For Each of the Following Situations, Record the Journal Entries

question 27

Essay

For each of the following situations, record the journal entries required.
On February 1, 2014, Alloy Company purchased $5,000 of merchandise from Alysou Company on account, terms 2/15, n/30, FOB shipping point. The goods cost Alysou $2,900. Alysou uses the perpetual inventory method.
On March 1, Alysou purchased a patent for $6,000. The patent was registered with the Canadian Intellectual Property Office 8 years ago. Alysou estimated that it would keep the patent for 8 years. Amortization is recorded on December 31.
On April 23, Lauren paid $4,650 to Alysou Company to fulfill her promissory note agreement. Of the $4,650, $650 is interest.
A year end physical count is performed for Alysou Company and it is determined that $25,240 worth of inventory is on hand on December 31. The balance sheet has a value of $26,700 as the inventory balance.

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Definitions:

Price Stability

The economic condition in which prices in the economy do not change significantly in either direction and remain relatively stable.

Government Transfer Program

Programs through which governments redistribute income, typically from taxpayers to individuals in need, such as welfare, social security, and unemployment benefits.

Unemployment Compensation

Financial payments made to individuals who have lost their jobs until they find new employment, provided by the government or insurance programs.

Social Security

A government program designed to provide financial assistance to retirees, disabled individuals, and survivors of deceased workers.