ACCOUNTING
apter 6 Homework Questions 3-5 (of 8) The following information applies to the
questions displayed below. The transactions listed below are typical of those
involving Amalgamated Textiles and American Fashions Amalgamated is a wholesale
merchandiser and American Fashions is a retail merchandiser. Assume all sales
of merchandise from Amalgamated to American Fashions are made with terms 3/10.
n/30, and that the two companies use perpetual inventory systems. Assume the
following transactions between the two companies occurred in the order listed
during the year ended December 31. a. Amalgamated sold merchandise to American
Fashions at a selling price of $245,000. The merchandise had cost Amalgamated
$181,000 b. Two days later, American Fashions complained to Amalgamated that
some of the merchandise differed from what American Fashions had ordered.
Amalgamated agreed to give an allowance of $6,500 to American Fashions. c. Just
three days later, American Fashions paid Amalgamated, which settled all amounts
owed. value: 1.25 points
ANSWER
|
No.
|
Transaction
|
General Journal
|
Debit
|
Credit
|
|
1
|
a(1)
|
Accounts receivable
|
245,000.00
|
|
|
|
|
Sales
|
|
245,000.00
|
|
|
|
|
|
|
|
2
|
a(2)
|
Cost of goods sold
|
181,000.00
|
|
|
|
|
Merchandise Inventory
|
|
181,000.00
|
|
|
|
|
|
|
|
3
|
b
|
Sales return and
allowances
|
6,500.00
|
|
|
|
|
Accounts receivable
|
|
6,500.00
|
|
|
|
|
|
|
|
4
|
c
|
Sales discount
|
7,155.00
|
|
|
|
|
Cash
|
231,345.00
|
|
|
|
|
Accounts Receivable
|
|
238,500.00
|
Calculations and explanations:
Net amount due from American
Fashions = 245,000 - 6,500 = $238,500
3% discount will be applicable on
$238,500. Thus discount amount = 3% of 238,500 = $7,155
Cash paid by American Fashions =
238500-7155 = $231,345
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