Effect of purchase returns and allowances and purchase discounts on the financia
ID: 2517244 • Letter: E
Question
Effect of purchase returns and allowances and purchase discounts on the financial statements: Perpetual system
The following events were completed by Dana’s Imports in September 2018:
Sept.
1 Acquired $50,000 cash from the issue of common stock.
1 Purchased $28,000 of merchandise on account with terms 2/10, n/30.
5 Paid $600 cash for freight to obtain merchandise purchased on September 1.
8 Sold merchandise that cost $15,000 to customers for $31,000 on account, with terms 2/10, n/30.
8 Returned $600 of defective merchandise from the September 1 purchase to the supplier.
10 Paid cash for the balance due on the merchandise purchased on September 1.
20 Received cash from customers of September 8 sale in settlement of the account balances, but not within the discount period
30 Paid $2,450 cash for selling expenses.
Required
a. Record each event in a statements model like the following one. The first event is recorded as an example.
Please format answers similar to below
Please include for 9/10:
1($ _____ - $_____ ) = $ _____ ; $_____ x .98 = $ _____ cash paid for inventory. Discount taken $ _____ x _____ % =$ .
Assets Liab. + Equity Rev. - Exp. = Net Inc. Cash Flow Cash Accts. Rec Inv.Accts. Pay. Com. Stk.+ Ret. Earn 50,000 NANANA 50,000 NA NANA NA 50,000 FAExplanation / Answer
Date
Balance Sheet
Income Statement
Statement of cash flows
Assets
Liabilities
Shareholders’ equity
Rev.
Exp.
Net inc.
Cash
Acc.rec.
Inv.
Acc. pay.
C. stock
Ret. Earn.
9 / 1
50000
NA
NA
NA
50000
NA
NA
NA
NA
50000 FA
9 / 1
NA
NA
28000
28000
NA
NA
NA
NA
NA
9 / 5
(600)
NA
600
NA
NA
NA
NA
NA
NA
(600) OA
9 / 8
NA
31000
NA
NA
NA
31000
31000
NA
31000
NA
9 / 8
NA
NA
(15000)
NA
NA
(15000)
NA
15000
(15000)
NA
9 / 8
NA
NA
(600)
(600)
NA
NA
NA
NA
NA
NA
9 / 10
(26852)
(548)
(27400)
NA
NA
NA
NA
NA
(26852) OA
9 / 20
31000
(31000)
NA
NA
NA
NA
NA
NA
NA
31000 OA
9 / 30
(2450)
NA
NA
NA
NA
(2450)
NA
2450
(2450)
(2450) OA
Total
51098
0
12452
0
50000
13550
31000
17450
13550
51098
Note;
1. Cash paid to inventory will be calculated as follow;
($28000 - $600) * 0.98 = $26852
2. Discount taken;
($28000 - $600) * 0.02 = $548
3. Accounts payable will be reduced by;
($28000 - $600) = $27400
Date
Balance Sheet
Income Statement
Statement of cash flows
Assets
Liabilities
Shareholders’ equity
Rev.
Exp.
Net inc.
Cash
Acc.rec.
Inv.
Acc. pay.
C. stock
Ret. Earn.
9 / 1
50000
NA
NA
NA
50000
NA
NA
NA
NA
50000 FA
9 / 1
NA
NA
28000
28000
NA
NA
NA
NA
NA
9 / 5
(600)
NA
600
NA
NA
NA
NA
NA
NA
(600) OA
9 / 8
NA
31000
NA
NA
NA
31000
31000
NA
31000
NA
9 / 8
NA
NA
(15000)
NA
NA
(15000)
NA
15000
(15000)
NA
9 / 8
NA
NA
(600)
(600)
NA
NA
NA
NA
NA
NA
9 / 10
(26852)
(548)
(27400)
NA
NA
NA
NA
NA
(26852) OA
9 / 20
31000
(31000)
NA
NA
NA
NA
NA
NA
NA
31000 OA
9 / 30
(2450)
NA
NA
NA
NA
(2450)
NA
2450
(2450)
(2450) OA
Total
51098
0
12452
0
50000
13550
31000
17450
13550
51098
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.