Pregunta
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The following are the sales transactions of EcoMart Merchandising. EcoMart uses a perpetual inventory system and the gross method.
October 1 Sold merchandise for
October 6 The customer in the October 1 sale returned
October 9 sold merchandise for
October 30 Received payment for the amount due from the October 1 sale less the return on October 6.
Use the above transactions, to analyze each transaction by indicating its effects on the components of the income statementspecifically, identify the accounts and amounts (including + or - ) for each transaction.
[The following information applies to the questions displayed below.]
The following are the sales transactions of EcoMart Merchandising. EcoMart uses a perpetual inventory system and the gross method.
October 6 The customer in the October 1 sale returned
October 9 sold merchandise for
October 30 Received payment for the amount due from the October 1 sale less the return on October 6.
Ask by Powers Chambers. in the United States
Mar 20,2025
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Transaction 1 – October 1
- Sales Revenue: +$1,800
- Cost of Goods Sold (COGS): +$1,050
Transaction 2 – October 6
- Sales Revenue: -$180
- Cost of Goods Sold (COGS): -$105
Transaction 3 – October 9
- Sales Revenue: +$850
- Cost of Goods Sold (COGS): +$570
Transaction 4 – October 30
- No Impact on Income Statement
Solución
Transaction 1 – October 1
Sales Event:
- Sales Revenue:
- Increase by
- Increase by
- Cost of Goods Sold (COGS):
- Increase by
- Increase by
Explanation: EcoMart records the full sale at its invoice amount, and under a perpetual system, the cost of goods sold is recorded at the cost of the merchandise transferred out.
Transaction 2 – October 6
Sales Return:
- Sales Revenue (contra account, Sales Returns and Allowances):
- Decrease by
- Decrease by
- Cost of Goods Sold (COGS) Adjustment:
- Decrease by
- Decrease by
Explanation: The customer returns merchandise, reducing the previously recorded sale by
Transaction 3 – October 9
Cash Sale:
- Sales Revenue:
- Increase by
- Increase by
- Cost of Goods Sold (COGS):
- Increase by
- Increase by
Explanation: For the cash sale, EcoMart records a revenue of
Transaction 4 – October 30
Receipt of Payment:
- Income Statement Impact:
- None
Explanation: The collection of cash for the October 1 sale (net of the return) is a balance sheet transaction that does not affect the income statement. Under the gross method with terms
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Simplifique esta solución The Deep Dive
Let’s break down EcoMart’s sales transactions and analyze their effects on the income statement by highlighting the relevant accounts and their changes.
-
October 1: Sale of merchandise for $1,800, cost $1,050
- Sales Revenue: +$1,800
- Cost of Goods Sold (COGS): -$1,050
- Net Impact on Income: +$750 (This transaction increases the net income by the difference between sales revenue and cost of goods sold.)
-
October 6: Return of merchandise for $180, cost $105
- Sales Returns and Allowances: -$180
- COGS: +$105 (Since the returned merchandise is added back to inventory.)
- Net Impact on Income: -$75 (Reduction in revenue due to return is greater than the adjustment to COGS.)
-
October 9: Cash sale of merchandise for $850, cost $570
- Sales Revenue: +$850
- COGS: -$570
- Net Impact on Income: +$280 (This increases the net income as sales exceed the cost.)
-
October 30: Received payment for the October 1 sale less the return on October 6
- Accounts Receivable: No immediate impact on income statement. The revenue has already been recorded.
- Cash: +$1,620 (Net amount received: $1,800 - $180 return)
- Net Impact on Income: Nothing additional here since the revenue was previously recognized; this is a cash collection.
To summarize: The initial impact from all transactions can be calculated as follows:
- Total Sales Revenue: $1,800 - $180 + $850 = $2,470
- Total COGS: $1,050 - $105 + $570 = $1,515
- Net Income Impact: $2,470 - $1,515 = $955
Thus, EcoMart’s net income from these transactions stands at $955! 🎉
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