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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

The records of Grade A Beef Company list the following selected accounts for the quarter ended September 30, 2018:

Interest Revenue \( 900 Accounts Payable \) 17,000

Merchandise Inventory 46,300 Accounts Receivable 33,500

Notes Payable, long-term 47,000 Accumulated Depreciation— Equipment 36,500

Salaries Payable 2,600 Common Stock 38,000

Net Sales Revenue 294,000 Retained Earnings 3,610

Rent Expense (Selling) 16,700 Dividends 15,000

Salaries Expense (Administrative) 2,500 Cash 7,300

Office Supplies 5,800 Cost of Goods Sold 161,700

Unearned Revenue 13,800 Equipment 131,000

Interest Expense 2,300 Interest Payable 900

Depreciation Expense—Equipment (Administrative) 1,310

Rent Expense (Administrative) 7,400

Utilities Expense (Administrative) 4,500 Salaries Expense (Selling) 5,000

Delivery Expense (Selling) 3,100 Utilities Expense (Selling) 10,900

Requirements

1. Prepare a single-step income statement.

2. Prepare a multi-step income statement.

3. J. Douglas, manager of the company, strives to earn a gross profit percentage of at least 50%. Did Grade A Beef achieve this goal? Show your calculations

M Wholesale Company began the year with merchandise inventory of \(5,000. During the year, M purchased \)93,000 of goods and returned \(6,600 due to damage. M also paid freight charges of \)1,200 on inventory purchases. At year-end, M’s ending merchandise inventory balance stood at $17,200. Assume that M uses the periodic inventory system. Compute M’s cost of goods sold for the year.

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

Jan. 4 Purchased merchandise inventory on account from Vanderbilt Company, \(7,000. Terms 1/10, n/EOM, FOB shipping point.

6 Paid freight bill of \)100 on January 4 purchase.

8 Returned half the inventory purchased on January 4 from Vanderbilt Company.

10 Sold merchandise inventory for cash, \(1,600. Cost of goods, \)640. FOB destination.

11 Sold merchandise inventory to Graceland Corporation, \(10,800, on account, terms of 1/10, n/EOM. Cost of goods, \)5,400. FOB shipping point.

12 Paid freight bill of \(60 on January 10 sale.

13 Sold merchandise inventory to Cabbell Company, \)9,500, on account, terms of n/45. Cost of goods, \(5,225. FOB shipping point.

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

17 Received defective inventory as a sales return from the January 13 sale, \)600. Cost of goods, \(300.

18 Purchased inventory of \)4,600 on account from Roberts Corporation. Payment terms were 3/10, n/30, FOB destination.

20 Received cash from Graceland Corporation, less discount.

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

28 Received cash from Cabbell Company, less return.

29 Purchased inventory from Sandra Corporation for cash, \(11,600, FOB shipping point. Freight in paid to shipping company, \)240.

Suppose Piranha.com sells 3,500 books on account for \(17 each (cost of these books is \)35,700) on October 10, 2018 to The Textbook Store. One hundred of these books (cost $1,020) were damaged in shipment, so Piranha.com later received the damaged goods from The Textbook Store as sales returns on October 13, 2018.

Requirements

1. Journalize The Textbook Store’s October 2018 transactions.

2. Journalize Piranha.com’s October 2018 transactions. The company estimates sales returns at the end of each month.

Journalize the following transactions that occurred in March 2018 for Double Company. Assume Double uses the periodic inventory system. No explanations are needed. Identify each accounts payable and accounts receivable with the vendor or customer name. Double estimates sales returns at the end of each month.

Mar. 3 Purchased merchandise inventory on account from Sidecki Wholesalers, \(5,500. Terms 2/15, n/EOM, FOB shipping point.

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

4 Purchased merchandise inventory for cash of \(1,100.

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

8 Sold merchandise inventory to Herrick Company, \(3,400, on account. Terms 1/15, n/35.

9 Purchased merchandise inventory on account from Tex Wholesalers, \)5,600. Terms 2/10, n/30, FOB destination.

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

12 Received payment from Herrick Company, less discount.

13 After negotiations, received a \(500 allowance from Tex Wholesalers.

15 Sold merchandise inventory to Jesper Company, \)1,700, on account. Terms n/EOM.

22 Made payment, less allowance, to Tex Wholesalers for goods purchased on March 9.

23 Jesper Company returned \(300 of the merchandise sold on March 15.

25 Sold merchandise inventory to Salter for \)1,000 on account. Terms of 1/10, n/30 was offered, FOB shipping point.

29 Received payment from Salter, less discount.

30 Received payment from Jesper Company, less return.
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