A. (30 pts.) Mercury Co. is a retail store that sells floor tiles. Mercury Co. u
ID: 2576846 • Letter: A
Question
A. (30 pts.) Mercury Co. is a retail store that sells floor tiles. Mercury Co. uses a perpetual inventory system, and gross method. Mercury's sales and related transactions in July 2012 were: July 12 Sold 80 boxes of floor tiles for $44 per box, $3,520 total on credit, terms July 18 Two boxes of floor tiles were returned for $88 credit. The cost of the July 22Received payment for the floor tiles sold on July 12th, less the returns 2/10 n. 30. The cost of the floor tiles sold was $2,820. floor tiles returned was $71, they were returned to inventory and discount. Required: 1. Prepare journal entries for the three transactions above. 2. Prepare journal entries for the three transactions above, assuming Mercury Co. uses the net method.Explanation / Answer
1.
Journal
july 12 Account Receivable Dr 3520
To Sales 3520
July 12 Cost of Good Sold Dr 2820
To Inventory 2820
July 18 Sales Dr 88
To accounts Receivable 88
July 18 Inventory Dr 88
To Cost of Good Sold 88
July 22 Cash Dr 3450
Sales Discount Dr 70
To Account Receivable 3520
( Being 2% discount is given)
2. Net Method
Journal Entry
july 12 Account Receivable Dr 3450
To Sales 3450
July 12 Cost of Good Sold Dr 2820
To Inventory 2820
July 18 Sales Dr 88
To accounts Receivable 88
July 18 Inventory Dr 88
To Cost of Good Sold 88
July 22 Cash Dr 3450
To Account Receivable 3450
( Being 2% discount is given)
July 12
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