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Chapter 5: Q5-8RQ (page 294)
What account is debited when recording a purchase of inventory when using the perpetual inventory system?
When the perpetual inventory system is used, themerchandise inventory account is debited at the time of purchase.
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Journalize the following transactions for Santa Fe Art Gift Shop. Assume Santa Fe uses the gross method to record sales revenue. Explanations are not required.
Feb. 3 Purchased \(2,800 of merchandise inventory on account under terms 3/10, n/EOM and FOB shipping point.
7 Returned \)700 of defective merchandise purchased on February 3.
9 Paid freight bill of \(400 on February 3 purchase.
10 Sold merchandise inventory on account for \)4,800. Payment terms were 1/15, n/30. These goods cost the company $2,400.
12 Paid amount owed on credit purchase of February 3, less the return and the discount.
28 Received cash from February 10 customer in full settlement of their debt.
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.
Journalize the following transactions that occurred in June 2018 for Daley Company. Assume Daley uses the periodic inventory system. No explanations are needed. Identify each accounts payable and accounts receivable with the vendor or customer name. Daley estimates sales returns at the end of each month.
Jun. 3 Purchased merchandise inventory on account from Sherry Wholesalers, \(5,500. Terms 3/15, n/EOM, FOB shipping point.
4 Paid freight bill of \)42 on June 3 purchase.
4 Purchased merchandise inventory for cash of \(1,100.
6 Returned \)200 of inventory from June 3 purchase.
8 Sold merchandise inventory to Henrich Company, \(4,400, on account. Terms 2/15, n/35.
9 Purchased merchandise inventory on account from Tex Wholesalers, \)4,600. Terms 1/10, n/30, FOB destination.
10 Made payment to Sherry Wholesalers for goods purchased on June 3, less return and discount.
12 Received payment from Henrich Company, less discount.
13 After negotiations, received a \(300 allowance from Tex Wholesalers.
15 Sold merchandise inventory to Jarvis Company, \)1,500, on account. Terms n/EOM.
22 Made payment, less allowance, to Tex Wholesalers for goods purchased on June 9.
23 Jarvis Company returned \(100 of the merchandise sold on June 15.
25 Sold merchandise inventory to Smith for \)700 on account. Terms of 3/10, n/30 was offered, FOB shipping point.
29 Received payment from Smith, less discount.
30 Received payment from Jarvis Company, less return.
When granting a sales allowance is there a return of merchandise inventory from the customer? Describe the journal entry(ies) that would be recorded.
What account is debited when recording a purchase of inventory when using a periodic inventory system?
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