Question

I. Certain merchandising transactions for Yule Park Gifts are listed below. November 2: Purchased 110 souvenir calendars at $9 each from Aloha Co. for cash Nov 4: Paid shipping costs $38 for the souvenir calendars order. Nov 5: Returned six calendars to Aloha for $56 (including shipping) because of printing errors. Nov 10: Sold 30 souvenir calendars (costing $280 in total including shipping) for $14 each for cash. Nov 20: Sold 40 additional souvenir calendars (costing 373 in total including shipping) for $14 each for cash. Nov 27: Granted credit of $28 for two returned calendars which were defective on their printing. Prepare journal entries for each transaction using (a) perpetual inventory accounting (b) periodic inventory accounting

Answer 1

I)

Journal Entries using Perpetual Inventory Accounting:
Date	Accounts Titles and Explanation	Debit	Credit
Nov. 2	Inventory (110 * $9)	$990
	Cash		$990
	(To record the purchase of inventory by cash)
Nov. 4	Inventory	$38
	Cash		$38
	(To record payment of shipping cots incurred for inventory)
Nov. 5	Accounts Receivable - Aloha	$56
	Inventory		$56
	(To record the return of 6 units purchased and the amount is due to receive)
Nov. 10	Cash	$420
	Sales Revenue (30 * $14)		$420
	(To record the sale of 30 units for cash)
	Cost of Goods Sold	$280
	Inventory		$280
	(To record the cost of goods sold)
Nov. 20	Cash	$560
	Sales Revenue (40 * $14)		$560
	(To record the sale of 40 units for cash)
	Cost of Goods Sold	$373
	Inventory		$373
	(To record the cost of goods sold)
Nov. 27	Inventory	$28
	Cash		$28
	(To record the credit of $28 has been granted or paid)

Journal Entries using Perpetual Inventory Accounting:
Date	Accounts Titles and Explanation	Debit	Credit
Nov. 2	Purchases (110 * $9)	$990
	Cash		$990
	(To record the purchase of inventory by cash)
Nov. 4	Shipping Costs	$38
	Cash		$38
	(To record payment of shipping cots incurred for inventory)
Nov. 5	Accounts Receivable - Aloha	$56
	Purchase Returns		$56
	(To record the return of 6 units purchased and the amount is due to receive)
Nov. 10	Cash	$420
	Sales Revenue (30 * $14)		$420
	(To record the sale of 30 units for cash)
Nov. 20	Cash	$560
	Sales Revenue (40 * $14)		$560
	(To record the sale of 40 units for cash)
Nov. 27	Sales Returns and Allowances	$28
	Cash		$28
	(To record the credit of $28 has been granted or paid)
Nov. 30	Ending Inventory ($990 - $56 - $280 - $373)	$281
	Cost of Goods Sold ($280 + $373)	$653
	Purchases ($990 - $56)		$934
	(To record the closing entry for inventory)

II)

Sales	$610,000
Less: Sales Returns and allowances	($14,600)
Less: Sales Discounts	($9,400)
Net Sales Revenue for September 30, 2018	$586,000