E7-4_-5Solutions

# E7-4_-5Solutions - 40 Accounts Receivable—Arquette 2,000...

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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 Receivable—Arquette. ...... 2,000 2. June 3 Accounts Receivable—Arquette. ................ 1,960 Sales (\$2,000 X 98%). .......................... 1,960 June 12 Cash. .............................................................. 1,960 ........................................................................ Accounts Receivable—Arquette. ...... 1,960 EXERCISE 7-5 (Continued) (b) July 29 Cash. ......................................................... ................................................................... 2,000 Accounts Receivable—Arquette. ..... 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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## This note was uploaded on 02/14/2011 for the course ACCT 251 taught by Professor Bouker during the Spring '11 term at Bergen Community College.

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E7-4_-5Solutions - 40 Accounts Receivable—Arquette 2,000...

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