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Principles of Accounting, Volume 1: Financial Accounting

Problem Set B

Principles of Accounting, Volume 1: Financial AccountingProblem Set B
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Table of contents
  1. Preface
  2. 1 Role of Accounting in Society
    1. Why It Matters
    2. 1.1 Explain the Importance of Accounting and Distinguish between Financial and Managerial Accounting
    3. 1.2 Identify Users of Accounting Information and How They Apply Information
    4. 1.3 Describe Typical Accounting Activities and the Role Accountants Play in Identifying, Recording, and Reporting Financial Activities
    5. 1.4 Explain Why Accounting Is Important to Business Stakeholders
    6. 1.5 Describe the Varied Career Paths Open to Individuals with an Accounting Education
    7. Key Terms
    8. Summary
    9. Multiple Choice
    10. Questions
  3. 2 Introduction to Financial Statements
    1. Why It Matters
    2. 2.1 Describe the Income Statement, Statement of Owner’s Equity, Balance Sheet, and Statement of Cash Flows, and How They Interrelate
    3. 2.2 Define, Explain, and Provide Examples of Current and Noncurrent Assets, Current and Noncurrent Liabilities, Equity, Revenues, and Expenses
    4. 2.3 Prepare an Income Statement, Statement of Owner’s Equity, and Balance Sheet
    5. Key Terms
    6. Summary
    7. Multiple Choice
    8. Questions
    9. Exercise Set A
    10. Exercise Set B
    11. Problem Set A
    12. Problem Set B
    13. Thought Provokers
  4. 3 Analyzing and Recording Transactions
    1. Why It Matters
    2. 3.1 Describe Principles, Assumptions, and Concepts of Accounting and Their Relationship to Financial Statements
    3. 3.2 Define and Describe the Expanded Accounting Equation and Its Relationship to Analyzing Transactions
    4. 3.3 Define and Describe the Initial Steps in the Accounting Cycle
    5. 3.4 Analyze Business Transactions Using the Accounting Equation and Show the Impact of Business Transactions on Financial Statements
    6. 3.5 Use Journal Entries to Record Transactions and Post to T-Accounts
    7. 3.6 Prepare a Trial Balance
    8. Key Terms
    9. Summary
    10. Multiple Choice
    11. Questions
    12. Exercise Set A
    13. Exercise Set B
    14. Problem Set A
    15. Problem Set B
    16. Thought Provokers
  5. 4 The Adjustment Process
    1. Why It Matters
    2. 4.1 Explain the Concepts and Guidelines Affecting Adjusting Entries
    3. 4.2 Discuss the Adjustment Process and Illustrate Common Types of Adjusting Entries
    4. 4.3 Record and Post the Common Types of Adjusting Entries
    5. 4.4 Use the Ledger Balances to Prepare an Adjusted Trial Balance
    6. 4.5 Prepare Financial Statements Using the Adjusted Trial Balance
    7. Key Terms
    8. Summary
    9. Multiple Choice
    10. Questions
    11. Exercise Set A
    12. Exercise Set B
    13. Problem Set A
    14. Problem Set B
    15. Thought Provokers
  6. 5 Completing the Accounting Cycle
    1. Why It Matters
    2. 5.1 Describe and Prepare Closing Entries for a Business
    3. 5.2 Prepare a Post-Closing Trial Balance
    4. 5.3 Apply the Results from the Adjusted Trial Balance to Compute Current Ratio and Working Capital Balance, and Explain How These Measures Represent Liquidity
    5. 5.4 Appendix: Complete a Comprehensive Accounting Cycle for a Business
    6. Key Terms
    7. Summary
    8. Multiple Choice
    9. Questions
    10. Exercise Set A
    11. Exercise Set B
    12. Problem Set A
    13. Problem Set B
    14. Thought Provokers
  7. 6 Merchandising Transactions
    1. Why It Matters
    2. 6.1 Compare and Contrast Merchandising versus Service Activities and Transactions
    3. 6.2 Compare and Contrast Perpetual versus Periodic Inventory Systems
    4. 6.3 Analyze and Record Transactions for Merchandise Purchases Using the Perpetual Inventory System
    5. 6.4 Analyze and Record Transactions for the Sale of Merchandise Using the Perpetual Inventory System
    6. 6.5 Discuss and Record Transactions Applying the Two Commonly Used Freight-In Methods
    7. 6.6 Describe and Prepare Multi-Step and Simple Income Statements for Merchandising Companies
    8. 6.7 Appendix: Analyze and Record Transactions for Merchandise Purchases and Sales Using the Periodic Inventory System
    9. Key Terms
    10. Summary
    11. Multiple Choice
    12. Questions
    13. Exercise Set A
    14. Exercise Set B
    15. Problem Set A
    16. Problem Set B
    17. Thought Provokers
  8. 7 Accounting Information Systems
    1. Why It Matters
    2. 7.1 Define and Describe the Components of an Accounting Information System
    3. 7.2 Describe and Explain the Purpose of Special Journals and Their Importance to Stakeholders
    4. 7.3 Analyze and Journalize Transactions Using Special Journals
    5. 7.4 Prepare a Subsidiary Ledger
    6. 7.5 Describe Career Paths Open to Individuals with a Joint Education in Accounting and Information Systems
    7. Key Terms
    8. Summary
    9. Multiple Choice
    10. Questions
    11. Exercise Set A
    12. Exercise Set B
    13. Problem Set A
    14. Problem Set B
    15. Thought Provokers
  9. 8 Fraud, Internal Controls, and Cash
    1. Why It Matters
    2. 8.1 Analyze Fraud in the Accounting Workplace
    3. 8.2 Define and Explain Internal Controls and Their Purpose within an Organization
    4. 8.3 Describe Internal Controls within an Organization
    5. 8.4 Define the Purpose and Use of a Petty Cash Fund, and Prepare Petty Cash Journal Entries
    6. 8.5 Discuss Management Responsibilities for Maintaining Internal Controls within an Organization
    7. 8.6 Define the Purpose of a Bank Reconciliation, and Prepare a Bank Reconciliation and Its Associated Journal Entries
    8. 8.7 Describe Fraud in Financial Statements and Sarbanes-Oxley Act Requirements
    9. Key Terms
    10. Summary
    11. Multiple Choice
    12. Questions
    13. Exercise Set A
    14. Exercise Set B
    15. Problem Set A
    16. Problem Set B
    17. Thought Provokers
  10. 9 Accounting for Receivables
    1. Why It Matters
    2. 9.1 Explain the Revenue Recognition Principle and How It Relates to Current and Future Sales and Purchase Transactions
    3. 9.2 Account for Uncollectible Accounts Using the Balance Sheet and Income Statement Approaches
    4. 9.3 Determine the Efficiency of Receivables Management Using Financial Ratios
    5. 9.4 Discuss the Role of Accounting for Receivables in Earnings Management
    6. 9.5 Apply Revenue Recognition Principles to Long-Term Projects
    7. 9.6 Explain How Notes Receivable and Accounts Receivable Differ
    8. 9.7 Appendix: Comprehensive Example of Bad Debt Estimation
    9. Key Terms
    10. Summary
    11. Multiple Choice
    12. Questions
    13. Exercise Set A
    14. Exercise Set B
    15. Problem Set A
    16. Problem Set B
    17. Thought Provokers
  11. 10 Inventory
    1. Why It Matters
    2. 10.1 Describe and Demonstrate the Basic Inventory Valuation Methods and Their Cost Flow Assumptions
    3. 10.2 Calculate the Cost of Goods Sold and Ending Inventory Using the Periodic Method
    4. 10.3 Calculate the Cost of Goods Sold and Ending Inventory Using the Perpetual Method
    5. 10.4 Explain and Demonstrate the Impact of Inventory Valuation Errors on the Income Statement and Balance Sheet
    6. 10.5 Examine the Efficiency of Inventory Management Using Financial Ratios
    7. Key Terms
    8. Summary
    9. Multiple Choice
    10. Questions
    11. Exercise Set A
    12. Exercise Set B
    13. Problem Set A
    14. Problem Set B
    15. Thought Provokers
  12. 11 Long-Term Assets
    1. Why It Matters
    2. 11.1 Distinguish between Tangible and Intangible Assets
    3. 11.2 Analyze and Classify Capitalized Costs versus Expenses
    4. 11.3 Explain and Apply Depreciation Methods to Allocate Capitalized Costs
    5. 11.4 Describe Accounting for Intangible Assets and Record Related Transactions
    6. 11.5 Describe Some Special Issues in Accounting for Long-Term Assets
    7. Key Terms
    8. Summary
    9. Multiple Choice
    10. Questions
    11. Exercise Set A
    12. Exercise Set B
    13. Problem Set A
    14. Problem Set B
    15. Thought Provokers
  13. 12 Current Liabilities
    1. Why It Matters
    2. 12.1 Identify and Describe Current Liabilities
    3. 12.2 Analyze, Journalize, and Report Current Liabilities
    4. 12.3 Define and Apply Accounting Treatment for Contingent Liabilities
    5. 12.4 Prepare Journal Entries to Record Short-Term Notes Payable
    6. 12.5 Record Transactions Incurred in Preparing Payroll
    7. Key Terms
    8. Summary
    9. Multiple Choice
    10. Questions
    11. Exercise Set A
    12. Exercise Set B
    13. Problem Set A
    14. Problem Set B
    15. Thought Provokers
  14. 13 Long-Term Liabilities
    1. Why It Matters
    2. 13.1 Explain the Pricing of Long-Term Liabilities
    3. 13.2 Compute Amortization of Long-Term Liabilities Using the Effective-Interest Method
    4. 13.3 Prepare Journal Entries to Reflect the Life Cycle of Bonds
    5. 13.4 Appendix: Special Topics Related to Long-Term Liabilities
    6. Key Terms
    7. Summary
    8. Multiple Choice
    9. Questions
    10. Exercise Set A
    11. Exercise Set B
    12. Problem Set A
    13. Problem Set B
    14. Thought Provokers
  15. 14 Corporation Accounting
    1. Why It Matters
    2. 14.1 Explain the Process of Securing Equity Financing through the Issuance of Stock
    3. 14.2 Analyze and Record Transactions for the Issuance and Repurchase of Stock
    4. 14.3 Record Transactions and the Effects on Financial Statements for Cash Dividends, Property Dividends, Stock Dividends, and Stock Splits
    5. 14.4 Compare and Contrast Owners’ Equity versus Retained Earnings
    6. 14.5 Discuss the Applicability of Earnings per Share as a Method to Measure Performance
    7. Key Terms
    8. Summary
    9. Multiple Choice
    10. Questions
    11. Exercise Set A
    12. Exercise Set B
    13. Problem Set A
    14. Problem Set B
    15. Thought Provokers
  16. 15 Partnership Accounting
    1. Why It Matters
    2. 15.1 Describe the Advantages and Disadvantages of Organizing as a Partnership
    3. 15.2 Describe How a Partnership Is Created, Including the Associated Journal Entries
    4. 15.3 Compute and Allocate Partners’ Share of Income and Loss
    5. 15.4 Prepare Journal Entries to Record the Admission and Withdrawal of a Partner
    6. 15.5 Discuss and Record Entries for the Dissolution of a Partnership
    7. Key Terms
    8. Summary
    9. Multiple Choice
    10. Questions
    11. Exercise Set A
    12. Exercise Set B
    13. Problem Set A
    14. Problem Set B
    15. Thought Provokers
  17. 16 Statement of Cash Flows
    1. Why It Matters
    2. 16.1 Explain the Purpose of the Statement of Cash Flows
    3. 16.2 Differentiate between Operating, Investing, and Financing Activities
    4. 16.3 Prepare the Statement of Cash Flows Using the Indirect Method
    5. 16.4 Prepare the Completed Statement of Cash Flows Using the Indirect Method
    6. 16.5 Use Information from the Statement of Cash Flows to Prepare Ratios to Assess Liquidity and Solvency
    7. 16.6 Appendix: Prepare a Completed Statement of Cash Flows Using the Direct Method
    8. Key Terms
    9. Summary
    10. Multiple Choice
    11. Questions
    12. Exercise Set A
    13. Exercise Set B
    14. Problem Set A
    15. Problem Set B
    16. Thought Provokers
  18. A | Financial Statement Analysis
  19. B | Time Value of Money
  20. C | Suggested Resources
  21. Answer Key
    1. Chapter 1
    2. Chapter 2
    3. Chapter 3
    4. Chapter 4
    5. Chapter 5
    6. Chapter 6
    7. Chapter 7
    8. Chapter 8
    9. Chapter 9
    10. Chapter 10
    11. Chapter 11
    12. Chapter 12
    13. Chapter 13
    14. Chapter 14
    15. Chapter 15
    16. Chapter 16
  22. Index
PB 1.

LO 6.1Record journal entries for the following transactions of Furniture Warehouse.

  1. July 5: Purchased 30 couches at a cost of $150 each from a manufacturer. Credit terms are 2/15, n/30, invoice date July 5.
  2. July 10: Furniture Warehouse returned 5 couches for a full refund.
  3. July 15: Furniture Warehouse found 6 defective couches, but kept the merchandise for an allowance of $500.
  4. July 20: Furniture Warehouse paid their account in full with cash.
PB 2.

LO 6.1Record journal entries for the following transactions of Mason Suppliers.

  1. Sep. 8: Purchased 50 deluxe hammers at a cost of $95 each from a manufacturer. Credit terms are 5/20, n/60, invoice date September 8.
  2. Sep. 12: Mason Suppliers returned 8 hammers for a full refund.
  3. Sep. 16: Mason Suppliers found 4 defective hammers, but kept the merchandise for an allowance of $250.
  4. Sep. 28: Mason Suppliers paid their account in full with cash.
PB 3.

LO 6.2Costume Warehouse sells costumes and accessories and purchases their merchandise from a manufacturer. Review the following transactions and prepare the journal entry or entries if Costume Warehouse uses

  1. the perpetual inventory system
  2. the periodic inventory system
Jun. 4 Costume Warehouse purchases 88 costumes on credit at a purchase price of $15 per costume. The terms of the purchase are 5/15, n/30, with an invoice date of June 4.
Jun. 12 Costume Warehouse returns 20 costumes to the manufacturer for a full refund.
Jun. 19 Costume Warehouse pays in full for the remaining costumes, less the return.
PB 4.

LO 6.2Pharmaceutical Supplies sells medical supplies and purchases their merchandise from a manufacturer. Review the following transactions and prepare the journal entry or entries if Pharmaceutical Supplies uses

  1. the perpetual inventory system
  2. the periodic inventory system
Apr. 7 Pharmaceutical Supplies purchases 50 medical stands on credit at a purchase price of $15 per stand. The terms of the purchase are 5/10, n/45, with an invoice date of April 7.
Apr. 11 Pharmaceutical Supplies returns 18 stands to the manufacturer for a full refund.
Apr. 17 Pharmaceutical Supplies pays in full for the remaining stands, less the return.
PB 5.

LO 6.3Review the following transactions for April Anglers and record any required journal entries.

Oct. 4 April Anglers purchases 82 fishing poles at $33 each with cash.
Oct. 5 April Anglers purchases 116 fishing poles at $30 each on credit. Terms of the purchase are 3/15, n/30, invoice date October 5.
Oct. 12 April discovers 18 of the fishing poles are damaged from the October 4 purchase and returns them to the supplier for a full refund. April also discovers that 32 of the fishing poles from the October 5 purchase are the wrong length but keeps them since the supplier granted an allowance of $15 per fishing pole.
Oct. 24 April pays their account in full from the October 5 purchase, less any returns, allowances, and/or discounts.
PB 6.

LO 6.3Review the following transactions for Dish Mart and record any required journal entries. Note that all purchase transactions are with the same supplier.

Nov. 5 Dish Mart purchases 45 sets of cutlery for $100 per set with cash.
Nov. 9 Dish Mart purchases 50 sets of cutlery for $120 per set on credit. Terms of the purchase are 5/15, n/60, invoice date November 9.
Nov. 13 Dish Mart discovers 15 of the cutlery sets are damaged from the November 9 purchase and returns them to the supplier for a full refund.
Nov. 14 Dish Mart purchases 30 sets of cutlery for $130 per set on credit. Terms of the purchase are 5/10, n/60, invoice date November 14.
Nov. 15 Dish Mart discovers that 10 of the cutlery sets from the November 14 purchase and 20 of the cutlery sets from the November 5 purchase are missing a few spoons but keeps them since the supplier granted an allowance of $30 per set for the November 14 cutlery sets and $35 per set for the November 5 cutlery sets. Dish Mart and the supplier have agreed to reduce the amount of debt Dish Mart has outstanding instead of sending a separate check for the November 5 allowance in cash.
Nov. 24 Dish Mart pays their account in full for all outstanding purchases, less any returns, allowances, and/or discounts.
PB 7.

LO 6.4Review the following sales transactions for April Anglers and record any required journal entries.

Oct. 4 April Anglers made a cash sale of 40 fishing poles to customer Billie Dyer at a price of $55 per pole. The cost to April is $33 per pole.
Oct. 5 April Anglers sells 24 fishing poles to customer Billie Dyer at a price of $52 per pole on credit. The cost to April is $30 per pole. Terms of the sale are 2/10, n/30, invoice date October 5.
Oct. 12 Billie returns seven of the fishing poles from the October 4 purchase to April Anglers for a full refund. April returns these poles to their inventory at the original cost per pole. Billie also discovers that 6 of the fishing poles from the October 5 purchase are the wrong color but keeps them since April granted an allowance of $18 per fishing pole.
Oct. 24 April pays their account in full from the October 5 purchase, less any returns, allowances, and/or discounts.
PB 8.

LO 6.4Review the following sales transactions for Dish Mart and record any required journal entries. Note that all sales transactions are with the same customer, Bella Davies.

Apr. 5 Dish Mart made a cash sale of 22 sets of cutlery to Bella Davies for $330 per set. The cost per set to Dish Mart is $125 per set.
Apr. 9 Dish Mart sells 14 sets of cutlery to Bella Davies on credit for $345 per set. The cost per set to Dish Mart is $120 per set. Terms of the sale are 2/15, n/60, invoice date April 9.
Apr. 13 Bella returns nine of the cutlery sets from the April 9 sale to Dish Mart for a full refund. Dish Mart restores the cutlery to its inventory at the original cost of $120 per set.
Apr. 14 Bella purchases 18 sets of cutlery for $275 per set on credit, at a cost to Dish Mart of $124 per set. Terms of the sale are 2/10, n/60, invoice date April 14.
Apr. 15 Bella discovers that 5 of the cutlery sets from the April 14 purchase and 10 of the cutlery sets from the April 5 purchase are missing a few spoons but keeps them since Dish Mart granted an allowance of $175 per set for all dish sets. Dish Mart and Bella have agreed to reduce the amount Bella has outstanding instead of sending a separate check for the April 5 allowance in cash.
Apr. 28 Bella Davies pays her account in full for all outstanding purchases, less any returns, allowances, and/or discounts.
PB 9.

LO 6.5Record the following purchase transactions of Custom Kitchens Inc.

Oct. 6 Purchased 230 cabinet doors on credit at a cost of $46 per door. Shipping charges are an extra $2 cash per door and are not subject to discount. Terms of the purchase are 5/15, n/35, FOB Shipping Point, invoice dated October 6.
Oct. 9 Purchased 100 cabinet doors with cash at cost of $40 per door. Shipping charges are an extra $3.25 cash per door and are not subject to discount. Terms of the purchase are FOB Destination.
Oct. 20 Custom Kitchens Inc. pays in full for their purchase from October 6.
PB 10.

LO 6.5Record the following sales transactions of Money Office Supplies.

Apr. 4 Made a cash sale to a customer for 15 chairs at a sales price of $80 per chair. The cost to Money Office Supplies is $55 per chair. Shipping charges are an extra $4 cash per chair and are not subject to discount. Terms of the sale are FOB Shipping Point.
Apr. 9 Sold 20 chairs on credit for $85 per chair to a customer. The cost per chair to Money Office Supplies is $50 per chair. Shipping charges are an extra $4.50 cash per chair and are not subject to discount. Terms of the sale are 3/10, n/30, FOB Destination, invoice dated April 9.
Apr. 19 The customer pays in full for their purchase on April 9.
PB 11.

LO 6.5Record the following sales transactions of Custom Kitchens Inc.

Nov. 12 Made a cash sale to a customer for 34 cabinet doors at a sales price of $72 per door. The cost to Custom Kitchens Inc. is $46 per door. Shipping charges are an extra $3.15 cash per door and are not subject to discount. Terms of the sale are FOB Shipping Point.
Nov. 16 Sold 22 doors on credit for $80 per door to a customer. The cost per door to Custom Kitchens Inc. is $40 per door. Shipping charges are an extra $4.00 cash per door and are not subject to discount. Terms of the sale are 5/15, n/40, FOB Destination, invoice dated November 12.
Nov. 24 The customer pays in full for their purchase on November 16.
PB 12.

LO 6.6The following is the adjusted trial balance data for Elm Connections as of December 31, 2019.

Elm Connections Adjusted Trial Balance for December 31, 2019. Debits or Credits, showing Cash: $596,823 credit; Accounts Receivable: $34,672 debit; Buildings: $350,000 debit; Merchandise Inventory: $263,909 debit; Accounts Payable: $502,690 credit; Common Stock: $432,975 credit; Sales: $603,427 credit; Interest Revenue: $94,568 credit; Rent Revenue: $90,000 credit; Sales Salaries Expense: $25,180 debit; Office Supplies Expense: $5,942 debit; Sales Discounts: $99,651 debit; Interest Expense: $3,566 debit; Sales Returns and Allowances: $110,285 debit; Cost of Goods Sold: $180,630; Rent Expense: $15,485; Depreciation Expense: Office Equipment: $9,000 debit; Insurance Expense: $9,324 debit; and Advertising Expense: $19,193 debit, for a debit total of $1,723,660 and a credit total of $1,723,660.
  1. Use the data provided to compute net sales for 2019.
  2. Compute the gross margin for 2019.
  3. Compute the gross profit margin ratio (rounded to nearest hundredth)
  4. Prepare a simple income statement for the year ended December 31, 2019.
  5. Prepare a multi-step income statement for the year ended December 31, 2019.
PB 13.

LO 6.6Following is the adjusted trial balance data for Garage Parts Unlimited as of December 31, 2019.

Garage Parts Unlimited Adjusted Trial Balance for December 31, 2019. Debits or Credits, showing Cash: $624,500 credit; Accounts Receivable: $100,233 debit; Buildings: $465,099 debit; Merchandise Inventory: $277,340 debit; Accounts Payable: $287,693 credit; Common Stock: $564,500 credit; Sales: $885,244 credit; Interest Revenue: $216,745 credit; Rent Revenue: $101,600 credit; Sales Salaries Expense: $29,878 debit; Office Supplies Expense: $5,942 debit; Sales Discounts: $112,431 debit; Interest Expense: $9,560 debit; Sales Returns and Allowances: $162,312 debit; Cost of Goods Sold: $208,016; Rent Expense: $19,191; Depreciation Expense: Office Equipment: $8,657 debit; Insurance Expense: $10,234 debit; and Advertising Expense: $22,389 debit, for a debit total of $2,055,782 and a credit total of $2,055,782.
  1. Use the data provided to compute net sales for 2019.
  2. Compute the gross margin or 2019.
  3. Compute the gross profit margin ratio (rounded to nearest hundredth)
  4. Prepare a simple income statement for the year ended December 31, 2019.
  5. Prepare a multi-step income statement for the year ended December 31, 2019.
PB 14.

LO 6.7Review the following transactions for April Anglers and record any required journal entries.

Oct. 4 April Anglers purchases 82 fishing poles at $33 each with cash.
Oct. 5 April Anglers purchases 116 fishing poles at $30 each on credit. Terms of the purchase are 3/15, n/30, invoice date October 5.
Oct. 12 April discovers 18 of the fishing poles are damaged from the October 4 purchase and returns them to the supplier for a full refund. April also discovers that 32 of the fishing poles from the October 5 purchase are the wrong length but keeps them since the supplier granted an allowance of $15 per fishing pole.
Oct. 24 April pays their account in full from the October 5 purchase, less any returns, allowances, and/or discounts.
PB 15.

LO 6.7Review the following sales transactions for Dish Mart and record any required journal entries. Note that all sales transactions are with the same customer, Bella Davies.

Apr. 5 Dish Mart made a cash sale of 22 sets of cutlery to Bella Davies for $330 per set. The cost per set to Dish Mart is $125 per set.
Apr. 9 Dish Mart sells 14 sets of cutlery to Bella Davies on credit for $345 per set, with a cost to Dish Mart of $120 per set. Terms of the sale are 2/15, n/60, invoice date April 9.
Apr. 13 Bella discovers 9 of the cutlery sets are damaged from the April 9 sale and returns them to Dish Mart for a full refund.
Apr. 14 Bella purchases 18 sets of cutlery for $275 per set on credit, at a cost to Dish Mart of $124 per set. Terms of the sale are 2/10, n/60, invoice date April 14.
Apr. 15 Bella discovers that 5 of the cutlery sets from the April 14 purchase and 10 of the cutlery sets from the April 5 purchase are missing a few spoons but keeps them since Dish Mart granted an allowance of $175 per set for all dish sets. Dish Mart and Bella have agreed to reduce the amount Bella has outstanding instead of sending a separate check for the April 5 allowance in cash.
Apr. 28 Bella Davies pays her account in full for all outstanding purchases, less any returns, allowances, and/or discounts.
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