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chpt 8 hw sol - Chapter 8 Homework Solutions Exercise 8-8...

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Chapter 8 Homework Solutions Exercise 8-8 Requirement 1 Purchase price = 100 units x $500 = $50,000 x .70 = $35,000 November 17, 2006 Purchases .................................................................... 35,000 ....................................................... Accounts payable ......................................................................... 35,000 November 26, 2006 Accounts payable ...................................................... 35,000 .................................................. Purchase discounts ( 2% x $35,000) .................................................................................... 700 ...................................................................... Cash (98% x $35,000) .................................................................................... 34,300 Requirement 2 December 15, 2006 Accounts payable ....................................................... 35,000 ............................................................................ Cash ......................................................................... 35,000
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Exercise 8-8 (concluded) Requirement 3 Requirement 1: November 17, 2006 Purchases (98% x $35,000) ............................................ 34,300 ....................................................... Accounts payable ......................................................................... 34,300 November 26, 2006 Accounts payable ....................................................... 34,300 ............................................................................ Cash ......................................................................... 34,300 Requirement 2: December 15, 2006 Accounts payable ....................................................... 34,300 Interest expense (2% x $35,000) .................................... 700 ............................................................................ Cash ......................................................................... 35,000
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Problem 8-2 1. The transaction is not correctly accounted for. Inventory held on consignment by another company should be included in the inventory of the consignor. Rasul should include this merchandise in its 2006 ending inventory. 2. The transaction is not correctly accounted for. Legal title to merchandise shipped f.o.b. shipping point changes hands when the goods are shipped. Rasul should record the purchase and corresponding account payable in 2006 and include the merchandise in its 2006 ending inventory.
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