On May 1 Sam Company sold 5000 of inventory to Bob Company T

On May 1, Sam Company sold $5,000 of inventory to Bob Company. The sale was made on account and Sam granted Bob credit terms of 2/10, n/30. The inventory cost Sam Company $3,000. On May 3, Bob returned $1,000 of the inventory to Sam. (The inventory returned by Bob cost Sam $600.) On May 9, Bob paid Sam in full for the amount due.

ONLY ONE OPTION TO BE SELECTED FOR EACH QUESTION

17. Whatjoumal entry will Sam record gn May3 if the perpetual inventory system is used? a debit Merchandise Inventory, S600; credit Cost of Goods Sold, S600. b. debit Sales, S1.000; credit Accounts Receivable, $1,000. c. debit Sales, S1,000; credit Cash, $1,000 d. debit Sales Retums and Allowances, S1,000; credit Accounts Receivable, $1,000. e. debit Sales Retums and Allowances, S1,000; credit Cash, $1,000. 18. What joumal entry will Bob record on May9 if the nventory system is used? a b. c. d. e. debit Accounts Payable, $4,000; credit Cash, $4,000. debit Accounts Payable, S5,000; credit Cash, S5,000. debit Accounts Payable, $4,000; credit Merchandise Inventory, S80; credit Cash, $3,920. debit Accounts Payable, $4,000; credit Purchase Discounts, $80, credit Cash, S3,920 debit Accounts Payable, $4,000; credit Purchase Returms and Allowances, S80; credit Cash, S3,920. 19. What joumal entry will Bob record on May9 if the system is used? a b. c. d. e. debit Accounts Payable, $4,000; credit Cash, $4,000. debit Accounts Payable, S5,000; credit Cash, S5,000. debit Accounts Payable, $4,000; credit Merchandise Inventory, S80; credit Cash, $3,920. debit Accounts Payable, $4,000; credit Purchase Discounts, $80, credit Cash, S3,920 debit Accounts Payable, $4,000; credit Purchase Returms and Allowances, S80; credit Cash, S3,920. 20. Whatjoumal entry will Sam record on May 9? a. debit Cash, $4,000; credit Accounts Receivable, $4,000 b. debit Cash, S5,000; credit Accounts Receivable, S5,000. c. debit Cash, S3,920; debit Sales, S80; credit Accounts Receivable, $4,000 d. debit Cash, S3,920; debit Sales Discounts, S80; credit Accounts Receivable, $4,000. e. debit Cash, S3,920; debit Sales Retums and Allowances, $80; credit Accounts Receivable, $4,000.

Solution

Sam- seller Bob- buyer Q17) Account titles & Explanations Debit Credit Sales return and allowance 1000 Accounts receivable 1000 hence option d is the correct answer Q18) Accounts payable (5000-1000) 4000 purchase discount 80 cash 4000*98% 3920 hence option d is the correct answer Q19) Accounts payable (5000-1000) 4000 merchandise inventory 80 cash 4000*98% 3920 hence option c is the correct answer Q20) Cash 3,920 sales discount 80 account receivable 4,000 hence option d is the correct answer