Log out Go to App
Go to App

Learning Materials

Features

Discover

Chapter 5: Q14SE (page 298)

Consider the following transactions for Garman Packing Supplies:

Apr. 10 Garman Packing Supplies buys \(175,000 worth of merchandise inventory on account with credit terms of 1/10, n/30.

12 Garman returns \)15,200 of the merchandise to the vendor due to damage during shipment.

19 Garman paid the amount due, less the return and discount.

Requirements

1. Journalize the purchase transactions assuming Garman Packing Supplies uses the periodic inventory system. Explanations are not required.

2. What is the amount of net purchases?

Short Answer

Expert verified

The net purchase of the company is$158,202.

Step by step solution

01

Meaning of Periodic Inventory System

There are two inventory systems available for the business entities inaccounting, which they can use according to their business structure. A periodic inventory system requires less effort and skills because it updatesinventory accounts periodically.

02

Preparation of journal entries

Date

Accounts and Explanation

Debit ($)

Credit ($)

Apr 10

Purchases

175,000

Accounts payable

175,000

Apr 12

Accounts payable

15,200

Purchase return

15,200

Apr 19

Accounts payable (175000-15200)

159,800

Cash

158,202

Discount received (159800*1%)

1,598

03

Computation of net purchases

Particulars

Amounts ($)

Purchases

175,000

Less: Purchase returns

(15,200)

Less: Discount

(1,598)

Net purchases

158,202

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Start your free trial

Over 30 million students worldwide already upgrade their learning with Vaia!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

Journalize the following sales transactions for Austin Mall. Assume Austin Mall uses the gross method to record sales revenue. Explanations are not required.

Jan. 4 Sold \(10,000 of antiques on account, credit terms are 1/15, n/30. Cost of goods is \)5,000.

20 Austin Mall received payment from the customer on the amount due from Jan. 4.

20 Sold \(5,200 of antiques on account, credit terms are 1/10, n/45, FOB destination. Cost of goods is \)2,600.

20 Austin Mall paid $120 on freight out.

29 Received payment from the customer on the amount due from Jan. 20, less the discount.

What are the two types of merchandisers? How do they differ?

What is an invoice?

Journalize the following sales transactions for King Company. Explanations are not required.

Apr. 1 King Company sold merchandise inventory for \(150. The cost of the inventory was \)90. The customer paid cash. King Company was running a promotion and the customer received a \(20 award at the time of sale that can be used at a future date on any King Company merchandise.

May 15 The customer uses the \)20 award when purchasing merchandise inventory for \(30. The cost of the inventory was \)18. The customer paid cash.

Question: Capital City Motorcycle’s selected accounts as of December 31, 2018, follow:

Selling Expenses $ 10,500

Interest Revenue 1,000

Net Sales Revenue 113,500

Cost of Goods Sold 85,000

Administrative Expenses 8,000

Prepare the multi-step income statement for the year ended December 31, 2018.
See all solutions

Recommended explanations on Business Studies Textbooks

Introduction to Business

Read Explanation

Managers

Read Explanation

Human Resources

Read Explanation

Corporate Finance

Read Explanation

Business Operations

Read Explanation

Operational Management

Read Explanation
View all explanations

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.

Sign-up for free