ACCT 211 Homework 4 Merchandising Operations Exercises Assignment solutions complete answers

ACCT 211 Homework 4 Merchandising Operations Exercises Assignment solutions complete answers 

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Allied Merchandisers was organized on May 1. Macy Company is a major customer (buyer) of Allied (seller) products.
 

May 3
Allied made its first and only purchase of inventory for the period on May 3 for 2,000 units at a price of $9 cash per unit (for a total cost of $18,000).
May 5
Allied sold 1,000 of the units in inventory for $13 per unit (invoice total: $13,000) to Macy Company under credit terms 2/10, n/60. The goods cost Allied $9,000.
May 7
Macy returns 100 units because they did not fit the customer’s needs (invoice amount: $1,300). Allied restores the units, which cost $900, to its inventory.
May 8
Macy discovers that 100 units are scuffed but are still of use and, therefore, keeps the units. Allied gives a price reduction (allowance) and credits Macy's accounts receivable for $500 to compensate for the damage.
May 15
Allied receives payment from Macy for the amount owed on the May 5 purchase; payment is net of returns, allowances, and any cash discount.
Prepare journal entries to record the following transactions for Allied assuming it uses a perpetual inventory system and the gross method.

 

Prepare the appropriate journal entries for Macy Company to record each of the May transactions. Macy is a retailer that uses the gross method and a perpetual inventory system; it purchases these units for resale. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

 

Sydney Retailing (buyer) and Troy Wholesalers (seller) enter into the following transactions.
  

May 11
Sydney accepts delivery of $28,000 of merchandise it purchases for resale from Troy: invoice dated May 11, terms 3/10, n/90, FOB shipping point. The goods cost Troy $18,760. Sydney pays $545 cash to Express Shipping for delivery charges on the merchandise.
May 12
Sydney returns $1,400 of the $28,000 of goods to Troy, who receives them the same day and restores them to its inventory. The returned goods had cost Troy $938.
May 20
Sydney pays Troy for the amount owed. Troy receives the cash immediately.
 
(Both Sydney and Troy use a perpetual inventory system and the gross method.)
 
1. Prepare journal entries that Sydney Retailing (buyer) records for these three transactions.
2. Prepare journal entries that Troy Wholesalers (seller) records for these three transactions.

 

Following are the merchandising transactions of Dollar Store.
 

November 1
Dollar Store purchases merchandise for $1,900 on terms of 2/5, n/30, FOB shipping point, invoice dated November 1.
November 5
Dollar Store pays cash for the November 1 purchase.
November 7
Dollar Store discovers and returns $250 of defective merchandise purchased on November 1, and paid for on November 5, for a cash refund.
November 10
Dollar Store pays $95 cash for transportation costs for the November 1 purchase.
November 13
Dollar Store sells merchandise for $2,052 with terms n/30. The cost of the merchandise is $1,026.
November 16
Merchandise is returned to the Dollar Store from the November 13 transaction. The returned items are priced at $215 and cost $108; the items were not damaged and were returned to inventory.
 
Journalize the above merchandising transactions for the Dollar Store assuming it uses a perpetual inventory system and the gross method.

 


Camaro
GTO
Torino
 
Cash
$ 2,750
$ 300
$ 1,400
Short-term investments
0
0
700
Current receivables
330
580
400
Inventory
2,350
2,160
3,400
Prepaid expenses
400
700
900
Total current assets
$ 5,830
$ 3,740
$ 6,800
Current liabilities
$ 2,360
$ 1,390
$ 3,900

a. Compute the acid-test ratio for each of the separate cases above.
b. Which company is in the best position to meet short-term obligations?