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Chapter 5: Q5-10RQ (page 294)
What is a purchase return? How does a purchase allowance differ from a purchase return?
Purchase returns are the service provided to the customers to return the goods bought from the seller.
Purchase allowances are the additional incentives granted by a business to the purchasers.
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Click Computers has the following transactions in July related to purchasing and sale of merchandise inventory.
July 1 Purchase of \(20,500 worth of computers on account, terms of 2/10, n/30.
3 Return of \)4,000 of the computers to the vendor.
9 Payment made on the account.
12 Sold computers on account for $8,000 to a customer, terms 3/15, n/30.
26 Received payment from customer on balance due.
Journalize the transactions for Click Computers assuming that the company uses the periodic inventory system.
Highlight the differences in the closing process when using the periodic inventory system rather than the perpetual inventory system.
The adjusted trial balance of Quality Office Systems at March 31, 2018, follows:
The adjusted trial balance of Rachael Rey Music Company at June 30, 2018, follows:
RACHAEL REY MUSIC COMPANY
Adjusted Trial Balance
June 30, 2018
Balance
Account Title Debit Credit
Cash \(4,000
Accounts Receivable 38,400
Merchandise Inventory 18,100
Office Supplies 300
Furniture 39,900
Accumulated Depreciation-Furniture \)8,200
Accounts Payable 13,800
Salaries Payable 850
Unearned Revenue 7,500
Notes Payable, long-term 17,000
Common Stock 6,000
Retained Earnings 21,350
Dividends 40,000
Sales Revenue 184,000
Cost of Goods Sold 85,500
Selling Expense 18,600
Administrative Expense 12,000
Interest Expense 1,900
Total \(258,700 \)258,700
Requirements
1. Prepare Rachael Rey鈥檚 multi-step income statement for the year ended June 30, 2018.
2. Journalize Rachael Rey鈥檚 closing entries.
3. Prepare a post-closing trial balance as of June 30, 2018.
What account is debited when recording a purchase of inventory when using the perpetual inventory system?
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