Prescott Dolls Sells Porcelain Dolls Exclusively at Antique Shows

question 43

Essay

Prescott Dolls sells porcelain dolls exclusively at antique shows.Prescott Dolls purchases inventory from individuals at garage sales,flea markets,antique malls,and estate sales.Each time Dahlia Prescott (the owner)makes a purchase,she records the person's name,address,date,specific items purchased and price paid,and total amount spent.Later at home,Dahlia cleans,researches and prices the inventory for sale to customers.She assigns an inventory number to each item and records the "asking" price.Dahlia buys price tags and display supplies from a company that sells at flea market and antique shows.All inventory and supplies purchases are immediately paid for using cash or with company checks from a bank account in Prescott Doll's name.Cash received from customer sales are also deposited in this account.Three times a year,Dahlia rents a booth at antique shows.A deposit is always required,with the balance due at the start of the show.Dahlia records the deposit and final payment,along with the show organizer's name and address,in the same worksheet on which purchases of inventory and supplies are recorded.
Draw an REA diagram for Prescott Dolls,related to purchasing inventory and supplies,renting booths,and paying for all items.

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Definitions:

Interest Payable

A liability account showing the amount of interest expense that has been incurred but not yet paid as of the balance sheet date.

Equity Method

An accounting technique used to record an investor's earnings in proportion to their ownership stake in a company.

Periodic Net Income

Periodic net income refers to the total earnings of a company, after accounting for all expenses and taxes, over a specific financial reporting period.

Brokerage Fees

Charges that are paid to a broker for executing transactions or providing specialized services.