Journal entries for merchandise transactions - perpetual system webster company was established on july 1. its sales terms are 2/10, n/30. credit terms for its purchases vary with the supplier. selected transactions for the first month of operations are given below. unless noted, all transactions are on account and involve merchandise held for resale. webster co. uses the perpetual system. july1 purchased goods from dawson inc $2,500; terms 1/10, n/302 purchased goods from penn co, $4,500; terms 2/10, n/303 paid freight on shipment from dawson, $3005 sold merchandise to ward, inc. $1,400 ($1,100 cost)5 paid freight on shipment to ward, inc $90 (delivery expense)8 returned $500 worth of the goods purchased july 1 from dawson, inc. because some goods were damaged. dawson approved the return.9 received returned goods from ward, inc. worth $200 ($150 cost)10 paid dawson inc the amount due10 purchased goods from dorn company with a list price of $2,600. terms 2/10, n/3011 paid freight on shipent from dorn co., $15015 sold merchandise to colby corporation, $3,200 ($2,400 cost)16 mailed a check to penn company for the amount due on its july 2 invoice18 received an allowance of $200 from dorn company for defective merchandise purchased on july 1019 paid dorn company the amount due25 received the amount due from colby corp. prepare the necessary journal enteries for the webster company15 recd the amount due from ward inc.

Zachary company produces commercial gardening equipment. since production is highly automated, the company allocates its overhead costs to product lines using activity-based costing. the costs and cost drivers associated with the four overhead activity cost pools follow: activities unit level batch level product level facility level cost $ 64,800 $ 27,730 $ 15,000 $ 154,000 cost driver 2,400 labor hrs. 47 setups percentage of use 11,000 units production of 780 sets of cutting shears, one of the company’s 20 products, took 240 labor hours and 7 setups and consumed 15 percent of the product-sustaining activities. required: (a) had the company used labor hours as a company wide allocation base, how much overhead would it have allocated to the cutting shears? (b) how much overhead is allocated to the cutting shears using activity-based costing? (c) compute the overhead cost per unit for cutting shears first using activity-based costing and then using direct labor hours for allocation if 780 units are produced. if direct product costs are $150 and the product is priced at 30 percent above cost for what price would the product sell under each allocation system? (d) assuming that activity-based costing provides a more accurate estimate of cost, indicate whether the cutting shears would be over- or underpriced if direct labor hours are used as an allocation base. explain how over-or undercosting can affect vaulker's profitability. (e) comment on the validity of using the allocated facility-level cost in the pricing decision. should other costs be considered in a cost- plus pricing decision? if so, which ones? what costs would you include if you were trying to decide whether to accept a special order?