Page 261: Cost of Goods Calculation
E5-10 The trial balance of Pollard Company at the end of its fiscal year, August 31, 2012, includes these accounts:
Beginning Inventory $18,700; Purchases $154,000; Sales Revenue $190,000; Freight-in $8,000; Sales Returns and Allowances $3,000; Freight-out $1,000; and Purchase Returns and Allowances $5,000. The ending merchandise inventory is $21,000
Prepare a cost of goods sold section (periodic system) for the year ending August 31. (Refer to page 229 – Flow of Cost Illustration 5-3; Pages 244 – 245; Illustration 5-13 on page 245; and the “Do It!” Demonstration)
Page 259: Perpetual Inventory System
E5-2 Assume that on September 1, Office Depot had an inventory that included a variety of calculators. The company uses a perpetual inventory system. During September, these transactions occurred.
Sept 6 Purchased calculators from Abacus Co. at a total cost of $1,650, terms n/30. (Refer to entry on page 232)
Sept 9 Paid freight of $50 on calculators purchased from Abacus Co. (Refer to page 233 – Freight costs incurred by buyer – see journal entry on this page)
Sept 10 Returned calculators to Abacus Co. for $66 credit because they did not meet specifications. (Refer to entry on page 234)
Sept 12 Sold calculators costing $520 for $690 to Union Book Store, terms n/30. (Refer to the two sets of entries on page 236, one is to record the sales revenue and the other is to record the cost and inventory impact of the sale)
Sept 14 Granted credit of $45 to Union Book Store for the return of one cal- culator that was not ordered. The calculator cost $34. (Refer to page 237 Journal entries in the section titled “Sales Returns and Allowances”)
Sept 20 Sold calculators costing $570 for $760 to Commons Card Shop, terms n/30. (Refer to the two sets of entries on page 236, one is to record the sales revenue and the other is to record the cost and inventory impact of the sale)
Journalize the September transactions.
Page 261: E5-13 Periodic Inventory System
E5-13 This information relates to Edyburn Co
On April 5, purchased merchandise from Hansen Company for $27,000, terms 2/10, n/30. (Refer to page 251 “Recording Purchases of Merchandise” Journal entry illustrations)
On April 6, paid freight costs of $1,200 on merchandise purchased from Hansen Company. (Refer to “Freight Costs” and related entries on page 251)
On April 7, purchased equipment on account for $30,000. (This entry is not to Merchandise – refer to entries from Chapter 3)
On April 8, returned some of the April 5 merchandise to Hansen Company, which
cost $3,600. (Refer to page 252 “Purchase Returns and Allowances” and related entries)
On April 15, paid the amount due to Hansen Company in full. (Here you need to calculate the end balance in the accounts payable after you have taken into consideration all the purchases on account, returns and discounts for paying within the 2/10 terms – See journal entry on page – 252 under “Purchase Discounts”)
(a) Prepare the journal entries to record these transactions on the books of Edyburn Co. using a periodic inventory system. (Refer to Appendix 5A – Period Inventory pages 251 – 253)
(b) Assume that Edyburn Co. paid the balance due to Hansen Company on May 4 instead of April 15. Prepare the journal entry to record this payment. (Here you need to calculate the end balance in the accounts payable after you have taken into consideration all the purchases on account, returns. Notice this scenario you paid within the 30 day terms but after the 2/10 terms – See journal entry on page – 252 under “Purchase Discounts”)
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