Record the following transactions for Parker Bicycle Company. Also show the impa

Question

Record the following transactions for Parker Bicycle Company. Also show the impact on the accounting equation.

1. Jan 1. Parker purchases 50 bicycles from Duncan Company for $1000 on account. The terms are 2/10, net 30.
2. Jan 5. Parker purchases some supplies from Manu, Inc. for $500 on account. Terms 1/10, net 30.
3. Jan 10. Parker sells 20 bicycles on account to the Boys & Girls Club for $800. Terms 2/15, net 30.
5. Jan 15. The Boys & Girls Club returns 5 bicycles and receives a reduction in their balance owed.Parker returns the bikes to inventory.
6. Jan 15. Parker pays Duncan the balance owed on the bicycles purchased earlier in the month.
7. Jan 17. Parker pays Manu for the supplies purchased this month.
8. Jan 22. The Boys & Girls Club pays their remaining balance to Parker.

9. Post 1-8 transactions to the T accounts involved in the calculation of Net Sales and determine the amount of
NET SALES

Net sales $____________

10.Post 1-8 transactions to the T accounts “Cost of Goods Sold” and “Inventory” and determine the GROSS PROFIT and the ENDING Inventory Balance

GROSS PROFIT $______________ GROSS PROFIT RATIO______________
ENDING INVENTORY$_____________

Explanation / Answer

jan 1 - account payable - $1000 ; terms -2/10 jan 5 - accont payable - $500 ; terms - 1/10 jan 10 - account receivable - $800 ;terms -2/15 net sales - 15 bicycles - 800/20 *15 = $600 gross profit = 1000- 600 = $400 gross profit ratio = 400/1000 = 2/5 ending inventories = 50-15 = 35 bicycles

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