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Chapter 5 Key Terms and Concepts

The document provides an overview of key accounting concepts and entries using the perpetual inventory method. It defines a multi-step income statement including sales, cost of goods sold, operating expenses, and net income. It also outlines the journal entries for a sale on account, return of merchandise, payment within the discount period, purchase on account, and return of purchased goods.

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Samantha Siau
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43 views1 page

Chapter 5 Key Terms and Concepts

The document provides an overview of key accounting concepts and entries using the perpetual inventory method. It defines a multi-step income statement including sales, cost of goods sold, operating expenses, and net income. It also outlines the journal entries for a sale on account, return of merchandise, payment within the discount period, purchase on account, and return of purchased goods.

Uploaded by

Samantha Siau
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOC, PDF, TXT or read online on Scribd
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Chapter 5 Key Terms and Concepts

Multi-step Income statement


Sales
Less: sales Returns and allowances
Sales discounts
Net sales
Less: Cost of merchandise sold
Gross profit
Less: Operating expenses ( selling and admin expenses)
Income from operations
Other income or expense
Net income
Entries for sales using perpetual method:
Sale on account: of $3,000, COMS = 1,500, terms 2/10, net 30
Accounts Receivable !"""
Sales !"""
Cost of merchandise Sold #!$""
%erchandise inventor& #!$""
Return of $500
Sales Returns and allowances $""
Accounts Receivable $""
%erchandise inventor& '$"
CO%S '$"
Payment receie! "it#in !iscount $erio!
Cash ( !""" ($"") ) *+, '!-$"
Sales .iscount (!""" ( $"") )*"' $"
Account Receivable '!$""
Entries for urchases using perpetual method
Purc#ase of 2,000, terms 3/15
%erchandise inventor& '!"""
Accounts /a&able '!"""
Return of $%00
Accounts /a&able -""
%erchandise inventor& -""
Payment "it#in !iscount $erio!
Account /a&able ( '!""" ( -"") #!0""
%erchandise inventor& -,
(#!0"" ) *")
Cash ( #0"" ) *+1) #!$$'

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