Question

Name: TA: ***This is due at the beginning of lecture on Thursday, November 21st*** Problem 2. MATTS Corp. has 100 baseball caps that cost $5 each in inventory at the beginning of March. Please show the beginning inventory in the appropriate T-account and then book the following transactions using the T-accounts provided below. This merchandiser uses a periodic inventory system. Be sure to label each transaction: a. MATTS purchases and receives 200 additional caps on account with terms that include a 5% discount if MATTS pays within 25 days. Normally MATTS would pay $5 per cap but because of the size of this order the price is reduced to $4 per cap. b. MATTS pays the transportation costs of $100 cash directly to the shipper. c. Some of the caps were crused when they arrived. Instead of sending them back, MATTS negotiates a $120 allowance (applied to accounts payable) from the seller and keeps the caps. d. MATTS is horrified to discover that 20 of the caps (not the same caps as in c. above) have a tiger on them - these are returned to the supplier immediately and accounts payable is reduced by the original purchase price. e. MATTS pays the remaining amount owed within 25 days thus earning the discount. f. When you have completed e. make the entries that would be made at the end of March for MATTS to determine Net Purchases for the period. Please label these entries fl,f2,f3, etc. g. When you have completed f. make the appropriate entry that would be made to determine Goods Available for sale.

Answer 1

Date : -II Inventory freight in 100 Opening 500 Pwichan 800 пс Payla So La) les 2 Alc payable Purchaus (6) Allowance 120 Purchar 800 & Puy Return so (a) - (aoxy (e) Cash 570 (6157) (e) Pur Discount 30 (60 x 5%) a) Alc payetle (200x4) freight in Pur. Ret & Allow Ale ray 120 qurchase Discount Ac30 fayable (60015%) Al pay bo (a) - Net purichu for the period o Goods Avellable for face (op Pur Return -Debit Purchases - Credit so 80 op Inv. = Net Purchases 500 de Net purchaus - 800 - 120 .... Goods for sale - Desit 1220 Inventory - Cuit 1120