Question

Alpha Company uses the periodic inventory system for purchase & sales of merchandise. Discount terms for both purchases & sales are, 2/10, n30 and the gross method is used. Unless otherwise noted, FOB Destination will apply to all purchases & sales. The value of inventory is based on periodic system. On January 1, 2016, beginning inventory consisted of 400 units of widgets costing $10 each. Alpha prepares monthly income statements. The following events occurred during the month of Jan.:

Date Activity

a. Jan. 3 Purchased on account 350 widgets for $11 each.

b. Jan. 5 Sold on account 500 widgets for $30 each. Paid freight out with cash of $150.

c. Jan. 10 Purchased on account 650 widgets for $12 each.

d. Jan. 11 Shipping cost for the January 10 purchased merchandise was $400 was paid with a cheque by Alpha directly to the freight company.

e. Jan. 12 Returned 50 widgets received from Jan. 10 purchase as they were not the correct item ordered.

f. Jan. 13 Paid for the purchases made on Jan. 3.

g. Jan. 21 Sold on account 550 widgets for $30 each. Paid freight out with cash of $250.

h. Jan. 22 Authorize credit without return of goods for 50 widgets sold on Jan. 21 when customer advised that they were received in defective condition.

i. Jan. 25 Received payment for the sale made on Jan. 5.

j. Jan. 26 Paid for the purchases made on Jan. 10.

k. Jan. 31 Received payment for the sale made on Jan. 21.

Use this information to prepare the General Journal entries (without explanation) for the January events. If no entry is required then enter the date and write "No Entry Required."

Answer 1

Solutions:

Date	Account	Debit	Credit
a) Jan. 3	Purchases (350*$11)	$3,850
	Accounts Payable		$3,850
b) Jan. 5	Accounts Receivable (500*$30)	$15,000
	Sales		$15,000
	Freight Expense	$150
	Cash		$150
c) Jan. 10	Purchases (650*$12)	$7,800.00
	Accounts Payable		$7,800.00
d) Jan. 11	Freight Expense	$400
	Cash		$400
e) Jan. 12	Accounts Payable (50*$12)	$600.00
	Purchases Returns and Allowances		$600.00
f) Jan. 13	Accounts Payable	$3,850
	Purchases Discounts ($3,850*2%)		$77
	Cash ($3,850-$77)		$3,773
g) Jan. 21	Accounts Receivable (550*$30)	$16,500
	Sales		$16,500
	Freight Expense	$250
	Cash		$250
h) Jan. 22	Sales Returns and Allowances (50*$30)	$1,500
	Accounts Receivable		$1,500
i) Jan. 25	Cash	$15,000
	Accounts Receivable		$15,000
j) Jan. 26	Accounts Payable ($7800-$600)	$7,200.00
	Cash		$7,200.00
k) Jan. 31	Cash ($15,000-$300)	$14,700
	Sales Discounts ($15,000*2%)	$300
	Accounts Receivable ($16,500-$1,500)		$15,000