Log out Go to App
Go to App

Learning Materials

Features

Discover

Chapter 5: Q31E (page 304)

Journalize the following transactions for Master Bicycles using the periodic inventory system. Explanations are not required.

Nov. 2 Purchased \(3,400 of merchandise inventory under terms 2/10, n/EOM, and FOB shipping point.

6 Returned \)800 of defective merchandise purchased on November 2.

8 Paid freight bill of \(100 on November 2 purchase.

10 Sold merchandise inventory on account for \)6,100. Payment terms were 3/15, n/45.

11 Paid amount owed on credit purchase of November 2, less the return and the discount.

22 Received cash from November 10 customer in full settlement of their debt, less the discount.

Short Answer

Expert verified

The total of debits and credits is$19,100.

Step by step solution

01

Meaning of Merchandise Inventory

In accounting, merchandise inventory indicates the goods or products stocked/held by a business concern to resale and generate revenues. An inventory consists of various stages such asraw material, work-in-progress, and finished goods.

02

Preparation of journal entries

Date

Accounts and Explanation

Debit ($)

Credit ($)

Nov 2

Purchases

3,400

Accounts payable

3,400

Nov 6

Accounts payable

800

Purchase returns

800

Nov 8

Freight-in

100

Cash

100

Nov 10

Accounts receivable

6,100

Sales

6,100

Nov 11

Accounts payable (3400-800)

2,600

Purchase discount (2600*2%)

52

Cash

2,548

Nov 22

Cash

5,917

Sales discount (6100*3%)

183

Accounts receivable

6,100

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

The adjusted trial balance of Quality Office Systems at March 31, 2018, follows:

When a company has a contract involving multiple performance obligations, how must the company recognize revenue?

What are the four steps involved in the closing process for a merchandising company?

Clink Electric uses the periodic inventory system. Clink reported the following selected amounts at May 31, 2018:

Merchandise Inventory, June 1, 2017 \( 16,000 Freight In \) 6,000

Merchandise Inventory, May 31, 2018 21,500 Net Sales Revenue 138,000

Purchases 81,000 Common Stock 32,000

Purchase Discounts 3,000 Retained Earnings 17,000

Purchase Returns and Allowances 6,600

Compute the following for Clink:

a. Cost of goods sold.

b. Gross profit.

Click Computers has the following transactions related to the sale of merchandise inventory.

Mar. 1 Sold a computer (cost of \(3,000) for \)8,000 to a customer. The customer paid cash. The sales price included a one-year service contract valued at $168.

Dec. 31 Recorded the amount of service contract earned.

Journalize the transactions for Click Computers assuming that the company uses the perpetual inventory system.
See all solutions

Recommended explanations on Business Studies Textbooks

Strategic Direction

Read Explanation

Human Resources

Read Explanation

Organizational Communication

Read Explanation

Managerial Economics

Read Explanation

Change Management

Read Explanation

Financial Performance

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