Chapters 4 - 7

Debit 2500 Sales salaries expense Credit 2500 sales salaries payable

Accrued sales salaries amount to $2,500

Debit 4,500 Selling expenses Credit 4,500 Prepaid selling expenses

Prepaid selling expenses of 4,500 have expired

Debit accounts payable 16900 Credit Merchandise Inventory (.03* 16900) 507 Credit Cash (.97 * 16900) 16393

Prepare entries that the buyer should record for the cash payment Santa Fe paid within the discount period. Santa Fe Company purchased merchandise for resale from Mesa Company with an invoice price of $16,900 and credit terms of 3/10, n/60. The merchandise had cost Mesa $11,526. Santa Fe paid within the discount period. Assume that both buyer and seller use a perpetual inventory system.

Debit Merchandise Inventory 16900 Credit Accounts Payable 16900

Prepare entries that the buyer should record for the purchase.Santa Fe Company purchased merchandise for resale from Mesa Company with an invoice price of $16,900 and credit terms of 3/10, n/60.

Debit Account Receivable 16900 Credit Sales 16900

Prepare entries that the seller should record for the sale. Santa Fe Company purchased merchandise for resale from Mesa Company with an invoice price of $16,900 and credit terms of 3/10, n/60.

Debit Merchandise Inventory 1200 Credit Cash 1200

Record a 1200 cash purchase of inventory

Debit Cash ( 16900*.97 ) 16393 Debit Sales Discounts (16900 *.03 ) 507 Credit Accounts Receivable 16900

Santa Fe Company purchased merchandise for resale from Mesa Company with an invoice price of $16,900 and credit terms of 3/10, n/60. The merchandise had cost Mesa $11,526. Santa Fe paid within the discount period. Assume that both buyer and seller use a perpetual inventory system. 2(b) Prepare entries that the seller should record for the cash collection. Santa Fe paid within the discount period.

net sales - cost of goods sold = gross profit

___________ - _________ = gross profit

Gross profit - Expenses = Net Income

___________- ____________ = Net Income