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Chapter 5: Q29RQ (page 295)
Is an adjusting entry needed for inventory shrinkage when using the periodic inventory system? Explain.
Answer
No adjusting entry is passed for the inventory shrinkage.
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Describe the journal entry(ies) when recording a sale of inventory using the periodic inventory system.
What is a purchase return? How does a purchase allowance differ from a purchase return?
Journalize the following sales transactions for Salem Sportswear. Explanations are not required. The company estimates sales returns at the end of each month.
Jul. 1 Salem sold \(20,000 of men鈥檚 sportswear for cash. Cost of goods sold is \)10,000.
3 Salem sold \(62,000 of women鈥檚 sportswear on account, credit terms are 3/10, n/30. Cost of goods is \)31,000.
5 Salem received a \(4,500 sales return on damaged goods from the customer on July 1. Cost of goods damaged is \)2,250.
10 Salem receives payment from the customer on the amount due, less discount.
Under the new revenue recognition standard, how is the sale of inventory recorded?
The unadjusted trial balance for Trudel Electronics Company at March 31, 2018, follows:
TRUDEL ELECTRONICS COMPANY
Unadjusted Trial Balance
March 31, 2018
Balance
Account Title Debit Credit
Cash \(4,000
Accounts Receivable 38,800
Merchandise Inventory 45,500
Office Supplies 6,500
Equipment 130,000
Accumulated Depreciation-Equipment \)36,800
Accounts Payable 17,400
Unearned revenue 13,200
Notes Payable, long-term 48,000
Common Stock 60,000
Retained Earnings 100
Dividends 20,000
Sales Revenue 282,500
Cost of Goods Sold 160,600
Salaries Expense (Selling) 20,000
Rent Expense (Selling) 15,800
Salaries Expenses (Administrative) 5,700
Utilities Expenses (Administrative) 11,100
Total \(458,000 \)458,000
Requirements
1. Journalize the adjusting entries using the following data:
a. Interest revenue accrued, \(200.
b. Salaries (Selling) accrued, \)2,300.
c. Depreciation Expense鈥擡quipment (Administrative), \(1,300.
d. Interest expense accrued, \)1,500.
e. A physical count of inventory was completed. The ending Merchandise Inventory should have a balance of \(45,200.
f. Trudel estimates that approximately \)6,000 of merchandise sold will be returned with a cost of $1,200.
2. Prepare Trudel Electronics鈥檚 adjusted trial balance as of March 31, 2018.
3. Prepare Trudel Electronics鈥檚 multi-step income statement for year ended March 31, 2018.
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