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Chapter 5: Q5-8TI (page 280)

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.

Short Answer

Expert verified

The total debit and credit of the journal are $56,760.

Step by step solution

01

Meaning of Periodic Inventory System

An inventory system that periodically updates the inventory transactions is termed a periodic inventory system. Under this system, a business entity updates its inventory accounts at the end of an accounting period and tracks its beginning and closing inventories.

02

Preparation of journal entries

Date

Accounts and Explanation

Debit ($)

Credit ($)

July 1

Purchases

20,500

Accounts payable

20,500

(To record the purchase of computers)

July 3

Accounts payable

4,000

Purchase return

4,000

(To record the return of goods)

July 9

Accounts payable

16,500

Cash

16,170

Purchase discount

330

(To record the payment within the discount period)

July 12

Accounts receivable

8,000

Sales revenue

8,000

(To record the sale of computers)

July 26

Cash

7,760

Sales discount

240

Accounts receivable

8,000

(Cash received within the discount period)

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Most popular questions from this chapter

Journalize the following transactions that occurred in September 2018 for Cardinal. Assume Cardinal uses the gross method to record sales revenue. No explanations are needed. Identify each accounts payable and accounts receivable with the vendor or customer name.

Sep. 3 Purchased merchandise inventory on account from Sherry Wholesalers, \(4,000. Terms 1/15, n/EOM, FOB shipping point.

4 Paid freight bill of \)75 on September 3 purchase.

4 Purchased merchandise inventory for cash of \(1,900.

6 Returned \)1,100 of inventory from September 3 purchase.

8 Sold merchandise inventory to Houston Company, \(5,500, on account. Terms 3/15, n/35. Cost of goods, \)2,365.

9 Purchased merchandise inventory on account from Tarin Wholesalers, \(12,000. Terms 3/10, n/30, FOB destination.

10 Made payment to Sherry Wholesalers for goods purchased on September 3, less return and discount.

13 After negotiations, received a \)200 allowance from Tarin Wholesalers.

15 Sold merchandise inventory to Java Company, \(3,300, on account. Terms 2/10, n/EOM. Cost of goods, \)1,320.

22 Made payment, less allowance, to Tarin Wholesalers for goods purchased on September 9.

25 Sold merchandise inventory to Smecker for \(1,900 on account that cost \)722. Terms of 1/10, n/30 were offered, FOB shipping point. As a courtesy to Smecker, $85 of freight was added to the invoice for which cash was paid by Cardinal.

28 Received payment from Houston Company.

29 Received payment from Smecker, less discount.

30 Received payment from Java Company.

Describe the operating cycle of a merchandiser.

Journalize the following transactions that occurred in November 2018 for May鈥檚 Adventure Park. Assume May鈥檚 uses the gross method to record sales revenue. No explanations are needed. Identify each accounts payable and accounts receivable with the vendor or customer name.

Nov. 4 Purchased merchandise inventory on account from Valera Company, \(8,000. Terms 1/10, n/EOM, FOB shipping point.

6 Paid freight bill of \)160 on November 4 purchase.

8 Returned half the inventory purchased on November 4 from Valera Company.

10 Sold merchandise inventory for cash, \(1,700. Cost of goods, \)680. FOB destination.

11 Sold merchandise inventory to Garrison Corporation, \(10,300, on account, terms of 3/10, n/EOM. Cost of goods, \)5,150. FOB shipping point.

12 Paid freight bill of \(30 on November 10 sale.

13 Sold merchandise inventory to Cain Company, \)9,000, on account, terms of 1/10, n/45. Cost of goods, \(4,500. FOB shipping point.

14 Paid the amount owed on account from November 4, less return and discount.

18 Purchased inventory of \)3,700 on account from Regan Corporation. Payment terms were 2/10, n/30, FOB destination.

20 Received cash from Garrison Corporation, less discount.

26 Paid amount owed on account from November 18, less discount.

28 Received cash from Cain Company.

29 Purchased inventory from Sanders Corporation for cash, \(12,000, FOB shipping point. Freight in paid to shipping company, \)200.

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.

Match the accounting terminology to the definitions.

1. Cost of Goods Sold

a. An inventory system that requires businesses to obtain a physical count of inventory to determine quantities on hand.

2. Perpetual inventory system

b. Expenses, other than the Cost of Goods Sold, that are incurred in the entity鈥檚 major ongoing operations.

3. Vendor

c. Excess of Net Sales Revenue over Cost of Goods Sold.

4. Periodic inventory system

d. The cost of merchandise inventory that the business has sold to customers.

5. Operating expenses

e. The individual or business from whom a company purchases goods.

6. Gross profit

f. An inventory system that keeps a running computerized record of merchandise inventory.
See all solutions

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