Question

(a) Record all of the Journal Entries for the following events at the retail Denim clothing store that you own. You can ignore HST. Assume you owned no Inventory at the beginning of the month.

(b) What is the Gross Profit for your Business at the end of the month? Show your detailed calculations.

- You purchased jeans from a U.S. supplier for Cdn. $1500 on credit on January 15th with terms 1/10, n/30. You took delivery of the jeans. Your supplier noted FOB Destination Point on its invoice. There was $50 in freight cost. You paid for the total $100 Duty Tax at the border right away.

- On January 16th you discovered that some of the jeans you purchased from your U.S. supplier were not the right colour. You contacted your supplier and asked for an allowance, otherwise you would have to return the entire order. Your supplier agreed and granted you a $200 allowance on the entire order.

- You sold 2 pairs of jeans to a customer for a total of $150 cash on January 20th. You had purchased the jeans from your supplier for $50 a pair as per the supplier invoice.

- The same customer returned 1 pair of the jeans to your store on January 21st because they didn't fit. You cheerfully provided them with a cash refund.

- On January 24th a second customer came to your store and purchased a pair of the same jeans for $75 and your cost of the jeans was $50 from your supplier. The customer paid with her VISA credit card. VISA charges your store a 4% Fee on all sales.

- You paid the amount owing to your supplier on January 27th

- On January 31st you performed a Physical Inventory count and found that you actually had 26 pairs of jeans on hand