Question

Below are transactions recorded by Patrick Corporation during the month of May. Note-on May 1" the balance in Patrick's Inventory Account was 70,000. The balance in Accounts Receivable on May 1 was 0 as was also the balance in Accounts Payable. Patrick gives their customers terms of 3/10,n/20 May 2 May 4 | May 5 May 11 May 9 May 10 May 14 May 16 Purchased $5,500 in merchandise from Bobswell Manufacturing, terms are 1/10, n/30 Paid freight of $200 on the May 2 purchase he Sold merchandise to Crafty Imitations for $8,000 - the merchandise cost $4,000 Paid Bobswell for the May 2 purchase Crafty Imitations paid the invoice Sold merchandise to Walmart for $11,000 - the merchandise cost $7,500 Purchased $4,000 of merchandise from Delaney Manufacturing terms were 3/10, n/45 Complained to Delaney Manfacturing that some of the product delivered was not exactly as ordered - they agree to provide a $300 allowance and we agreed to keep the merchandise Purchased $2,500 in merchandise from Apple Industries, terms are 2/15, n/30 Walmart was not happy with the colors of some of the goods and requested an allowance of $400 - we granted this Walmart paid cash to satisfy half of the invoice. Sold merchandise with a list price of $2,000 to Costco - the cost of the merchandise was $1,200 Costco returned 40% of the merchandise purchased Paid Delaney Manufacturing the amount due Paid Apple Industries the amounts due Walmart paid the other half of the amount due May 18 May 16 May 18 May 19 May 22 May 26 May 27 May 28 Required 1. Prepare all Je to recognize these transactions as described above 2. Report/Calculate Net Sales 3. Report/Calculate Cost of Goods Sold

Answer 1

1.

Date	Account Titles and Explanation	Debit	Credit
May-02	Inventory	5500
	Accounts payable-Bobswell Manufacturing		5500
	(To record inventory purchased on account)
May-04	Inventory	200
	Cash		200
	(To record freight paid on inventory purchase)
May-05	Accounts receivable-Crafty Imitations	8000
	Sales revenue		8000
	(To record sales on account)
May-05	Cost of goods sold	4000
	Inventory		4000
	(To record the cost of goods sold)
May-11	Accounts payable-Bobswell Manufacturing	5500
	Inventory ($5500 x 1%)		55
	Cash		5445
	(To record the payment on account)
May-09	Cash	7760
	Sales discounts ($8000 x 3%)	240
	Accounts receivable-Crafty Imitations		8000
	(To record collections on account)
May-10	Accounts receivable-Walmart	11000
	Sales revenue		11000
	(To record sales on account)
May-10	Cost of goods sold	7500
	Inventory		7500
	(To record the cost of goods sold)
May-14	Inventory	4000
	Accounts payable-Delaney Manufacturing		4000
	(To record inventory purchased on account)
May-16	Accounts payable-Delaney Manufacturing	300
	Inventory		300
	(To record purchase allowance)
May-18	Inventory	2500
	Accounts payable-Apple Industries		2500
	(To record inventory purchased on account)
May-16	Sales returns and allowances	400
	Accounts receivable-Walmart		400
	(To record allowance granted)
May-18	Cash	5141
	Sales discounts ($5300 x 3%)	159
	Accounts receivable-Walmart [1/2 x ($11000 - $400)]		5300
	(To record collections on account)
May-19	Accounts receivable-Costco	2000
	Sales revenue		2000
	(To record sales on account)
May-19	Cost of goods sold	1200
	Inventory		1200
	(To record the cost of goods sold)
May-22	Sales returns and allowances (40% x $2000)	800
	Accounts receivable-Costco		800
	(To record sales returns)
May-22	Inventory (40% x $1200)	480
	Cost of goods sold		480
	(To record the cost of goods returned)
May-26	Accounts payable-Delaney Manufacturing	3700
	Cash ($4000 - $300)		3700
	(To record payment on account)
May-27	Accounts payable-Apple Industries	2500
	Inventory ($2500 x 2%)		50
	Cash		2450
	(To record payment on account)
May-28	Cash	5300
	Accounts receivable-Walmart [1/2 x ($11000 - $400)]		5300
	(To record collections on account)

2.

Sales revenue		21000
Less:
Sales discounts	399
Sales returns and allowances	1200	1599
Net sales		19401

3. Cost of good sold = $4000 + $7500 + $1200 - $480 = $12220