Question

Fn Journal entries, discounts, closing entries and income statementsboth perpetual and periodic inventory systems GST version Dundas Desks buys desks for $80 each and sells them for $140 each. On 1 August 2019, 86 desks were in inventory. Dundas Desks completed the transactions below during August. Purchased 140 desks on account. Terme: 2/10, n/30, EXW supplier's warehouse Paid freight cost of $120 on 2 August purchase. Sold 80 desks on account. Terms: 3/10, n/30. DDP acquirer's warehouse. Paid freight cost of $60 Returned 30 of the desks purchased on 2 August and paid the amount due on the desks retained in stock A customer returned 11 of the desks sold on 4 August. The desks were not defective and were returned to stock Aug. 2 3 4 8 10 12 Purchased 72 desks on credit. Terms: 2/10, n/30, EXW supplier's warehouse. 13 Received payment from customer for the amount due on 4 August sale. 18 Sold 140 desks for cash at $120 each. 20 Six of the desks sold on 18 August were returned by the customer for a cash refund. The desks were not defective. Paid the supplier the amount owed for the 12 August purchase. 23 A physical inventory count taken on 31 August 2019 showed 63 desks in stock Required (a) In two columns and assume the business is registered for the GST, prepare general journal entries to record the transactions assuming: i. a perpetual inventory system is used a periodic inventory system is used. Narrations are not required. ii. (b) Assuming Dundas Desks closes its accounts at month end; prepare relevant entries to close the accounts under both inventory systems. (c) Prepare two separate income statements showing gross profit and profit for August, assuming that: i. the perpetual inventory system was used ii. the periodic inventory system was used.

Answer 1

Ques 1

Perpetual and periodic entries

Aug.02 Inventory 11200 Purchases GST receivable 11200 1120 GST receivable 1120 Accounts paya 12320 Accounts payable 12320 Aug-03 Freight Inwards GST Receivable 120 12 Freight Inwards GST Receivable Aug-04 Accounts 12320 12320 Receivable GST Pavable 120 Receivable GST Payable 1120 es 11200 11200 6 400 nventor 6 400 Freight Outwards GST Receivable Freight Outwards GST Receivable 60 6D 56 Accounts Payable GST Receivable Purchases Ret Aug-08Accounts Payable 2640 2640 GST Receivable 240 2400 nventor 2400 Accounts Payable Discount Rec GST Receivable Cash at Bank 9680 9680 Discount Received GST Receivable Cash at Bank 9468.4 9468.4 Aug-10 Sales Returns& Allows Sales Returns GST Payable Accounts Rec Accounts Receivable 1694 1694 nventory Cost of Sales 880 5760 Purchases GST Receivable Accounts Pa Aug-12 Inventory 5760 GST Receivable 5336 6336 Aug-13 Cash at Bank Cash at Bank Discount Allowed GST Payable Accounts Receivable 10,307.2.2 289.8 28.98 32 owed 289.8 GST Payable Accounts Receivable (69 140 28.98 10 626 Cash at Bank GST Payable 18 480 8 480 GST Payable 1 680 1 680 16 800 16 800 Cost of Sales nvento 11 200 Aug-20 Sales Returns 720 Sales Returns GST Payable Cash at Bank Cash at Bank 792 nvento 480 Aug-23 Accounts Payable 6 336 Accounts Payable 6 336 6 336 Cash at Bank 6 336 AuR-31 Stock Loss Expense nvento 160

Ques 2

closing entries

Ques 3

Ques 2 Closing entries Closing entries 19129.8 26569.8 Income summar Sales Ret & Allows Cost of Sales Freight Inwards Freight Out Discount Allowed Stock Loss Expense 2260 16240 120 60 289.8 160 ncome summa nventory Sales Ret & Allows Purchases Freight Inwards Freight Out 6880 2260 16960 120 60 289.8 Discount Allowed Sales Discount Received Income Summary Sales Purchases Ret & Allows nventory Discount Received Income Summary 28000 2400 5040 176 28000 176 28176 35 616

income statement

DUNDAS DESKS Income Statement(Perpetual) for the month ended 31 August 2016 INCOME Sales revenue Less: Sales returns and allowances Discount allowed Net sales revenue Less: Cost of sales Stock loss Discount received GROSS PROFIT Less Freight outwards NET PROFIT $28 000.00 $2 260.00 289.8 2549.8 25450.2 16 360.00 160 176 16 344.00 9106.2 60 9046.2 DUNDAS DESKS Income Statement(Periodic) for the month ended 31 August 2016 INCOME Sales revenue Less: Sales returns and allowances Discount allowed Net sales revenue Cost of sales: Beginning inventory Add: Cost of purchases Freight Inwards $28 000.00 2260 2549.8 25450.2 289.8 6880 16960 120 17080 2400 176 Less: Purchases returns Discount received Net cost of purchases Cost of goods available for sale Less: Cost of ending inventory Cost of sales GROSS PROFIT Less: Freight outwards NET PROFIT 14 504.00 21 384.00 5 040.00 16 344.00 9106.2 60 9046.2