Question

10/31/2019 Part II (28 points) 1. Tahoe Ski Companyy uses the perpetual invemtory system and the gross method of accounting for purchases. The company had the following transactions during January January 6 January 8 January 15 Purchased $4,000 of inventory. The seller's credit terms are 2/10, n/30 Returned $200 worth of defective units and received full credil Paid the amount due, less the returned items Prepare jourmal entries to record each of the preceding transactions. Jan. 6 Jan. 8 Jan. 15 2. Craig's Snowboards uses the perpetual inventory system and the gross method of accounting for sales, and had the following sales transactions during June: June 2 Sold merchandise to General Sports Store on credit for $4,800, terms n/60. The items sold had a cost of $2,700. General Sports Store paid for the merchandise sold on June 2 July 13 Prepare the journal entries that Craig's Snowboards must make to record these transactions. Jun. 2 Jun. 2 Jul.13 3

Answer 1

PART-II

Requirement 1:

Date	Account title and explanation	Debit	Credit
Jan 6	Merchandise inventory	$4,000
	Accounts payable		$4,000
	[To record purchase of inventory on account]
Jan 8	Accounts payable	$200
	Merchandise inventory		$200
	[To record purchase returns]
Jan 15	Accounts payable [4000-200]	$3,800
	Cash		$3,724
	Merchandise inventory (3,800 x 2%)		$76

Requirement 2:

Date	Account title and explanation	Debit	Credit
June 2	Accounts receivable	$4,800
	Sales revenue		$4,800
	[To record sales on account]
	Cost of goods sold	$2,700
	Merchandise inventory		$2,700
	[To record cost of goods sold]
July 13	Cash	$4,800
	Accounts receivable		$4,800
	[To record collection from customers]

PART-III:

a	Specific	Ending inventoy
		Units	Cost/unit	Total
	Beginning inventory	100	$3.00	$300.00
	January 9 purchases	50	$3.20	$160.00
	Total	150		$460.00
b	FIFO	Ending inventory
		Units	Cost/unit	Total
	Beginning inventory	70	$3.00	$210.00
	January 9 purchases	80	$3.20	$256.00
	Total	150		$466.00
c	LIFO	Ending inventory
		Units	Cost/unit	Total
	Beginning inventory	150	$3.00	$450.00
	January 9 purchases	0	$3.20	$0.00
	Total	150		$450.00
d	Weighted average	Ending inventory
		Units	Cost/unit	Total
	Ending inventory	150	$3.04*	$456.00
	Total	150		$456.00

*Average cost per unit = Total cost ÷ Total units = $1,216/400 = $3.04

PART-IV:

Requirement 1:

Date	Account title and explanation	Debit	Credit
Jan 31	Allowance for doubtful account	$1,000
	Accounts receivable		$1,000
	[To record write-off of uncollectible]
Mar 9	Accounts receivable	$800
	Allowance for doubtful account		$800
	[To record reinstatement of uncollectible]
Mar 9	Cash	$800
	Accounts receivable		$800
	[To record collection from customers]

Requirement 2:

a	Date	Account title and explanation	Debit	Credit
	Dec 31	Bad debt expense [200,000 x 0.5%]	$1,000
		Allowance for doubtful account		$1,000
		[To record bad debt expense]
b	Date	Account title and explanation	Debit	Credit
	Dec 31	Bad debt expense [$100,000 x 2%] - $600	$1,400
		Accounts receivable		$1,400
		[To record bad debt expense]