AC 302 CHAPTER 8 PROBLEM QUESTION 3

AC 302 CHAPTER 8 PROBLEM QUESTION 3
Name				Date		
Instructor				Course		
Intermediate Accounting 14th Edition by Kieso Weygandt and Warfield						
Primer on Using Excel in Accounting by Rex A Schildhouse						
						
P8-3 (Purchases Recorded Gross and Net) Some of the transactions of Torres Company during August are listed below. Torres uses the periodic inventory method.						
						
						
Aug 10	Purchased merchandise on account, terms 2/10, n/30					$12,000 
Aug 13	Returned part of the purchase of Aug 10, and received credit on acct					$1,200 
Aug 15	Purchased merchandise on account, terms 1/10, n/60					$16,000 
Aug 25	Purchased merchandise on account, terms 2/10, n/30					$20,000 
Aug 28	Paid invoice of August 15 in full.					
						
Instructions:						
"(a) Assuming that purchases are recorded at gross amounts and that discounts are to be recorded
     when taken:"						
						
(1) Prepare general journal entries to record the transactions.						
Aug 10	Account Title				Amount	
	Account Title					Amount
						
Aug 13	Account Title				Amount	
	Account Title					Amount
						
Aug 15	Account Title				Amount	
	Account Title					Amount
						
Aug 25	Account Title				Amount	
	Account Title					Amount
						
Aug 28	Account Title				Amount	
	Account Title					Amount
						
   (2) Describe how the various items would be shown in the financial statements.						
Enter text answer here.						
						
						
Enter text answer here.						
						
						
Enter text answer here.						
						
						
"(b) Assuming that purchases are recorded at net amounts and that discounts lost are treated as
     finance expenses:"						
						
(1) Prepare general journal entries to record the transactions.						
						
Aug 10	Account Title				Amount	
	Account Title					Amount
						
Aug 13	Account Title				Amount	
	Account Title					Amount
						
Aug 15	Account Title				Amount	
	Account Title					Amount
						
Aug 25	Account Title				Amount	
	Account Title					Amount
						
Aug 28	Account Title				Amount	
	Account Title				Amount	
	Account Title					Amount
						
"   (2) Prepare the adjusting entry necessary on August 31 if financial statements are to be prepared
       at that time."						
						
						
Aug 31	Account Title				Amount	
	Account Title					Amount
						
(3) Describe how the various items would be shown in the financial statements.						
Enter text answer here.						
						
						
						
						
						
(c) Which of the two methods do you prefer and why?						
						
Enter text answer here.