Paramount Co., a women’s clothing store, purchased $60,000 of merchandise from a supplier on account

Paramount Co., a women’s clothing store, purchased $60,000 of merchandise from a supplier on account, terms FOB destination, 2/10, n/30. Paramount Co. returned $12,000 of the merchandise, receiving a credit memo, and then paid the amount due within the discount period. Journalize Paramount Co.’s entries to record (a) the purchase, (b) the merchandise return, and (c) the payment.


Answer:

a.
 Merchandise Inventory 60,000
Accounts Payable 60,000
b.
 Accounts Payable 12,000
Merchandise Inventory 12,000
Accounts Payable 48,000
c.
 Cash 47,040
Merchandise Inventory 960





The debits and credits from four related transactions are presented in the following T accounts. Describe each transaction.


Cash Accounts Payable
(2) 300 (3) 4,000 (1) 21,000
(4) 16,830 (4) 17,000
Merchandise Inventory
(1) 21,000 (3) 4,000
(2) 300 (4) 170
Answer:
(1) Purchased merchandise on account at a cost of $21,000.
(2) Paid freight, $300.
(3) An allowance or return of merchandise was granted by the creditor, $4,000.
(4) Paid the balance due within the discount period: debited Accounts Payable, $17,000, and credited Merchandise Inventory for the amount of the discount, $170, and Cash, $16,830.

The stockholders’ equity T accounts of I-Cards Inc. for the current fiscal year ended December 31, 2014, are as follows. Prepare a statement of stockholders’ equity

The stockholders’ equity T accounts of I-Cards Inc. for the current fiscal year ended December 31, 2014, are as follows. Prepare a statement of stockholders’ equity for the fiscal year ended December 31, 2014.

























COMMON STOCK
Jan. 1 Balance 4,800,000
Apr. 14 Issued
30,000 shares 1,200,000
Dec. 31 Balance 6,000,000
PAID-IN CAPITAL IN EXCESS OF PAR
Jan. 1 Balance 960,000
Apr. 14 Issued
30,000 shares 300,000
Dec. 31 Balance 1,260,000
TREASURY STOCK
Aug. 7 Purchased
12,000 shares 552,000
RETAINED EARNINGS
Mar. 31 Dividend 69,000 Jan. 1 Balance 11,375,000
June 30 Dividend 69,000 Dec. 31 Closing
(net income) Sept. 30 Dividend 69,000 3,780,000
Dec. 31 Dividend 69,000 Dec. 31 Balance 14,879,000









Answer:

















I-CARDS INC.
Statement of Stockholders’ Equity
For the Year Ended December 31, 2014
Common
Stock,
$40 par
Paid-In
Capital in
Excess
of Par
Treasury
Stock
Retained
Earnings Total
Balance, Jan. 1, 2014 $4,800,000 $ 960,000 — $11,375,000 $17,135,000
Issued 30,000 shares
of common stock 1,200,000 300,000 1,500,000
Purchased 12,000 shares
as treasury stock $(552,000) (552,000)
Net income 3,780,000 3,780,000
Dividends (276,000) (276,000)
Balance, Dec. 31, 2014 $6,000,000 $1,260,000 $(552,000) $14,879,000 $21,587,00