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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

What is the Cost of Goods Sold (COGS), and where is it reported?

The unadjusted trial balance for Tuttle Electronics Company follows:

TUTTLE ELECTRONICS COMPANY

Unadjusted Trial Balance

October 31, 2018

Balance

Account Title Debit Credit

Cash \(4,200

Accounts Receivable 33,800

Merchandise Inventory 45,700

Office Supplies 5,700

Equipment 129,500

Accumulated Depreciation-Equipment \)37,200

Accounts Payable 15,600

Unearned Revenue 13,400

Notes Payable, long-term 53,000

Common Stock 48,000

Retained Earnings 6,700

Dividends 27,000

Sales Revenue 300,300

Cost of Goods Sold 171,600

Salaries Expense (Selling) 26,000

Rent Expense (Selling) 15,400

Salaries Expense (Administrative) 4,800

Utilities Expense (Administrative) 10,500

Total \(474,200 \)474,200

Requirements

1. Journalize the adjusting entries using the following data:

a. Interest revenue accrued, \(550.

b. Salaries (Selling) accrued, \)2,800.

c. Depreciation Expense鈥擡quipment (Administrative), \(1,295.

d. Interest expense accrued, \)1,500.

e. A physical count of inventory was completed. The ending Merchandise Inventory should have a balance of \(45,300.

f. Tuttle estimates that approximately \)6,200 of merchandise sold will be returned with a cost of $2,480.

2. Prepare Tuttle Electronics鈥檚 adjusted trial balance as of October 31, 2018.

3. Prepare Tuttle Electronics鈥檚 multi-step income statement for year ended October 31, 2018.

Journalize the following sales transactions for Morris Supply. Explanations are not required.

Mar. 1 Morris Supply sold merchandise inventory for \(3,000. The cost of the inventory was \)1,800. The customer paid cash. Morris Supply was running a promotion, and the customer received a \(150 award at the time of sale that can be used at a future date on any Morris Supply merchandise.

3 Sold \)6,000 of supplies on account. Credit terms are 2/10, n/45, FOB destination. The cost of goods is \(3,600.

10 Received payment from the customer on the amount due from March 3, less the discount.

Apr. 15 The customer used the \)150 award when purchasing merchandise inventory for \(200; the inventory cost was \)120. The customer paid cash.

Describe the operating cycle of a merchandiser.

How is gross profit calculated, and what does it represent?
See all solutions

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