Question

Chapter 5 Hand-out Assignment Question 1 On October 1, Keiler Motorcycle Shop had an inventory of 20 dirt bikes at a cost of $ 1,150 each. During the month of October, the following transactions occurred: Oct. 3 Purchased 10 bikes at a cost of $ 1,150 each from Lyons Bike Company, terms n/30. 6 Sold 10 bikes for $1,500 each, terms n/30. 6 The appropriate company paid freight of $ 250 on the October 6 sale was FOB shipping point. Received credit from Lyons Bike Company for the return of 2 defective bikes. 19 Purchased 8 bikes from Huffy Cycle Company at a cost of $ 1,125 each, terms 2/10, n/30. 20 Freight of $ 220 on the October 19 purchase was FOB shipping point and paid by the appropriate company. 29 Paid for the October 19 purchase. Instructions Using a perpetual inventory system, prepare the journal entries to record the transactions.

Answer 1

Date	Account Titles	Debit	Credit
Oct. 3	Inventory	11500
	Accounts payable		11500
Oct. 6	Accounts receivable	15000
	Sales		15000
	Cost of goods sold	11500
	Inventory		11500
Oct. 6	No entry (Freight will be paid by the purchaser.)
Oct. 7	Accounts payable	2300
	Inventory		2300
Oct. 19	Inventory	9000
	Accounts payable		9000
Oct. 20	Inventory	220
	Cash		220
Oct. 29	Accounts payable	9000
	Inventory		180
	Cash		8820

Above figures have been calculated in the following manner:

Date	Account Titles	Debit	Credit
Oct. 3	Inventory	=10*1150
	Accounts payable		11500
Oct. 6	Accounts receivable	=1500*10
	Sales		15000
	Cost of goods sold	=10*1150
	Inventory		11500
Oct. 6	No entry (Freight will be paid by the purchaser.)
Oct. 7	Accounts payable	=1150*2
	Inventory		2300
Oct. 19	Inventory	=1125*8
	Accounts payable		9000
Oct. 20	Inventory	220
	Cash		220
Oct. 29	Accounts payable	9000
	Inventory		=9000*0.02
	Cash		=9000-180