Question

10. Alpha failed to record the return of inventory to the manufacturer for a credit (periodic inventory system). 11. Alpha purchased merchandise on credit with terms F.O.B. Destination. As of December 31, the merchandise had not yet been received by Alpha Alpha recorded the purchase and included that merchandise in ending inventory (periodic system). 12. Alpha should have recorded the purchase of supplies on credit but didn't As a result, no AJE was

Please what journal entries you would make and how assets, liabilities and net income are effected (understated, overstated, no effect).

Answer 1

No.	Journal	Asset	Liabilities	Net Income
10	Accounts payable	No effect	Overstated	No effect
	Purchase returns	Overstated	No effect	No effect
11	Accounts payable	No effect	Overstated	No effect
	Purchases	Overstated	No effect	No effect
12	Purchases	Understated	No effect	No effect
	Accounts payable	No effect	Understated	No effect

Notes:

For no.10:

In the periodic inventory system, a separate account is maintained for purchase returns to track returns.SInce entry not passed for returns, now accounted.

For no.11:

In FOB destination purchase of goods, the buyer should record goods only when received by the buyer. During transit, the ownership of the goods is with the seller. Hence buyer has to reverse the entry passed.

For no.12:

Since entry not passed for purchase of supplies on account, now accounted