No-Toxic-Toys currently has of equity and is planning an expansion to meet increasing demand for its product. The company currently earns in net income, and the expansion will yield in additional income before any interest expense.
The company has three options: do not expand, expand and issue in debt that requires payments of annual interest, or expand and raise from equity financing. For each option, compute net income and return on equity (Net income ÷ Equity). Ignore any income tax effects.
Mathis Company and Reece Company use the perpetual inventory system. The following transactions occurred during the month of April:
a. On April 1, Mathis purchased merchandise on account from Reece with credit terms of 2/10, n/30. The selling price of the merchandise was $3,100, and the cost of the merchandise sold was$2,225.
b. On April 1, Mathis paid freight charges of $250 cash to have the goods delivered to its warehouse.
c. On April 8, Mathis returned$800 of the merchandise which had originally cost Reece $500.
d. On April 10, Mathis paid Reece the balance due.
Prepare the journal entry to record the April 8 return of merchandise.