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21. Make appropriate entries for the following transactions at the Franke Company or Thompson Products. Indicate for each account used whether is it an asset, a liability, a revenue, or an expense account.

    1. Franke purchases $7,500 of merchandise for resale; Franke uses the end-of-period adjustment for determine the cost of goods sold for the period.

    2. Thompson purchases $5,000 of parts to be incorporated into the products it manufactures; Thompson maintains perpetual inventory valuations.

    3. Franke sells $10,000 of merchandise and offers all of its customers payment terms of 2%, 10 days/net, 30 days; Franke accounts for cash discounts offered on the net basis.

    4. Thompson sells $10,000 of merchandise and offers all of its customers payment terms of 2%, 10 days/net, 30 days; Thompson accounts for cash discounts offered on the gross basis.

    5. Franke receives a $400 payment from a bankruptcy customer in full payment of the customers $800 receivable (originally recorded 10 months ago). Franke uses an Allowance for Doubtful Accounts contra account.

    6. Thompson receives a $500 payment from a bankruptcy customer in full payment of the customers $1000 receivable (originally recorded in the last fiscal year). Thompson does not use an Allowance for Doubtful Accounts contra account.

    7. Franke pays an employee $2,000 for vacation leave that the employee is taking this accounting period. Franke cactus the liability for vacation salaries as employees earn vacation days throughout the year.

    8. Thompson pays $2,000 of dividends on its common stock; these dividends were declared and accrued during the last accounting period.

    9. Franke pays $1,4000 for an insurance policy that provides protection beginning next month.

    10. Thompson pays $5,000 in an out-of-court settlement of a lawsuit for which it had previously accrued (reserved) $10,000 of probable liability.

format required: name what accounts are being debited and credited (ex -The traveling expense account should be debited by $1000 and a credit to the cash account for $1000) and indicate whether it is an asset, a liability, a revenue, or an expense account.

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