E7-4_-5Solutions - ................... 40 Accounts...

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EXERCISE 7-4 (10–15 minutes) Computation of cost of goods sold: Merchandise purchased. ..................................... $320,000 Less: Ending inventory. ...................................... 70,000 Cost of goods sold. ....................................................... $250,000 Selling price = 1.4 (Cost of good sold) = 1.4 ($250,000) = $350,000 Sales on account. .................... $350,000 Less: Collections. ................... 198,000 Uncollected balance. ............... 152,000 Balance per ledger. ................. 117,000 Apparent shortage. .................. $ 35,000 —Enough for a new car EXERCISE 7-5 (15–20 minutes) (a) 1. June 3 Accounts Receivable—Arquette. ................ 2,000 Sales. .................................................... 2,000 June 12 Cash. .............................................................. ........................................................................ 1,960 Sales Discounts ($2,000 X 2%).
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Unformatted text preview: ................... 40 Accounts ReceivableArquette. ...... 2,000 2. June 3 Accounts ReceivableArquette. ................ 1,960 Sales ($2,000 X 98%). .......................... 1,960 June 12 Cash. .............................................................. 1,960 ........................................................................ Accounts ReceivableArquette. ...... 1,960 EXERCISE 7-5 (Continued) (b) July 29 Cash. ......................................................... ................................................................... 2,000 Accounts ReceivableArquette. ..... 1,960 Sales Discounts Forfeited. ................ 40 (Note to instructor : Sales discounts forfeited could have been recog-nized at the time the discount period lapsed. The company, however, would probably not record this forfeiture until final cash settlement.)...
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E7-4_-5Solutions - ................... 40 Accounts...

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