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Chapter 5: Q5-25RQ (page 294)
What account is debited when recording a purchase of inventory when using a periodic inventory system?
The purchase account is debited when recording a purchase of inventory while using aperiodic inventory system.
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Suppose Piranha.com sells 3,500 books on account for \(17 each (cost of these books is \)35,700) on October 10, 2018 to The Textbook Store. One hundred of these books (cost $1,020) were damaged in shipment, so Piranha.com later received the damaged goods from The Textbook Store as sales returns on October 13, 2018.
Requirements
1. Journalize The Textbook Store鈥檚 October 2018 transactions.
2. Journalize Piranha.com鈥檚 October 2018 transactions. The company estimates sales returns at the end of each month.
Journalize the following sales transactions for Antique Mall. Explanations are not required. The company estimates sales returns at the end of each month.
Jan. 4 Sold \(16,000 of antiques on the account; credit terms are n/30. The cost of goods is \)8,000.
8 Received a \(300 sales return on damaged goods from the customer. The cost of goods damaged is \)150.
13 Antique Mall received payment from the customer on the amount due from Jan. 4, less the return.
20 Sold \(4,900 of antiques on the account; credit terms are 1/10, n/45, FOB destination. The cost of goods is \)2,450.
20 Antique Mall paid $70 on freight out.
29 Received payment from the customer on the amount due from Jan. 20, less the discount.
Kingston Tires received the following invoice from a supplier (Fields Distribution, Inc.):
Requirements
1. Journalize the transaction required by Kingston Tires on September 23, 2018. Do not round numbers to the nearest whole dollar. Assume tires are purchased on account.
2. Journalize the return on Kingston鈥檚 books on September 28, 2018, of the D39鈥揦4 Radials, which were ordered by mistake. Do not round numbers to the nearest whole dollar.
3. Journalize the payment on October 1, 2018, to Fields Distribution, Inc. Do not round numbers to the nearest whole dollar.
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.
Macarthy Landscape Supply鈥檚 selected accounts as of December 31, 2018, follow. Compute the gross profit percentage for 2018.
Selling Expenses $ 12,900
Interest Revenue 900
Net Sales Revenue 134,700
Cost of Goods Sold 114,000
Administrative Expenses 10,200
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