HOMEWORK 5

ACCOUNTING 101
PROFESSOR HELTZER
Name_________________________________
Question 1 Pe!"etu#$ In%ento!& %s' Pe!io(i) In%ento!&'
Below is data for Jacks Inventory for the month of January. Jack began the month of January with an
inventory balance of $8 !" units at $8#unit$. Jack has always bought inventory at $8#unit.
%vent &ate 'hat (a))ened* &etails
!a$ "#"#+ Buy Inventory Buy , t-shirts for $8#shirt on credit
!b$ "#.,#+ /ell Inventory /ell .+, of the t-shirts )urchased on "#" for
$0#shirt on credit.
1ssuming Jacks uses a "e!"etu#$ in%ento!& s&ste*2 )lease )rovide the relevant 3ournal entries4
%vent &ate Journal %ntry#%ntries
!a$ "#"#+ Me!)+#n(ise In%ento!& ,-.000 /e0it
A))ounts P#&#0$e ,-.000 C!e(it
1500 2 ,3 4 ,-.0005
!b$ "#.,#+ A))ounts !e)ei%#0$e 1675 2 ,805 ,3.650 /e0it
S#$es Re%enue ,3.650 C!e(it
Cost o9 :oo(s so$( 1675 2 ,35 ,6.600 /e0it
Me!)+#n(ise In%ento!& ,6.600 C!e(it
!b$ 1ssuming Jacks uses a "e!io(i) in%ento!& s&ste*2 )lease )rovide the relevant 3ournal entries4
%vent &ate Journal %ntry#%ntries
!a$ "#"#+ Pu!)+#ses 1500 2 ,35 ,-.000 /e0it
A))ounts P#&#0$e ,-.000 C!e(it
!b$ "#.,#+ A))ounts !e)ei%#0$e 1675 2 ,805 ,3.650 /e0it
S#$es Re%enue ,3.650 C!e(it
!c$ "#0#+
!ad3usting
entry$
In%ento!& ,6.;00 /e0it
Cost o9 :oo(s so$( ,6.600 /e0it
Pu!)+#ses ,-.;00 C!e(it
Question 6 Mu$ti"$e C+oi)e 1)i!)$e t+e )o!!e)t #ns<e!5 #n( =ou!n#$ Ent!ies' E#)+ "!o0$e* is
in(e"en(ent'
!a$ If goods are in transit as of the end of the year2 and the terms of sale were 56B destination2 the goods
should be shown as )art of the inventory of4
". 7he seller of the goods
.. 7he buyer of the goods
0. 7he common carriers inventory
8. No ones inventory
!b$ 9oods totaling $++2 were )urchased January 8 with the terms 0#"2 n#0. 6n January "2 $+2 of
the goods sold on January 8 were returned. If cash )ayment was made on January "8 in relation to the
January 8 )urchase2 what would be the discount !assume the entire outstanding balance was )aid$*
". $.20"
.. $.2"
0. $
8. $"28
:se the following data to answer !c$ and !d$4
6n "#8 7illie ;o. buys $02 worth of inventory on account. 6n "#" 7illie ;o. returns $82 of
inventory because it was defective.
!c$ 1ssume 7illie ;o. uses the perpetual system to account for its inventory. <lease )rovide the 3ournal entry
to record the )urchase return4
A))ounts "#&#0$e ,3.000 /e0it
Me!)+#n(ise In%ento!& ,3.000 C!e(it
!d$ 1ssume 7illie ;o. uses the periodic system to account for its inventory. <lease )rovide the 3ournal entry
to record the )urchase return4
A))ounts "#&#0$e ,3.000 /e0it
Pu!)+#se !etu!n #n( #$$o<#n)es ,3.000 C!e(it