Tillman, Inc., entered into the transactions listed below. In the journal provid
ID: 2486012 • Letter: T
Question
Tillman, Inc., entered into the transactions listed below. In the journal provided, prepare Tillman's journal entries, assuming use of the periodic inventory system. Omit explanations. April 3 Purchased $3,200 of merchandise on credit, terms 2/10, n/60. 6 Returned $400 of the goods purchased on April 3. 7 Paid freight charges of $280 on goods purchased on April 3. 12 Paid for the goods purchased on April 3. 13 Sold goods on credit for $4,000, terms 1/10, n/30. 14 The customer of April 13 returned $400 of the goods. 23 Received payment from the customer of April 13. 25 Purchased office supplies for $1,000.Explanation / Answer
April3:
Purchases a/c (Dr) $3,200
Accounts payable (Cr $3,200
April 6:
Accounts payable (Dr) $400
Purchase return (Cr) $400
April 7:
Freight in charges (Dr) $280
Cash (Cr) $280
April 12:
Accounts payable (Dr) 2800
Cash (Cr) 2800
April 13:
Accounts receivable (Dr) 4,000
Sales (Cr) 4,000
April 14:
Sales return (Dr) 400
Accounts receivable (Cr) 400
April 23:
Cash (Dr) 400
Accounts receivable (Cr) 400
April 25:
Office supplies (Dr) 1000
Cash (Cr) 1000
Closing entry:280
Purchases = 3200 - 400 (return) = 2,800
Beginning inventory = 0 (not given)
Ending inventory = $400. This is the sale price.
we have to calculate the cost of ending inventory: Total cost or purchase = 3200 -400 = 2800
Assuming this entire purchase was sold for $4,000 on April 13. Thus, cost of $4,000 worth of goods = 2800. cost of $400 worth of goods = (2800/4000)*400 = $280. This is the ending invenrory
Thus, closing entry will be:
Ending inventory (Dr) $280
Cost of goods sold (Dr) $3720 - balancing figure
Purchases (Cr) $2800 - (3200-400)
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