Question

Problem 3 The Jessica Company supplies you with the following information: Freight-in $ 2,000 Freight-out (selling expense) 7,000 Gross sales 122,000 Merchandise inventory, Jan 1, 20x4 12,000 Merchandise inventory, Dec 31, 20x4 15,000 Purchases 75,000 Office supplies used 7,000 Purchase discounts 7,000 Purchase returns and allowances 6,000 Sales returns and allowances 15,000 Supplies inventory, Dec 31, 20x4 5,000 Required - Calculate the cost of goods sold for Jessica Company. Prepare the journal entry to (1) record cost of goods sold and (2) close all temporary accounts to cost of goods sold. Jessica uses a periodic inventory system. Problem 4 The Orange Department Store uses the retail inventory method to estimate

Answer 1

1.

Statement showing cost of goods Sold
Beginning Inventory			$ 12,000.00
	Purchase	$      75,000.00
Less:	Purchase Return	-$       6,000.00
Less:	Purchase Discount	-$       7,000.00
	Net Purchase		$ 62,000.00
Add:	Freight In		$    2,000.00
	Cost of Goods Available for Sale		$ 76,000.00
Less:	Ending Inventory		-$ 15,000.00
Cost of Goods Sold			$ 61,000.00

2

Journal Entry
1	Particulars	Debit	Credit
	Cost of Goods Sold	$      61,000.00
	Merchandise Inventory		$      61,000.00
2
	Sales	$ 1,22,000.00
	Income Summary		$ 1,22,000.00
	Income Summary	$      90,000.00
	Sales Return and allowances		$      15,000.00
	Cost of Goods Sold		$      61,000.00
	Freight Out		$        7,000.00
	Office Supplies used		$        7,000.00