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Name: Exercise: Exercise E7-5, Record Sales Gross and Net Course: Date

Bolton Company sold merchandise to Arquette Company for £2,000 with payment terms of 2/10, n/60. Arquette was invoiced for freight costs of £90 on n/30 terms. On June 12, Arquette paid the balance due. Journal entries are made to record the sales at gross and net amounts, and the payment received. If payment was not made until July 29, the journal entry is adjusted accordingly.

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679 views

Name: Exercise: Exercise E7-5, Record Sales Gross and Net Course: Date

Bolton Company sold merchandise to Arquette Company for £2,000 with payment terms of 2/10, n/60. Arquette was invoiced for freight costs of £90 on n/30 terms. On June 12, Arquette paid the balance due. Journal entries are made to record the sales at gross and net amounts, and the payment received. If payment was not made until July 29, the journal entry is adjusted accordingly.

Uploaded by

rahmaw
Copyright
© © All Rights Reserved
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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Name:

Exercise: Exercise E7-5, Record Sales Gross and Net


Course:
Date:
On June 3, Bolton Company sold to Arquette Company merchandise having a sale price of
£2,000 with terms of 2/10, n/60, f.o.b. shipping point. An invoice totaling £90
terms n/30, was received by Arquette on June 8 from John Booth Transport Service for the freight
cost. On June 12, the company received a check for the balance due from Arquette Company.

Instructions:
(a) Prepare journal entries on the Bolton Company books to record all the events noted above under
each of the following bases:
(1) Sales and receivables are entered at gross selling price.

Jun 3 Account Title


Account Title
Account Title

Jun 12 Account Title


Account Title
Account Title

(2) Sales and receivables are entered at net of cash discounts.

Jun 3 Account Title


Account Title
Account Title

Jun 12 Account Title


Account Title
Account Title

(b) Prepare the journal entry under basis 2, assuming that Arquette Company did not remit payment
until July 29.

Jul 29 Account Title


Account Title
Account Title

Exercise 7-5, Page 1 of 3, 03/28/2021, 23:46:58


Name:
Problem: P8-3, Purchases Recorded Gross and Net
Course:
Date:
Some of the transactions of Torres Company during August are listed below. Torres uses the periodic
inventory method.

Aug 10 Purchased merchandise on account, terms 2/10, n/30 £12,000


Aug 13 Returned part of the purchase of Aug 10, and received credit on acct £1,200
Aug 15 Purchased merchandise on account, terms 1/10, n/60 £16,000
Aug 25 Purchased merchandise on account, terms 2/10, n/30 £20,000
Aug 28 Paid invoice of August 15 in full.

Instructions:
(a) Assuming that purchases are recorded at gross amounts and that discounts are to be recorded
when taken:
(1) Prepare general journal entries to record the transactions.
Aug 10 Account Title Amount
Account Title Amount

Aug 13 Account Title Amount


Account Title Amount

Aug 15 Account Title Amount


Account Title Amount

Aug 25 Account Title Amount


Account Title Amount

Aug 28 Account Title Amount


Account Title Amount

(2) Describe how the various items would be shown in the financial statements.
Enter text answer here.

Enter text answer here.

Enter text answer here.

(b) Assuming that purchases are recorded at net amounts and that discounts lost are treated as
finance expenses:
(1) Prepare general journal entries to record the transactions.

Aug 10 Account Title Amount

Problem 8-3, Page 2 of 3, 03/28/2021, 23:46:58


Aug 10
Account Title Amount

Aug 13 Account Title Amount


Account Title Amount

Aug 15 Account Title Amount


Account Title Amount

Aug 25 Account Title Amount


Account Title Amount

Aug 28 Account Title Amount


Account Title Amount
Account Title Amount

(2) Prepare the adjusting entry necessary on August 31 if financial statements are to be prepared
at that time.

Aug 31 Account Title Amount


Account Title Amount

(3) Describe how the various items would be shown in the financial statements.
Enter text answer here.

(c) Which of the two methods do you prefer and why?

Enter text answer here.

Problem 8-3, Page 3 of 3, 03/28/2021, 23:46:58

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