Question

2. On Sept 1, the beginning of the fiscal year, Campus Office Supply had a inventory of 10 calculators are a cost of $20 each. During September the following transactions occurred (25 marks):

Sept 2 – Purchased 75 calculators for $20 each from Digital Corp on account, terms n/30

Sept 10-Returned 2 calculators to Digital for credit since they did not meet specifications

Sept 11- Sold 26 calculators for $30 each to the book store terms n/30

Sept 14- Granted credit to Book store for $30 for one calculator that was returned. It was placed back in Inventory

Sept 21- Sold 30 calculators for $30 each to Student Card Shop, terms 1/10 n/30.

Sept 29-Paid Digital the amount owing

Sept 30- Received payment in full from the Student Card Shop.

 

Instructions

a) Record the September transactions as journal entries (14 marks)

b) Create T accounts for the Merch Inventory and Cost of Goods sold. Post the opening balances and the Sept transactions and give ending balances for each in dollars. Also give the ending inventory of calculators in quantity (11 marks)

Answer 1

a) Record the September transactions as journal entries (14 marks)
Date	Account Titles & Explanation	Debit	Credit
2-Sep	Merchandise Inventory (75 X $20)	$  1,500.00
	Accounts Payable		$  1,500.00
10-Sep	Accounts Payable (2 X $20)	$       40.00
	Merchandise Inventory		$       40.00
11-Sep	Accounts Receivable (26 x $30)	$     780.00
	Sales		$     780.00
	Cost of Goods Sold (26 x $20)	$     520.00
	Merchandise Inventory		$     520.00
14-Sep	Sales Returns and Allowances	$       30.00
	Accounts Receivables		$       30.00
	Merchandise Inventory	$       20.00
	Cost of Goods Sold		$       20.00
21-Sep	Accounts Receivable (30 x $30)	$     900.00
	Sales		$     900.00
	Cost of Goods Sold (30 x $20)	$     600.00
	Merchandise Inventory		$     600.00
29-Sep	Accounts payable	$  1,460.00
	Cash		$  1,460.00
30-Sep	Cash	$     891.00
	Sales Discount	$         9.00
	Accounts Receivables		$     900.00
b)
	Merchandise Inventory
Opening bal. (10 x $20)	$                                                             200.00
2-Sep	$                                                          1,500.00	$       40.00	10-Sep
14-Sep	$                                                               20.00	$     520.00	11-Sep
		$     600.00	21-Sep
Ending bal.	$                                                             560.00
	Cost of good sold
11-Sep	$                                                             520.00	$       20.00	14-Sep
21-Sep	$                                                             600.00
Balance	$                                                          1,100.00
Ending Inventory in units = 10+75-2-26+1-30	28	units