Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
E5B-29 Journalizing purchase transactions—periodic inventory system
Learning Objective 8 Appendix 5B
Lawrence Appliances had the following purchase transactions. Journalize all necessary
transactions using the periodic inventory system. Explanations are not required.
Sep. 4 Purchased inventory of $6,900 on account from Max Appliance Wholesale, an appliance
wholesaler. Terms were 3/15, n/30, FOB shipping point.
4 Paid freight charges, $480.
10 Returned $300 of inventory to Max.
17 Paid Max Appliance Wholesale, less return and discount.
20 Purchased inventory of $3,900 on account from MY Appliance, an appliance wholesaler. Terms
were 1/10, n/45, FOB destination.
22 Received a $400 allowance from MY Appliance for damaged but usable goods.
29 Paid MY Appliance, less allowance and discount.
SOLUTION
E5B-30 Journalizing sales transactions—periodic inventory system
Learning Objective 8 Appendix 5B
Journalize the following sales transactions for Straight Shot Archery using the periodic inventory
system. Explanations are not required. The company estimates sales returns and allowances at
the end of each month.
Aug. 1 Sold $6,500 of equipment on account, credit terms are 1/10, n/30.
8 Straight Shot received payment from the customer on the amount due from August 1, less
the discount.
15 Sold $3,100 of equipment on account, credit terms are n/45, FOB destination.
15 Straight Shot paid $90 on freight out.
20 Straight Shot negotiated a $500 allowance on the goods sold on August 15.
24 Received payment from the customer on the amount due from August 15, less the
allowance.
SOLUTION
E5B-31 Journalizing purchase and sales transactions—periodic inventory system
Learning Objective 8 Appendix 5B
Journalize the following transactions for Master Bicycles using the periodic inventory system.
Explanations are not required.
Nov. 2 Purchased $3,400 of merchandise inventory on account 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.
SOLUTION
E5B-32 Journalizing closing entries—periodic inventory system
Learning Objective 8 Appendix 5B
2. Ending Retained Earnings Balance $71,100
Ocean Life Boat Supply uses the periodic inventory method. The adjusted trial balance of Ocean
Life Boat Supply at December 31, 2018, follows:
Requirements
1. Journalize the required closing entries at December 31, 2018. Assume ending Merchandise
Inventory is $54,300.
2. Set up T-accounts for Income Summary; Retained Earnings; and Dividends. Post the closing
entries to the T-accounts, and calculate their ending balances.
3. How much was Ocean Life’s net income or net loss?
SOLUTION
Requirement 1
Learning Objective 8 Appendix 5B
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.
SOLUTION
Problems (Group A)
For all problems, assume the perpetual inventory system is used unless stated otherwise.
Round all numbers to the nearest whole dollar unless stated otherwise.
P5-34A Journalizing purchase and sale transactions
Learning Objectives 2, 3
Journalize the following transactions that occurred in September 2018 for Aquamarines. No
explanations are needed. Identify each accounts payable and accounts receivable with the vendor
or customer name. Aquamarines estimates sales returns at the end of each month.
Sep. 3 Purchased merchandise inventory on account from Sharpner Wholesalers, $5,500. Terms
2/15, n/EOM, FOB shipping point.
4 Paid freight bill of $85 on September 3 purchase.
4 Purchased merchandise inventory for cash of $1,600.
6 Returned $1,300 of inventory from September 3 purchase.
8 Sold merchandise inventory to Herman Company, $5,700, on account. Terms 2/15, n/35.
Cost of goods, $2,565.
9 Purchased merchandise inventory on account from Tucker Wholesalers, $6,000. Terms
3/10, n/30, FOB destination.
10 Made payment to Sharpner Wholesalers for goods purchased on September 3, less return
and discount.
12 Received payment from Herman Company, less discount.
13 After negotiations, received a $500 allowance from Tucker Wholesalers.
15 Sold merchandise inventory to Jerome Company, $2,800, on account. Terms n/EOM. Cost
of goods, $1,200.
22 Made payment, less allowance, to Tucker Wholesalers for goods purchased on September
9.
23 Jerome Company returned $200 of the merchandise sold on September 15. Cost of goods,
$80.
25 Sold merchandise inventory to Small for $1,800 on account that cost $738. Terms of 3/10,
n/30 was offered, FOB shipping point. As a courtesy to Small, $40 of freight was added to
the invoice for which cash was paid by Aquamarines.
29 Received payment from Small, less discount.
30 Received payment from Jerome Company, less return.
SOLUTION
P5-34A, cont.
P5-35A Journalizing purchase and sale transactions
Learning Objectives 2, 3
Journalize the following transactions that occurred in November 2018 for Julie’s Fun World. No
explanations are needed. Identify each accounts payable and accounts receivable with the vendor
or customer name. Julie’s Fun World estimates sales returns at the end of each month.
Nov. 4 Purchased merchandise inventory on account from Vera Company, $5,000. Terms 3/10, n/EOM,
FOB shipping point.
6 Paid freight bill of $100 on November 4 purchase.
8 Returned half the inventory purchased on November 4 from Vera Company.
10 Sold merchandise inventory for cash, $1,100. Cost of goods, $400. FOB destination.
11 Sold merchandise inventory to Geary Corporation, $11,100, on account, terms of 2/10, n/EOM.
Cost of goods, $6,105. FOB shipping point.
12 Paid freight bill of $20 on November 10 sale.
13 Sold merchandise inventory to Caldwell 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 November 4, less return and discount.
17 Received defective inventory as a sales return from the November 13 sale, $500. Cost of goods,
$275.
18 Purchased inventory of $3,600 on account from Rainman Corporation. Payment terms were 2/10,
n/30, FOB destination.
20 Received cash from Geary Corporation, less discount.
26 Paid amount owed on account from November 18, less discount.
28 Received cash from Caldwell Company, less return.
29 Purchased inventory from Sandra Corporation for cash, $12,300, FOB shipping point. Freight in
paid to shipping company, $170.
SOLUTION
