Accounting-I Chapter 5 Homework

Question
Taos Company purchased merchandise for resale from Tuscon Company with an invoice price of $22,000 and credit terms of 3/10, n/60. The merchandise had cost Tuscon $15,000. Taos paid within the discount period. Assume that both buyer and seller use a perpetual inventory system.

1(a)

Don't use plagiarized sources. Get Your Custom Essay on
Accounting-I Chapter 5 Homework
Just from $13/Page
Order Essay

Prepare entries that the buyer should record for the purchase. (Omit the “$” sign in your response.)

1(b)

Prepare entries that the buyer should record for the cash payment. (Omit the “$” sign in your response.)

2(a)

Prepare entries that the seller should record for the sale. (Omit the “$” sign in your response.)

2(b)

Prepare entries that the seller should record for the cash collection. (Omit the “$” sign in your response.)

3.

Assume that the buyer borrowed enough cash to pay the balance on the last day of the discount period at an annual interest rate of 11% and paid it back on the last day of the credit period. Compute how much the buyer saved by following this strategy. (Use 365 days a year. Round your intermediate calculations and final answer to 2 decimal places. Omit the “$” sign in your response.)

Case A Case B Case C
Cash $ 800 $ 510 $ 3,200
Short-term investments 0 0 1,100
Current receivables 0 790 800
Inventory 2,000 1,600 1,900
Prepaid expenses 1,200 600 300
Total current assets $ 4,000 $ 3,500 $ 7,300
Current liabilities $ 2,200 $ 1,100 $ 3,650

Compute the current ratio and acid-test ratio for each of the above separate cases. (Round your answers to 2 decimal places.)

Which company case is in the best position to meet short-term obligations?

L’Oreal reports the following income statement accounts for the year ended December 31, 2009 (euros in millions).

Net profit € 1,794.9 Income tax expense € 676.1
Finance costs 76.0 Profit before tax expense 2,471.0
Net sales 17,472.6 Research and development expense 609.2
Gross profit 12,311.0 Selling, general and administrative expense 3,735.5
Other expense 30.6 Advertising and promotion expense 5,388.7
Cost of sales 5,161.6

Following the usual IFRS practices, prepare the income statement for the year ended December 31, 2009. (Enter your answers in millions. Input all amounts as positive values. Round your answers to 1 decimal place. Omit the “€” sign in your response.)

Spare Parts was organized on May 1, 2011, and made its first purchase of merchandise on May 3. The purchase was for 1,000 units at a price of $10 per unit. On May 5, Spare Parts sold 600 of the units for $14 per unit to DeSoto Co. Terms of the sale were 2/10, n/60.

a.
On May 7, DeSoto returns 200 units because they did not fit the customer’s needs. Spare Parts restores the units to its inventory.

b. On May 8, DeSoto discovers that 50 units are damaged but are still of some use and, therefore, keeps the units. Spare Parts sends DeSoto a credit memorandum for $300 to compensate for the damage.
c.
On May 15, DeSoto discovers that 72 units are the wrong color. DeSoto keeps 43 of these units because Spare Parts sends a $92 credit memorandum to compensate. DeSoto returns the remaining 29 units to Spare Parts. Spare Parts restores the 29 returned units to its inventory.

Prepare entries for Spare Parts to record the May 5 sale. (Omit the “$” sign in your response.)

Prepare entries for each of the above separate transactions a through c using a perpetual inventory system.(Omit the “$” sign in your response.)

Spare Parts was organized on May 1, 2011, and made its first purchase of merchandise on May 3. The purchase was for 1,000 units at a price of $10 per unit. On May 5, Spare Parts sold 600 of the units for $14 per unit to DeSoto Co. Terms of the sale were 2/10, n/60.

a.
On May 7, DeSoto returns 200 units because they did not fit their needs. Spare Parts restores the units to its inventory.

b. On May 8, DeSoto discovers that 50 units are damaged but are still of some use and, therefore, keeps the units. Spare Parts sends DeSoto a credit memorandum for $300 to compensate for the damage.
c.
On May 15, DeSoto discovers that 72 units are the wrong color. DeSoto keeps 43 of these units because Spare Parts sends a $92 credit memorandum to compensate. DeSoto returns the remaining 29 units to Spare Parts. Spare Parts restores the 29 returned units to its inventory.

Prepare the appropriate journal entries for DeSoto Co. to record the May 5 purchase. (Omit the “$” sign in your response.)

Assume DeSoto is a retailer that uses a perpetual inventory system and purchases these units for resale. Prepare the appropriate journal entries for DeSoto Co. to record the each of the above three separate transactionsa throughc.(Omit the “$” sign in your response.)

My Essay Gram
Calculate your paper price
Pages (550 words)
Approximate price: -

Why Work with Us

Top Quality and Well-Researched Papers

We always make sure that writers follow all your instructions precisely. You can choose your academic level: high school, college/university or professional, and we will assign a writer who has a respective degree.

Professional and Experienced Academic Writers

We have a team of professional writers with experience in academic and business writing. Many are native speakers and able to perform any task for which you need help.

Free Unlimited Revisions

If you think we missed something, send your order for a free revision. You have 10 days to submit the order for review after you have received the final document. You can do this yourself after logging into your personal account or by contacting our support.

Prompt Delivery and 100% Money-Back-Guarantee

All papers are always delivered on time. In case we need more time to master your paper, we may contact you regarding the deadline extension. In case you cannot provide us with more time, a 100% refund is guaranteed.

Original & Confidential

We use several writing tools checks to ensure that all documents you receive are free from plagiarism. Our editors carefully review all quotations in the text. We also promise maximum confidentiality in all of our services.

24/7 Customer Support

Our support agents are available 24 hours a day 7 days a week and committed to providing you with the best customer experience. Get in touch whenever you need any assistance.

Try it now!

Calculate the price of your order

Total price:
$0.00

How it works?

Follow these simple steps to get your paper done

Place your order

Fill in the order form and provide all details of your assignment.

Proceed with the payment

Choose the payment system that suits you most.

Receive the final file

Once your paper is ready, we will email it to you.

Our Services

No need to work on your paper at night. Sleep tight, we will cover your back. We offer all kinds of writing services.

Essays

Essay Writing Service

No matter what kind of academic paper you need and how urgent you need it, you are welcome to choose your academic level and the type of your paper at an affordable price. We take care of all your paper needs and give a 24/7 customer care support system.

Admissions

Admission Essays & Business Writing Help

An admission essay is an essay or other written statement by a candidate, often a potential student enrolling in a college, university, or graduate school. You can be rest assurred that through our service we will write the best admission essay for you.

Reviews

Editing Support

Our academic writers and editors make the necessary changes to your paper so that it is polished. We also format your document by correctly quoting the sources and creating reference lists in the formats APA, Harvard, MLA, Chicago / Turabian.

Reviews

Revision Support

If you think your paper could be improved, you can request a review. In this case, your paper will be checked by the writer or assigned to an editor. You can use this option as many times as you see fit. This is free because we want you to be completely satisfied with the service offered.

Live Chat+1(405) 367-3611Email