Question

5-3 On September 1, the beginning of its fiscal year, Campus Office Supply Ltd. had an inventory of 100 calculators at a Record and 500 each. The company uses a perpetual inventory system. During September, the following transactions occurred; and sales ti Durchased 750 calculators for $20 each from Digital Corp. on account, terms n/30. (LO 2,3) in calculators to Digital for $200 credit because they did not meet specifications 11 Sold 260 calculators for $30 each to Campus Book Store, terms n/30 10 Returned 10 calculators to Digital for $200

Answer 1

(a) Journal entries of september transactions:

Date	Accounts and Explanations	Debit	Credit
Sep 2	Inventory	$15,000
	Accounts payable		$15,000
	[750 calculators are purchased for $20, so Inventory account( asset)is increased therefore debited and Accounts payable(liability) is increased therefore credited]
Sep 10	Accounts payable	$200
	Inventory		$200
	( 10 calculators are returned for $200 credit, Accounts payable is debited because decreased and Inventory is creited because decreased)
Sep 11	Accounts receivables	$7,800
	Sales		$7,800
	(260 calculators sold for $30 each, Accounts receivable is debited because increased and sales is credited because increased)
	Cost of goods sold	$5,200
	Inventory		$5,200
	( Sale of 260 calculators transfers the cost of inventory from inventory account to cost of goods sold account. COGS is debited because increased and Inventory is credited because decreased)
Sep 14	Sales	$300
	Accounts receivables		$300
	( 10 calculators are returned and $300 are credited, Sales debited because decreased and accounts receivable credited because decreased)
	Inventory	$200
	Cost of goods sold		$200
	[Calculators were restored to inventory therefore inventory is debited(increased) and COGS is credited(decreased)]
Sep 21	Accounts receivable	$8,910
	Sales		$8,910
	(300 calculators were sold for $30 each, Accounts receivable is debited because increased and sales is credited because increased)
	COGS	$6,000
	Inventory		$6,000
	(Sale of 300 calculators transfers the cost of inventory from inventory account to cost of goods sold account. COGS is debited because increased and Inventory is credited because decreased)
Sep 29	Accounts payable	$14,800
	Cash		$14,800
	[Paid the amount to digital, Accounts payable is debited (decreased) and Cash is credited (decreased) ]
Sep 30	Cash	$8910
	Accounts receivable		$8910
	( Received payment, Cash is debited because increased and accounts receivable is credited because decreased)

(b) T Accounts for the Inventory and Cost of goods sold accounts:

Inventory A/c
Date	Accounts	Amount	Date	Accounts	Amount
Sep 1	Opening balance (100 cal * $20)	$2,000	Sep 10	Account payable	$200
Sep 2	Accounts payable (750 cal * $20)	$15,000	Sep 11	COGS ( 260 cal * $20)	$5,200
Sep 14	COGS (10 cal * $20)	$200	Sep 21	COGS (300 cal * $20)	$6,000
			Sep 30	Closing balance ( 290 cal * $20 )	$5800
		$17,200			$17,200

Cost of goods sold A/c
Date	Accounts	Amount	Date	Accounts	Amount
Sep 11	Inventory ( 260 Cal * $20)	$5,200	Sep 14	Inventory (10 cal * $20 )	$200
Sep 21	Inventory ( 300 Cal * $20)	$6,000	Sep 30	Closing balance	$11,000
		11,200			11,200

(c) The ending balance of inventory and cost of goods sold in both dollars and quantities are given below:

Inventory (in dollars) =  2,000(balance) + 15,000 (purchased) + 200 (returned back) - 200 (returned) - 5,200 (transfered to cogs) - 6000 (transferred to cogs) = $5,800

Invenory in quantity = 100(balance) + 750 (purchased) + 10 (returned back) - 10 (returned) - 260 (transfered to cogs) - 300transferred to cogs) = 290

COGS (in dollars) = 5,200 ( transferred from Inventory) +6,000 ( transferred from Inventory) + 200( transferred from Inventory) = $11,000

COGS (in quantity) = 260 ( transferred from Inventory) + 300 ( transferred from Inventory) - 10 ( transferred from Inventory) = 550