Author Question: Morris Lest began his business, Graters, Inc with 10,000 of his savings. Graters borrowed 5,000 from ... (Read 53 times)

justinmsk · **on:** Jul 5, 2018

Morris Lest began his business, Graters, Inc with 10,000 of his savings. Graters borrowed 5,000 from Baroque Bank. Graters bought 3,000 worth of graters. The rent for the store is 1,000 per month.

The first month's sales were 4,000 for inventory valued at 2,500. All of the transactions were in cash. Identify the get/give transactions above, and determine if there is an increase or decrease in assets, liabilities, or shareholders' equity.

Get Give Total Assets Total Liabilities Shareholders' Equity
Contributed capital Retained earnings
Ex. Cash Ownership +10,000 +10,000

Question 2

Merchandise subject to terms 2/10, n/30, FOB shipping point, is sold on account to a customer for 25,000 . What is the amount of the sales discount allowable?
a. 260
b. 500
c. 460
d. 150

scrocafella · **Reply #1 on:** Jul 5, 2018

Answer to Question 1

Get Give Total Assets Total Liabilities Shareholders' Equity
Contributed capital Retained earnings
Ex. Cash Ownership +10,000 +10,000
Cash IOU +5,000 +5,000
Inventory
Cash
+3,000
- 3,000
Use of store Cash -1,000 -1,000
Cash
Inventory
+4,000
-2,500 +4,000
-2,500

Answer to Question 2

b