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Unformatted text preview: P5-2 Vargo Company (Perpetual Inventory)1. Journal Entries2. Cash Rebates7-Oct Accounts Receivable$3,000 Cash rebates should not be recorded as revenue because it does not Sales$3,000 represent a transaction with the customer. Doing so would overstateSold merchandise to Ken Smith,revenues. Cash rebates should be treated as Purchase Discounts andterms n/30, FOB shipping pointdeducted from Gross Purchases.7-Oct Cost of Goods Sold$1,800 Merchandise Inventory$1,800 Value of inventory sold8-Oct Merchandise Inventory$6,000 Accounts Payable$6,000 Purchased merchandise from NovakCo., terms n/30, FOB shipping pt.9-Oct Freight-In$254 Cash$254 Paid Smart Co. for shipping charges10-Oct Merchandise Inventory$9,000 Freight-In$600 Accounts Payable$9,600 Purchased merchandise from Mara'sCo., terms n/30, FOB shipping pt.Reimbursed Mara's for freight costs14-Oct Accounts Receivable$2,400 Sales$2,400 Sold merchandise to Rose Milito,terms n/30, FOB shipping point14-Oct Cost of Goods Sold$1,440 Merchandise Inventory$1,440 Value of inventory sold14-Oct Accounts Payable$600 Merchandise Inventory$600 Returned merchandise to Novak Co....
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This note was uploaded on 10/24/2011 for the course UGBA 102A taught by Professor Udpa during the Spring '07 term at University of California, Berkeley.
- Spring '07