Question

Printer Supply Company sells computer printers and printer supplies. One of its products is a toner cartridge for laser printers. At the beginning of 2019, there were 225 cartridges on hand at a cost of $62 each. During 2019, Printer Supply purchased 1,475 cartridges at $62 each, sold 830 cartridges at $95 each, and sold an additional 710 cartridges at $102 each after a midyear selling price increase. Printer Supply returned 15 defective cartridges to the supplier. In addition, customers returned 20 cartridges that were purchased at $102 to Printer Supply for various reasons. Assume that Printer Supply uses a periodic inventory system.

	Required:
1.	Prepare journal entries to record the purchases, sales, and return of inventory. Assume that all purchases and sales are on credit but no discounts were offered.
2.	What is the cost of ending inventory, cost of goods sold, and gross profit for 2019?

X

Chart Of Accounts

CHART OF ACCOUNTS

Printer Supply Company

General Ledger

ASSETS 111 Cash 112 Petty Cash 121 Accounts Receivable 123 Allowance for Doubtful Accounts 124 Notes Recei

Answer 1

	Answer 1
Date	Particulars	LF	Dr (Amount)	Cr(Amount)
1	Purchase A/C Dr (1475*62)		91,450
	To Accounts Payable			91,450
	(being purchases made cartridges by Prnter supply company)
2	Accounts Payable a/c    Dr(15*62)		930
	To Purchase Returns			930
	(Purchase returns of cartridges by Prnter supply company)
3	Accounts Receivable a/c    Dr (830*95+710*102)		151,270
	To Sales account			151,270
	(Sold cartridges by Printer supply company)
4	Sales Returns account Dr (20*102)		2,040
	ToAccounts Receivable a/c			2,040
	(Sales returns of cartridges tp Printer supply company)
5	Inventory (Ending) account    Dr (165*62)		10,230
	Cost of Goods Sold account Dr (1520*62)		94,420
	To Net Purchases     ( (1475-15)*62)			90,520
	To Begginning inventory (225*62)			13,920

Answer 2
Cost of Ending Inventory units
Opening Inventory	225
Add: purchases	1,475
Less: Purchase return	(15)
Less: Sales(830+710)	(1,540)
Add: Sales return	20
Inventory at the end	165
The cost of ending inventory=	inventory at end * cost price	10,230
Cost of Goods Sold
Opening Inventory	225
Add: purchases	1,475
Less: Purchase return	(15)
Less: Closing inventory	(165)
Cost of Goods Sold	1520 units
Cost of Goods Sold (cost price)=	CSG unit*62	94,240
Gross Profit=	Net Sales- Cost of goods sold
Therefore Net sales=	Sales- sales return	149,230.00
Gross Profit=		54,990.00