Question

Restu Book Store distributes hard cover books to retail stores and extend credit terms of n/30 to all of its customers. During the month of June, the following merchandising transactions occurred. Date Transactions Purchased 400 books on account for RM6 each from Logan Publisher with credit terms 2/10, n/30 June 1 3 Sold 240 books for RM10 each to Reading Rainbow, on account. The cost of each book is RM6. 6 Returned 20 books to Logan Publisher, RM 6 each. This is due to wrong book title. Restu received credit of RM120 for this transaction. 9 Paid Logan Publisher in full, less discount 10 Sold 80 books for RM10 each to Cheap Book, on account. The cost of each book is RM6. 20 Received full payment from Reading Rainbow by cash. 22 Received payment from Cheap Book by cash. 30 Sold 30 books at RM10 each to Willey Bookstore by cash. The cost of each book is RM6. Ending Inventory : RM180 Required: a) Journalize the June's transactions by using periodic inventory system. b) Post to accounts and prepare a trial balance as at 30th June 2018. c) Prepare the Statement of Profit or Loss for the month ended 30th June 2018.

Answer 1

1. Journal Entries -

Credit Restu Book Store Journal Entries Date Accounts Title Debit June 1 Inventory $ 2,400 Accounts Payable (Being Inventory Purchased on account) $ 2,400 June 3 Accounts Receivable $ 2,400 Sales Revenue (Being books Sold on Account) $ 2,400 June 3 ost of Goods Sold $ 1,440 Inventory (Being cost of Goods Sold incurred) $ 1,440 120 June 6 Accounts Payable $ Inventory (Being Books Returned) $ 120 June 9 Accounts Payable $ 2,280 Cash Discount Cash (Being payment made on account) $ 46 $ 2,234 June 10 Accounts Receivable $ 800 Sales Revenue (Being books Sold on Account) $ 800 June 10 Cost of Goods Sold $ 480 Inventory (Being cost of Goods Sold incurred) $ 480 June 20 Cash $ 2,400 Accounts Receivable (Being Amount received on account) $ 2,400 June 22 Cash $ 800 Accounts Receivable (Being Amount received on account) $ 800 June 30 Accounts Receivable $ 300 Sales Revenue (Being books Sold on Account) $ 300 June 30 Cost of Goods Sold $ 180 Inventory (Being cost of Goods Sold incurred) $ 180

2. Ledgers -

Cash June 20$ 2,400 June 9 June 22 $ 800 $ 2,234 Sales Revenue June 3 $ 2,400 June 10$ 800 June 30$ 300 $ 3,500 cl Bal. $ 966 Cl Bal. $ 3,200 $ 3,200 $ 3,500 $ 3,500 Cash Discount June 9 June 1 $ 46 Inventory $ 2,400 June 3 $ 1,440 June 6 $ 120 June 10$ 480 June 30$ 180 Cl Bal. $ 46 Cl Bal. $ 180 $ 2,400 $ 2,400 Accounts Receivable June 3 $ 2,400 June 20$ 2,400 June 10$ 800 June 22 $ 800 June 30 $ 300 cl Bal. $ 300 Cost of Goods Sold June 3 $ 1,440 June 10$ 480 June 30$ 180 cl Bal. $ 2,100 $ 3,500 $ 3,500 Accounts Payable $ 120 June 1 $ 2,280 June 6 June 9 $ 2,400 $ 2,400 $ 2,400

3. Trial Balance -

Credit Restu Book Store Trial Balance Accounts Title Debit Cash $ 966 Inventory $ 180 Accounts Receivable $ 300 Accounts Payable Sales Revenue Cash Discount Cost of Goods Sold $ 2,100 $ $ 3,500 $ 46 Total $ 3,546 $ 3,546

4. Statement of Profit and Loss -

Restu Book Store Statement of Profit and Loss Sales Revenue Cost of Goods Sold $ 3,500 $ 2,054 Gross Profit $ 1,446

Note - Purchase discount deducted from cost of Good Sold as it is related with purchase.