70.2K

Verified Solution

Link Copied!

Project #5: Merchandise Sales with Discount Right before closing on New Year's eve, a couple came into the store and purchased 40 bags of dog food for cash at $50 each for a Canine New Year's Party. Normally, sales discounts are taken when sales are on account. However, due to the New Year's holiday, the owners are feeling generous and offer a 2 percent discount on anything purchased. Each bag of food cost Fido's Food Mart $25. Since the revenue is earned in this year, the following activites must occur: Required: 1. Record the journal entry for this merchandise sale a. Show the balancing effects on the accounting equation b. Record the adjusting journal entry in two-line format using a debit and a credit. c. Show T-accounts with beginning balances, transactions, and end balances. 2. Calculate Fido's Food Mart's cost of goods sold on this sale. 3. Prepare a new adjusted trial balance and highlight the accounts and amounts changed. doomShutterstock.com Journal Entry Format Cost of goods sold Inventory to record COGS on income statement and reduce inventory on balance sheet As the inventory moves out of the store, the paperwork is moving the inventory off the balance sheet to the income statemet. Project As Merchandise Sales with Discount Fido's Food Mart Adjusted Trial Balance December 31, 20XX Credits Account Title Cash Accounts receivable Debits 50,938 12,250 84,720 650 320 30,550 12,250 Inventory Supplies Prepaid insurance Equipment Vehicle Accumulated depreciation - Equipment and vehicle Accounts payable Unearned revenue (gift cards) Bonds payable (mature 12/31/XX) Common stock (200 shares @ $210/share, par $210) 62,128 12,000 42,000 132,725 34,840 Retained earnings Sales revenue Less: sales discount Cost of goods sold Operating expenses Depreciation expense Insurance expense Rent expense Supplies expense Wages expense Totals 160 5,750 1,200 15,500 249,128 249,128

Answer & Explanation Solved by verified expert

See Answer