Question

Required information [The following information applies to the questions displayed below.] James Company began the month of October with inventory of $32,000. The following inventory transactions occurred during the month: a. The company purchased merchandise on account for $47,500 on October 12. Terms of the purchase were 1/10, n/30. James uses the net method to record purchases. The merchandise was shipped f.o.b. shipping point and freight charges of $670 were paid in cash. b. On October 31, James paid for the merchandise purchased on October 12 c. During October merchandise costing $20,550 was sold on account for $31,400. d. It was determined that inventory on hand at the end of October cost $59,145 2. Assuming that the James Company uses a periodic inventory system, prepare journal entries for the above transactions including the adjusting entry at the end of October to record cost of goods sold. James considers purchase discounts lost as part of interest expense. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

2. Assuming that the James Company uses a periodic inventory system, prepare journal entries for the above transactions including the adjusting entry at the end of October to record cost of goods sold. James considers purchase discounts lost as part of interest expense. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

1. The company purchased merchandise on account for $47,500 on October 12. Terms of the purchase were 1/10, n/30. James uses the net method to record purchases.

2. The merchandise was shipped f.o.b. shipping point and freight charges of $670 were paid in cash.

3. On October 31, James paid for the merchandise purchased on October 12.

4. Record the sale of merchandise on account.

5. Record the cost of goods sold.

6. Record any necessary adjusting entry when the inventory on hand at the end of October cost $59,145.

Answer 1

James Company Requirement 1 Journal Enteries Date Particulars Debit in $ Credit in $ Oct-12 Purchases a/c Dr. 47025 To Accounts Payable 47025 (Purchases on account)47500 x 0.99 Dr. 670 Oct-12 Freight in a/c To Cash (Freight paid) 670 Oct-31 Accounts Payable a/c Interest Expense a/c To Cash Dr. Dr. 47025 475 47500 Dr. 31400 Oct-31 Accounts Receivable a/c To Sales Revenue 31400 20550 59145 Oct-31 Cost of goods sold a/c Dr. Inventory (ending) a/c Dr. To Inventory (beginning) To Purchases To Freight 32000 47025 670 Requirement 2 Journal Enteries Date Particulars Oct-12 Inventory a/c Dr. To Accounts Payable (Inventory on account) Debit in $ Credit in $ 47025 47025 Oct-12 Dr. 670 Freight in a/c To Cash (Freight paid) 670 Oct-31 Accounts Payable a/c Interest Expense a/c To Cash Dr. Dr. 47025 475 47500 Dr. 31400 Oct-31 Accounts Receivable a/c To Sales Revenue 31400 32000 Cost of goods sold a/c Dr. To Inventory (To record cost of goods sold) Beginning inventory Plus net purchases: Purchases Plus: Freight-in Cost of goods available for sale Less: Ending inventory Cost of goods sold 47025 670 47695 79695 -59145 20550