Financial Accounting (12th Edition) (What's New in Accounting)
12th Edition
ISBN: 9780134725987
Author: C. William Thomas, Wendy M. Tietz, Walter T. Harrison Jr.
Publisher: PEARSON
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Textbook Question
Chapter 5, Problem 5.63BP
(Learning Objectives 1, 2: Apply GAAP for proper revenue recognition; account for sales returns and allowances) Dearborn Industries sells to wholesalers. Customers must pay within 15 days or at the point of sale using a credit card. Dearborn’s cost of goods sold is 35% of sales. The company had the following selected transactions during March:
| March 3 | Sold $25,000 of merchandise to Greenleaf Company on account. |
| March 4 | Sold $4,000 of merchandise to Yardley Corp., who paid by credit card, The credit card company charges Dearborn a fee of 2% on credit card sales. |
| March 5 | Greenleaf Company returned $5,000 of the merchandise from March 3. |
| March 7 | Sold $1,000 of merchandise to Athens, Inc., on account. |
| March 15 | Greenleaf Company paid the balance of what it owed for the purchase on March 3. |
| March 19 | Sold $12,000 of merchandise to Zurich Co. on account. |
| March 21 | Zurich reported that some of the merchandise received was scratched and returned $500 worth of merchandise to Dearborn. |
| March 23 | Sold $38,000 of merchandise to Niles Co. on account. |
| March 25 | Zurich paid the balance of what it owed for the purchase on March 19. |
| March 31 | Dearborn made the |
Requirements
1. Record Dearborn’s transactions, including the cost of goods sold entry for each sale.
2. Calculate the gross sales revenue for the month.
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(Learning Objectives 1, 2: Apply GAAP for proper revenue recognition; accountfor sales returns and allowances) Dearborn Industries sells to wholesalers. Customers mustpay within 15 days or at the point of sale using a credit card. Dearborn’s cost of goods sold is35% of sales. The company had the following selected transactions during March:March 3 Sold $25,000 of merchandise to Greenleaf Company on account.Sold $4,000 of merchandise to Yardley Corp., who paid by credit card. The creditcard company charges Dearborn a fee of 2% on credit card sales.March 4March 15 Greenleaf Company paid the balance of what it owed for the purchase on March 3.March 19 Sold $12,000 of merchandise to Zurich Co. on account.March 21 Zurich reported that some of the merchandise received was scratched and returned$500 worth of merchandise to Dearborn.March 23 Sold $38,000 of merchandise to Niles Co. on account.March 25 Zurich paid the balance of what it owed for the purchase on March 19.March 31 Dearborn made…
(Learning Objectives 1, 2: Apply GAAP for proper revenue recognition; accountfor sales returns and allowances) Treno Industries sells to wholesalers. Customers must paywithin 15 days or at the point of sale using a credit card. Treno’s cost of goods sold is 40% ofsales. The company had the following selected transactions during March:March 3 Sold $15,000 of merchandise to Whittier Company on account.Sold $2,000 of merchandise to Yeller Corp., who paid by credit card. The creditcard company charges Treno a fee of 2% on credit card sales.March 4March 15 Whittier Company paid the balance of what it owed for the purchase on March 3.March 19 Sold $22,000 of merchandise to Zucca Co. on account.March 21 Zucca reported that some of the merchandise received was scratched and returned$1,000 worth of merchandise to Treno.March 23 Sold $32,000 of merchandise to Nichols Co. on account.March 25 Zucca paid the balance of what it owed for the purchase on March 19.March 31 Treno made the adjusting…
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Chapter 5 Solutions
Financial Accounting (12th Edition) (What's New in Accounting)
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