Question

Question: 1 On December 1, 2020, Company had the following account balances. Debit Cash $ 7,200 Accumulated Depreciation- Equipment Accounts receivable 4.600 Accounts Payable Inventory 12.000 Salaries and Wages Payable Supplies 1,200 Owner's Capital Equipment 22.000 $47.000 Credit $ 2,200 4,500 1.000 39,300 $47.000 During December, the company completed the following summary transactions. December 5 Purchased golf bags, clubs, and balls on account from Tiger Co. $1,200, FOB shipping point, terms 2/10, 1/60. Appropriate party paid freight on purchases $50. December 9 Received credit from Tiger Co.for merchandise returned $100. December 10 Sold merchandise on account to John traders $600, FOB shipping point, terms 2/15, 1/30. The cost of goods sold is $400. Appropriate party paid freight cost $20. December 12 Purchased golf shoes, sweaters, and other accessories on account from Classic Sportswear S450, FOB destination, terms 3/10, n/30. Appropriate party paid freight on purchases $50. December 16 Paid Tiger Co. in full. December 17 Received credit from Classic Sportswear for merchandise returned $50. December 20 Made sales on account to Chenzi traders $500, FOB Destination, terms 2/10, 1/30. Cost of goods sold is $300 Appropriate party paid freight cost $20. December 21 Paid Classic Sportswear in full December 23 Goods returned from Chenzi traders $100. The cost of goods sold is $30 December 30 Received payments from Chenzi traders in full. December 31 Received payments from John traders in full. Instructions a. Journalize the December transactions using both perpetual and periodic inventory system in a table side by side. b. Enter the December 1 balances in the ledger and post the December transactions and prepare a trail balance on December 31 (using perpetual inventory system).

Answer 1

Solution:

Credit Requirement A Journal Entries- Perpetual Inventory System Date Accounts Title Debit 2020 Dec-05 Inventory $1,250 Accounts Payable Cash (Record purchase of inventory on account) $1,200 $50 $100 Dec-09 Accounts Payable Inventory (Record inventory returned by Tiger Co.) $100 $600 Dec-10 Accounts Receivable Sales Revenue (Record sale of inventory on account) $600 $400 Dec-10 Cost of Goods Sold Inventory (Record cost of inventory sold) $400 $450 Dec-12 Inventory Accounts Payable (Record purchase of inventory on account) $450 $1,100 Dec-16 Accounts Payable Cash (Record payment made to Tiger Co.) $1,100

$50 Dec-17 Accounts Payable Inventory (Record inventory returned by Classic sports) $50 $500 Dec-20 Accounts Receivable Sales Revenue (Record sale of inventory on account) $500 $300 Dec-20 Cost of Goods Sold Inventory (Record cost of inventory sold) $300 $20 Dec-20 Freight Expense Cash (Record payment of freight expense by seller) $20 $400 Dec-21 Accounts Payable Cash Inventory (Record payment on account at discount) $388 $12 $100 Dec-23 Sales Return & Allowance Accounts Receivable (Record goods return by Chenzi Traders) $100 $30 Dec-23 Inventory Cost of Goods Sold (Record cost of inventory returned) $30 $392 $8 Dec-30 Cash Sales Discounts Accounts Receivable (Record cash received from Chenzi traders) $400 $600 Dec-31 Cash Accounts Receivable (Record cash received from John traders) $600

Journal Entries- Periodic Inventory System Accounts Title Debit Date Credit 2020 $1,200 $50 Dec-05 Purchases Freight Expense Accounts Payable Cash (Record purchase of inventory on account) $1,200 $50 $100 Dec-09 Accounts Payable Purchase Returns (Record inventory returned by Tiger Co.) $100 $600 Dec-10 Accounts Receivable Sales Revenue (Record sale of inventory on account) $600 $450 Dec-12 Purchases Accounts Payable (Record purchase of inventory on account) $450 $1,100 Dec-16 Accounts Payable Cash (Record payment made to Tiger Co.) $1,100 $50 Dec-17 Accounts Payable Purchase Returns (Record inventory returned by Classic sports) $50

$500 Dec-20 Accounts Receivable Sales Revenue (Record sale of inventory on account) $500 $20 Dec-20 Freight Expense Cash (Record payment of freight expense by seller) $20 $400 $388 Dec-21 Accounts Payable Cash Purchase Discounts (Record payment on account at discount) $12 $100 Dec-23 Sales Return & Allowance Accounts Receivable (Record goods return by Chenzi Traders) $100 $392 $8 Dec-30 Cash Sales Discounts Accounts Receivable (Record cash received from Chenzi traders) $400 $600 Dec-31 Cash Accounts Receivable (Record cash received from John traders) $600

Requirement B General Ledger Cash Debit Credit Date Explanation Dec-01 Beginning Balance Dec-05 Freight Expense Dec-16 Accounts Payable Dec-20 Freight Expense Dec-21 Accounts Payable Dec-30 Accounts Receivable Dec-31 Accounts Receivable $50 $1,100 $20 $388 Balance $7,200 $7,150 $6,050 $6,030 $5,642 $6,034 $6,634 $392 $600 Credit Accounts Receivable Date Explanation Debit Dec-01 Beginning Balance Dec-10 Sales Revenue $600 Dec-20 Sales Revenue $500 Dec-23 sales return & allowance Dec-30 Cash Dec-30 Sales Discounts Dec-31 Cash Balance $4,600 $5,200 $5,700 $5,600 $5,208 $5,200 $4,600 $100 $392 $8 $600 Inventory Debit Credit $1,200 $50 Date Explanation Dec-01 Beginning Balance Dec-05 Accounts Payable Dec-05 Cash Dec-09 Accounts Payable Dec-10 Cost of Goods Sold Dec-12 Accounts Payable Dec-17 Accounts Payable Dec-20 Cost of Goods Sold Dec-21 Accounts Payable Dec-23 Cost of Goods Sold $100 $400 Balance $12,000 $13,200 $13,250 $13,150 $12,750 $13,200 $13,150 $12,850 $12,838 $12,868 $450 $50 $300 $12 $30

Supplies Debit Credit Date Explanation Dec-01 Beginning Balance Dec-31 Ending Balance Balance $1,200 $1,200 Equipment Debit Credit Date Explanation Dec-01 Beginning Balance Dec-31 Ending Balance Balance $22,000 $22,000 Accumulated Depreciation - Equipment Date Explanation Debit Credit Dec-01 Beginning Balance Dec-31 Ending Balance Balance $2,200 $2,200 Accounts Payable Debit Credit $1,200 $100 Date Explanation Dec-01 Beginning Balance Dec-05 Inventory Dec-09 Inventory Dec-12 Inventory Dec-16 Cash Dec-17 Inventory Dec-21 Cash Dec-21 Inventory $450 Balance $4,500 $5,700 $5,600 $6,050 $4,950 $4,900 $4,512 $4,500 $1,100 $50 $388 $12

Credit Salaries and Wages Payable Date Explanation Debit Dec-01 Beginning Balance Dec-31 Ending Balance Balance $1,000 $1,000 Owner's Capital Debit Credit Date Explanation Dec-01 Beginning Balance Dec-31 Ending Balance Balance $39,300 $39,300 Sales Revenue Debit Credit Date Explanation Dec-01 Beginning Balance Dec-10 Accounts Receivable Dec-20 Accounts Receivable Balance $0 $600 $1,100 $600 $500 Cost of Goods Sold Debit Credit Date Explanation Dec-01 Beginning Balance Dec-10 Inventory Dec-20 Inventory Dec-23 Inventory $400 $300 Balance $0 $400 $700 $670 $30

Sales Discounts Debit Credit Date Explanation Dec-01 Beginning Balance Dec-30 Accounts Receivable Balance $0 $8 $8 Credit Sales Return & Allowance Date Explanation Debit Dec-01 Beginning Balance Dec-23 Accounts Receivable $100 Balance $0 $100 Freight Expense Debit Credit Date Explanation Dec-01 Beginning Balance Dec-20 Cash Balance $0 $20 $20

Trial Balance As at December 31, 2020 Accounts Title Credit Cash Debit $6,634 $4,600 $12,868 $1,200 $22,000 Accounts Receivable Inventory Supplies Equipment Accumulated Depreciation - Equipment Accounts Payable Salaries and Wages Payable Owner's Capital Service Revenue Cost of goods sold Sales Discounts Sales return & allowances Freight Expense Total $2,200 $4,500 $1,000 $39,300 $1,100 $670 $8 $100 $20 $48,100 $48,100