2. The summary amounts below appear in the Income Statement and Balance Sheet co
ID: 2519878 • Letter: 2
Question
2. The summary amounts below appear in the Income Statement and Balance Sheet columns of a company's December 31 work sheet. Prepare the necessary closing entries. Income Statement Balance Sheet Debit Credit Debit Credit 12,000 Liabilities.. 3,000 7,500 Kate Smith, Capital Revenue Salaries expense.... 1,500 19,500 11,250 5,250 16,500 19,500 13,500 10,500 3,000 19,500 19.500 13,500 13,500 Other operating expens 3,000 3. Shock Company purchased merchandise from Mee Company with an invoice price of $300,000 and credit terms of 2/10, n/30. The merchandise had cost Mee Company $200,000. Shock Company paid within the discount period. Assume that both buyer and seller use a perpetual inventory system. 1. Prepare entries that the buyer should record for (a) the purchase and (b) the cash payment. 2. Prepare entries that the seller should record for (a) the sale and (b) the cash collection.Explanation / Answer
2). Closing Entries are :
Income Summary A/c Dr. 3000
To Kate Smith Capital 3000
Kate Smith Capital A/c Dr. 1500
To Kate Smith Withdrawls 1500
3). 1) a). Inventory A/c Dr. $300000
To Mee Company $300000
b). Mee Comapny A/c Dr. $300000
To Cash $300000
2). a). Shock Company A/c Dr $300000
To Revenue $300000
Cost of Goods Sold A/c Dr $200000
To Inventory $200000
b). Cash A/c Dr $ 294000
Sales Discount A/c Dr $6000
To Shock Company $300000
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