Question

a. On October 1, the Business Students' Society (BSS) placed an order for 100 golf shirts at a unit cost of $20, under terms 2/10, n/30. b. The order was received on October 10, but some golf shirts differed from what had been ordered. Uncertain whether the shirts would be returned or kept, BSS decided to record any purchase discount only when taken (using the gross method). c. On October 11, 20 golf shirts were returned to the supplier. d. On October 12, BSS complained the remaining golf shirts were slightly defective so the supplier granted a $100 allowance. e. BSS paid for the golf shirts on October 13. f. During the first week of October, BSS received student and faculty orders for 80 golf shirts, at a unit price of $60, on terms 2/10, n/30. g. The golf shirts were delivered to these customers on October 18. Unfortunately, customers were unhappy with the golf shirts, so BSS permitted them to be returned or given an allowance (see hand ). h. Uncertain whether customers would keep or return the shirts, BSS decided to record any sales discount only when taken (using the gross method). i. On October 19, one-half of the golf shirts were returned by customers to BSS. j. On October 20, an allowance was given on account equal to $12.50 per shirt for the remaining 40 shirts. k. The customers paid their remaining balances on the last day of the month, October 31. Answer is not complete. Requirement General Journal General Ledger Trial Balance Income Statement Prepare journal entries for the transactions described in events (a) through (i), using the date of each transaction as its reference. Assume BSS uses perpetual inventory accounts and accrue office expenses of $500 incurred on account, and to accrue income taxes of $133. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

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Answer 1

Prepare Joumal entries as follows: | Debit | Credit Date Account Titles and Explanation Oct. 01 No journal entry required Oct. 10 $2.000 Inventory (100 shirts * $20 per shirt) Accounts payable (To record the purchase of shirts in account) $2.000 $400 Oct. 11 Accounts payable Inventory (20 shirts $20 per shirt) (To record the return damaged 20 shirts) $400 Oct. 12 S100 Accounts payable Allowance for damage shirts (To record the grant of allowance) $100 $1,500 Oct. 13 Accounts payable ($2000-$400-$100) Discount received ($1500x 2) Cash (To record the payment to supplier) $30 $1.470

$4.800 Oct. 18 Accounts receivable (80 shirts * $60) Sales revenue (To record the sales revenue on account) $4.800 $1.470 Oct. 18 COGS Inventory (To record the cost of goods sold) $1.470 Oct. 19 $2.400 Sales return and allowance ($4800/2) Accounts receivable (To reord the return on sale) $2.400 Oct. 19 $735 Inventory ($1470/2) COGS (To record the COGS on return goods) Oct. 20 $500 Sales returns and allowance (40 shirts * $12.5) Accounts receivable $500 $1,900 Oct. 31 Cash Accounts receivable ($4800-$2400-$500) $1.900

Prepare Income Statement as follows: Business Students' Society Income Statement For the Month Ended October 31 Sales revenue Less: Sales returns and allowance ($2400+$500) Net Sales $4.800 $2,900 $1,900 $735 $1.165 Less: COGS (S1470-8735) Gross profit Less: operating expense office expense Income taxes $500 $133 Net Income $532