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. Required: 1. Assuming that the James Company uses a perpetual inventory system, prepare journal entries for the above transactions. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

• 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.
• On October 31, James paid for the merchandise purchased on October 12.
• Record the sale of merchandise on account.
• Record the cost of goods sold.
• Record any necessary adjusting entry when the inventory on hand at the end of October cost $59,145.

Answer 1

1	October 12	Inventory	47025		=47500*(1-1%)
		Accounts Payable		47025
2	October 12	Inventory	670
		Cash		670
3	October 31	Accounts Payable	47025
		Interest expense	475
		Cash		47500
4	October 31	Accounts Receivable	31400
		Sales Revenue		31400
5	October 31	Cost of goods sold	20550
		Inventory		20550
6	October 31	NO journal entry required