Business, 17.06.2020 04:57 bbbbhu

Littleton Books has the following transactions during May. May 2 Purchases books on account from Readers Wholesale for $4,100, terms 2/10, n/30. May 3 Pays cash for freight costs of $280 on books purchased from Readers. May 5 Returns books with a cost of $400 to Readers because part of the order is incorrect. May 10 Pays the full amount due to Readers. May 30 Sells all books purchased on May 2 (less those returned on May 5) for $4,800 on account. Record the transactions of Littleton Books, assuming the company uses a perpetual inventory system.
1. Purchases books on account from Readers Wholesale for $4,100, terms 2/10, n/30.2. Pays cash for freight costs of $280 on books purchased from Readers.3. Returns books with a cost of $400 to Readers because part of the order is incorrect.4. Pays the full amount due to Readers.5. Record the sale of inventory on account.6. Record cost of inventory sold.

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Answer from: arryahc

May 2 Purchases books on account from Readers Wholesale for $4,100, terms 2/10, n/30.

Dr Merchandise inventory 4,100

Cr Accounts payable 4,100

May 3 Pays cash for freight costs of $280 on books purchased from Readers.

Dr Merchandise inventory 280

Cr Cash 280

When you use perpetual inventory all freight costs (and any additional costs related to the purchase) must be included in the inventory account as part of the cost of the merchandise.

May 5 Returns books with a cost of $400 to Readers because part of the order is incorrect.

Dr Accounts payable 400

Cr Merchandise inventory 400

May 10 Pays the full amount due to Readers.

Dr Accounts payable 3,700

Cr Cash 3,626 [= ($4,100 - $400) x 98%]

Cr Purchase discounts 74

Since the payment is done within the discount period, you will pay 2% less. The purchase discount has a credit balance since it reduces costs.

May 30 Sells all books purchased on May 2 (less those returned on May 5) for $4,800 on account.

Dr Accounts receivable 4,800

Cr Sales revenue 4,800

Dr COGS 3,980

Cr Merchandise inventory 3,980

Answer from: Quest

Secured loans are protected by collateral security. examples: title loans where the borrower uses the car title as collateral security interest rates are lower and repayments are longer therefore risk is low as a collateral security is given as guarantee to the bank in case of failure to pay the loanunsecured loans are not protected by collateral security but it is given on the creditworthiness of the borrower, trusting that she/he will pay on time. examples; payday loans is a short term loan where the borrower lends money from the bank and pays is back when the borrower receives his/her wages.interest rates are high and repayments are shorter. but the risk is high as no collateral security is given as a guarantee to the bank for payment of the loan

Answer from: Quest

the answer is a.

by: nicholas dooley

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Littleton Books has the following transactions during May. May 2 Purchases books on account from R...

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