Question

Part II (20 marks) Cross Shop is engaged in the following transactions during February 2019. Purchased 1,000 boxes of masks for resale for $120 per box from 6M Company on account. 2 Returned 10 boxes of defective masks to 6M Company. 5 Sold 200 boxes of masks to a customer for $180 per box for cash. Paid half of the amount owed to 6M Company for the masks purchased on 2 February The customer returned 10 boxes of masks purchased on 8 February to Cross Shop because they are in the wrong color. Purchased 100 boxes of bandages for resale for $150 per box from 6M Company by cash. Received $5,000 cash in advance from a customer for the bandages which will be delivered on 5 March 2019. 8 22 26 27 27 A complete physical inventory taken as at 28 February 2019 indicates goods costing $130,700 remains in stock

Answer 1

Solution of the above problem is as under:

Statement showing Journal Entries of the transactions occurred during January 2019
Date	Particulars	Debit ($)	Credit ($)
Feb 2,2019	Inventory Account A/c Dr.	120000
	To 6M Company A/c		120000
	(Being purchases made on credit)
Feb 5,2019	6M Company A/c Dr.	1200
	To Inventory A/c		1200
	(Being purchases return recorded in books)
Feb 8,2019	Cash A/c Dr.	36000
	To Sales A/c		36000
	(Being googs sold in cash amounting to $ 36000)
Feb 22,2019	6M Company A/c Dr.	59400
	To Cash A/c		59400
	(Being cash paid to 6M Company for purchases made)
Feb 26,2019	Inventory A/c Dr.	1800
	To Cash A/c		1800
	(Being sales return recorded in books)
Feb 27,2019	Inventory A/c Dr.	15000
	To Cash A/c		15000
	(Being purchases made in cash from 6M Company)
Feb 27,2019	Cash A/c Dr.	5000
	To Advance received from customer A/c		5000
	(Being advance received from customer recorded for the sale to be made on 5th March 2019)

Note: Since question in the picture start from Part-II We will be able to provide solution to part A) question as part b) requires full picture including Part-I