Recording purchases, purchases returns, and purchases allowances LO P1 Prepare journal entries to record the following transactions for a retail store. The company uses a perpetual inventory system and the gross method
Apr. 2 Purchased $3,3ee of merchandise from Lyon Company with credit terms of 2/15, n/60, invoice dated .April 2, and FOB shipping point.
3 Paid $240 cash for shipping charges on the April 2 purchase.
4 Returned to Lyon Company unacceptable merchandise that had an invoice price of $800.
17 Sent a check to Lyon Company for the April 2 purchase, net of the discount and the returned
merchandise.
18 Purchased $5,90e of merchandise from Frist Corp. with credit terms of 1/1e, n/30, invoice dated April 18,
and FOB destination.
21 After negotiations, received from Frist a $400 allowance toward the $5,90e owed on the April 18
purchase.
28 Sent check to Frist paying for the April 18 purchase, net of the allowance and the discount.
Journal entry worksheet
1 2 3 4 5 6
Purchased $3,300 of merchandise from Lyon Company with credit terms of 2/15, n/60, invoice dated April 2, and FOB shipping point.
Note:
Date General Journal Debit Credit
Apr 02

5. profit maximization and shutting down in the short run suppose that the market for polos is a competitive market. the following graph shows the daily cost curves of a firm operating in this market. 0 2 4 6 8 10 12 14 16 18 20 50 45 40 35 30 25 20 15 10 5 0 price (dollars per polo) quantity (thousands of polos) mc atc avc for each price in the following table, calculate the firm's optimal quantity of units to produce, and determine the profit or loss if it produces at that quantity, using the data from the previous graph to identify its total variable cost. assume that if the firm is indifferent between producing and shutting down, it will produce. (hint: you can select the purple points [diamond symbols] on the previous graph to see precise information on average variable cost.) price quantity total revenue fixed cost variable cost profit (dollars per polo) (polos) (dollars) (dollars) (dollars) (dollars) 12.50 135,000 27.50 135,000 45.00 135,000 if the firm shuts down, it must incur its fixed costs (fc) in the short run. in this case, the firm's fixed cost is $135,000 per day. in other words, if it shuts down, the firm would suffer losses of $135,000 per day until its fixed costs end (such as the expiration of a building lease). this firm's shutdown price—that is, the price below which it is optimal for the firm to shut down—is per polo.

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