1. Merchandising Operations
Chapter 5 Exercises
Accounting for
Merchandising Operations

2. Merchandising Transactions
In-Class Exercises:
Exercise No Page
Merchandise purchases

3. Merchandise Purchases
Prepare journal entries to record the following transactions for a retail store. Assume a perpetual inventory system.
Apr. 2 Purchased merchandise from Blue Company under the following terms: $3, price, invoice dated April 2, credit terms of 2/15,n/60, and FOB shipping point.
3 Paid $200 for shipping charges on the April 2 purchase.
4 Returned to Blue Company unacceptable merchandise that had an invoice price of $600.
17 Sent a check to Blue Company for the April 2 purchase, net of the discount and the returned merchandise.
18 Purchased merchandise from Fox Corp. under the following terms: $7,500 price, invoice dated April 18, credit terms of 2/10,n/30, and FOB destination.
21 After negotiations, received from Fox a $2,100 allowance on the April 18 purchase.
28 Sent check to Fox paying for the April 18 purchase, net of the discount and allowance.

4. Merchandise Purchases

5. Merchandise Purchases
Discount ($3,000 x 2% = $60)

6. Merchandise Purchases
End of Exercise

7. Seller Transactions
Exercise No Page
Seller transactions only

8. Seller Transactions
Taos Company purchased merchandise for resale from Tuscon Company with an invoice price of $22,000 and credit terms of 3/10, n/60. The merchandise had cost Tuscon $15,000. Taos paid within the discount period. Assume that Tuscon uses a perpetual inventory System.
Prepare entries that the seller (Tuscon) should record for:
a. The sale.
b. The cash collection.

9. Seller Transactions
Discount ($22,000 x 3% = $660)

10. Seller Transactions

11. Seller Transactions
End of Exercise