Purchase of assets for use in business not held for resale are recorded as

Purchase of assets for use in business not held for

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If 21 7/1/2014
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22 7/1/2014
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When take discount Journal Entry: Acct. Payable 3500 Cash 3430 Inventory 70 (To record payment within discount period) If Do Not take discount: Accounts Payable 3500 Cash 3500 (To record payment when no discount taken) Should always take the discount. If not it s like paying interest of 2% on $3500 for 20 days. Which = an- nual rate of 36.5% III. Recording Sales of Merchandise Sales Revenues are recorded when earned. Typically, earned when goods transfer from seller to buyer. Sales must be supported by business documents. Cash register tape provides evidence of cash sale. Sales invoice is evidence of credit sales. 2 entries are made for each sale: 1) Accounts Receivable 3800 Sales 3800 First entry records the sale. The debit is to Accounts Receivable if credit sale and to cash if cash sale. Second entry records cost of merchandise sold: 2) Cost of Goods Sold 2400 Inventory 2400 For Internal decision making companies many have sales accounts for each major product line. Company management can monitor sales more closely. For outside users Financial Statements (FS) a merchandiser would provide only a single sales figure. Sale Returns and Allowances The opposite of Purchase Returns and Allowances are Sales Returns and Allowances recorded on the books of the seller. Entries for sales returns and allowances: 1) Sales Returns and Allowances 300 Accounts Receivable 300 (To record credit for returned goods) 2) Inventory 140 Cost of goods sold 140 (To record cost of goods returned)
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