280.
May 28

Cash

120,854

Sales Discounts

2,466

Account Receivable

123,320

Cash collection within the discount period. Sales discount is ($135,720- 12,400) *2% = $ 2,466.
May 31

Inventory

77,800

Cash

77,800

Purchase inventory for cash, including freight of $ 2,000.

Inventory
Bal.

20,000

19,000 May 08

May 07

76,000

10,200 May 13

May 17

7,400

90,480 May 13

May 18

164,000

1,710 May 16

May 31

77,800

3,280 May 26

345,200
220,530

124,670

19,000