Question

Question: 1 On December 1, 2020, Company had the following account balances. Debit Cash $ 7,200 Accumulated Depreciation- Equipment Accounts receivable 4.600 Accounts Payable Inventory 12.000 Salaries and Wages Payable Supplies 1,200 Owner's Capital Equipment 22.000 $47.000 Credit $ 2,200 4,500 1.000 39,300 $47.000 During December, the company completed the following summary transactions. December 5 Purchased golf bags, clubs, and balls on account from Tiger Co. $1,200, FOB shipping point, terms 2/10, 1/60. Appropriate party paid freight on purchases $50. December 9 Received credit from Tiger Co.for merchandise returned $100. December 10 Sold merchandise on account to John traders $600, FOB shipping point, terms 2/15, 1/30. The cost of goods sold is $400. Appropriate party paid freight cost $20. December 12 Purchased golf shoes, sweaters, and other accessories on account from Classic Sportswear S450, FOB destination, terms 3/10, n/30. Appropriate party paid freight on purchases $50. December 16 Paid Tiger Co. in full. December 17 Received credit from Classic Sportswear for merchandise returned $50. December 20 Made sales on account to Chenzi traders $500, FOB Destination, terms 2/10, 1/30. Cost of goods sold is $300 Appropriate party paid freight cost $20. December 21 Paid Classic Sportswear in full December 23 Goods returned from Chenzi traders $100. The cost of goods sold is $30 December 30 Received payments from Chenzi traders in full. December 31 Received payments from John traders in full. Instructions a. Journalize the December transactions using both perpetual and periodic inventory system in a table side by side. b. Enter the December 1 balances in the ledger and post the December transactions and prepare a trail balance on December 31 (using perpetual inventory system).

Answer 1

Answer-1:

(i) Journal Entry Under Perpetual Inventory System:

Date	Account Title	Debit	Credit
Dec.05	Merchandise inventory	1,200
	Account payable-Tiger Co.		1,200
Dec.05	Merchandise inventory	50
	Cash		50
Dec.09	Account payable-Tiger Co.	100
	Merchandise inventory		100
Dec.10	Account receivable-John Traders	600
	Sales revenue		600
Dec.10	Cost of goods sold	400
	Merchandise inventory		400
Dec.12	Merchandise inventory	450
	Account payable-Classic Sportswear		450
Dec.16	Account payable-Tiger Co.	1,100
	Cash		1,100
Dec.17	Account payable-Classic Sportswear	50
	Merchandise inventory		50
Dec.20	Account receivable-Chenzi Traders	500
	Sales revenue		500
Dec.20	Delivery expense	20
	Cash		20
Dec.20	Cost of goods sold	300
	Merchandise inventory		300
Dec.21	Account payable-Classic Sportswear	400
	Merchandise inventory (400*3%)		12
	Cash		388
Dec.23	Sales return and allowances	100
	Account receivable-Chenzi Traders		100
Dec.23	Merchandise inventory	30
	Cost of goods sold		30
Dec.30	Cash	392
	Sales discount (400*2%)	8
	Account receivable-Chenzi Traders		400
Dec.31	Cash	600
	Account receivable-John Traders		600

(ii) Journal Entry Under Periodical Inventory System:

General Journal under Periodic Inventory system Date Account Name Debit ($) Credit ($) Dec. 05 Purchase 1,200 Account payable-Tiger Co. 1,200 50 Dec.05 Freight-in Cash 50 100 Dec.05 Account payable Tiger Co. Purchase return and allowances 100 600 Dec.10 Account receivable-John Traders Sales revenue 600 450 Dec.12 Purchase Account payable Classic Sportswear 450 Dec.16 Account payable Tiger Co. Cash 1,100 1,100 50 Dec.16 Account payable Classic Sportswear Purchase return and allowances 50 500 Dec.20 Account receivable-Chenzi Traders Sales revenue 500 20 Dec.20 Freight-out Cash 20

400 Dec.21 Account payable Classic Sportswear Cash Purchase discount 388 12 100 Dec.23 Sales return and allowances Account receivable-Chenzi Traders 100 392 Dec.30 Cash Sales dicount Account receivable-Chenzi Traders 8 400 600 Dec.31 Cash Account receivable-John Traders 600

Answer-2:

Trial Balance (Under Perpetual Inventory System) Account Name Debit ($) Credit ($) Cash 5,642 Account receivable 5,600 Inventory 12,868 Supplies 1,200 Equipment 22,000 Cost of goods sold 670 Delivery expense 20 Sales return and allowances 100 Accumulated depreciation equipment 2,200 Account payable 4,500 Salaries and wages payable 1,000 Owner's capital 39,300 Sales revenue 1,100 Total 48,100 48, 100