Log out Go to App
Go to App

Learning Materials

Features

Discover

Chapter 5: Q5-2TI (page 260)

Click Computers has the following transactions in July related to the purchase 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.

Journalize the purchase transactions for Click Computers assuming the company uses the perpetual inventory system.

Short Answer

Expert verified

The total debit and credit for the journal are $41,000.

Step by step solution

01

Meaning of Perpetual Inventory System

The perpetual inventory system immediately records the sale and purchase of inventoriesthrough an electronic medium. This system requires computers and knowledge to record inventory-related transactions.

02

Preparation of journal entries

Date

Accounts and Explanation

Debit ($)

Credit ($)

July 1

Inventory

20,500

Accounts payable

20,500

(To record the purchase of computers)

July 3

Accounts payable

4,000

Inventory

4,000

(To record the return of goods)

July 9

Accounts payable

16,500

Bank

16,170

Inventory

330

(To record the payment within the discount period)

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

Suppose Muddyriver.com sells 2,000 books on account for \(19 each (cost of these books is \)22,800), credit terms 1/20, n/45 on October 10, to The Salem Store. The Salem Store paid the balance to Muddyriver.com on October 22.

Requirements

1. Journalize the Salem Store’s October transactions.

2. Journalize Muddyriver.com’s October transactions. Assume Muddyriver.com uses the gross method to record sales revenue.

Jeana’s Furniture’s unadjusted Merchandise Inventory account at year-end is \(69,000. The physical count of inventory came up with a total of \)67,600. Journalize the adjusting entry needed to account for inventory shrinkage.

What is an invoice?

What account is debited when recording a purchase of inventory when using the perpetual inventory system?

Journalize the following transactions that occurred in February 2018 for Oceanic. No explanations are needed. Identify each accounts payable and accounts receivable with the vendor or customer name. Oceanic estimates sales returns at the end of each month.

Feb. 3 Purchased merchandise inventory on account from Silton Wholesalers, \(5,200. Terms 2/15, n/EOM, FOB shipping point.

4 Paid freight bill of \)70 on February 3 purchase.

4 Purchased merchandise inventory for cash of \(1,500.

6 Returned \)900 of inventory from February 3 purchase.

8 Sold merchandise inventory to Herenda Company, \(5,600, on account. Terms 3/15, n/35. Cost of goods, \)2,352.

9 Purchased merchandise inventory on account from Teddy Wholesalers, \(7,000. Terms 1/10, n/30, FOB destination.

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

12 Received payment from Herenda Company, less discount.

13 After negotiations, received a \)500 allowance from Teddy Wholesalers.

15 Sold merchandise inventory to Jordon Company, \(3,400, on account. Terms n/EOM. Cost of goods, \)1,496.

22 Made payment, less allowance, to Teddy Wholesalers for goods purchased on February 9.

23 Jordon Company returned \(1,000 of the merchandise sold on February 15. Cost of goods, \)440.

25 Sold merchandise inventory to Smith for \(1,700 on account that cost \)663. Terms of 2/10, n/30 were offered, FOB shipping point. As a courtesy to Smith, $70 of freight was added to the invoice for which cash was paid by Oceanic.

27 Received payment from Smith, less discount.

28 Received payment from Jordon Company, less return.
See all solutions

Recommended explanations on Business Studies Textbooks

Managerial Economics

Read Explanation

Human Resources

Read Explanation

Intermediate Accounting

Read Explanation

Introduction to Business

Read Explanation

Financial Performance

Read Explanation

Nature of Business

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