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Chapter 5: Q5-18RQ (page 294)
What is inventory shrinkage? Describe the adjusting entry that would be recorded to account for inventory shrinkage.
Inventory shrinkage refers to an expense that reducesthe inventory values of the business entities.
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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.
The adjusted trial balance of Rockin Robbin Dance Company at April 30, 2018, follows:
ROCKIN ROBBIN DANCE COMPANY
Adjusted Trial Balance
April 30, 2018
Balance
Account Title Debit Credit
Cash \(4,400
Accounts Receivable 38,000
Merchandise Inventory 17,800
Office Supplies 850
Furniture 39,900
Accumulated Depreciation-Furniture \)8,300
Accounts Payable 14,100
Salaries Payable 1,000
Unearned Revenue 6,500
Notes Payable, long-term 12,000
Common Stock 5,000
Retained Earnings 36,150
Dividends 40,000
Sales Revenue 178,500
Cost of Goods Sold 83,700
Selling Expense 19,000
Administrative Expense 16,000
Interest Expense 1,900
Total \(261,550 \)261,550
Requirements
1. Prepare Rockin Robbin鈥檚 multi-step income statement for the year ended April 30, 2018.
2. Journalize Rockin Robbin鈥檚 closing entries.
3. Prepare a post-closing trial balance as of April 30, 2018.
What is a merchandiser, and what is the name of the merchandise that it sells?
Consider the following transactions for Burlington Drug Store:
Feb. 2 Burlington buys \(23,800 worth of inventory on account with credit terms of 2/15, n/30, FOB shipping point.
4 Burlington pays a \)50 freight charge.
9 Burlington returns $5,200 of the merchandise due to damage during shipment.
14 Burlington paid the amount due, less return and discount.
Requirements
1. Journalize the purchase transactions. Explanations are not required.
2. In the final analysis, how much did the inventory cost Burlington Drug Store?
What is an invoice?
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