James Company began the month of October with inventory of $32,000. The followin

Question

James Company began the month of October with inventory of $32,000. The following inventory transactions occurred during the month: a. The company purchased merchandise on account for $47,500 on October 12, 2013. Terms of the purchase were 1/10, n/30. James uses the net method to record purchases. The merchandise was shipped f.o.b. shipping point and freight charges of $670 were paid in cash. b. On October 18 the company returned merchandise costing $4,700. The return reduced the amount owed to the supplier. The merchandise returned came from beginning inventory, not from the October 12 purchase. c. On October 31, James paid for the merchandise purchased on October 12. d. During October merchandise costing $20,550 was sold on account for $31,400. e. It was determined that inventory on hand at the end of October cost $54,445. Required: 1. Assuming that the James Company uses a periodic inventory system, prepare journal entries for the above transactions including the adjusting entry at the end of October to record cost of goods sold.

Explanation / Answer

Date Details Dr. Cr. 12-Oct Purchase 47500 Account Payable 47500 12-Oct Freight 670 Cash 670 18-Oct Account Payable 4700 Purchase Return 4700 31-Oct Account Payable 47500 Cash 47500 31-Oct Account Receivable 31400 Sales 31400 31-Oct No Journal entry required Cost of goods sold Beginning inventory    32,000.00 Add-Net purchase 47,025.00 Less-Purcahse return (4,700.00) Add Freight        670.00    42,995.00 Cost of goods avaiable for sale    74,995.00 Less-ending inventory (54,445.00) cost of goods sold    20,550.00 Cost of goods sold 20,550.00 Closing inventory 54,445.00 Purchase Return     4,700.00 Inventory beginning    32,000.00 Purchase    47,025.00 Freight         670.00

Related Questions

Navigate

• Browse (All)
• Browse J
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.