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    Assignment 4 - Merchandising Operations

    Uploaded by

    Shehzad Qureshi
    Big Oak sold lumber to Hard Hat Construction for $19,700 with a cost of $10,300. Big Oak later collected payment and purchased lumber from LHP Company. At year-end, Big Oak's inventory count was $114,000 but the records showed $116,500 with a cost of goods sold of $721,000. Journal entries are needed for periodic and perpetual inventory systems.

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    Assignment 4 - Merchandising Operations

    Uploaded by

    Shehzad Qureshi
    66 views2 pages
    Big Oak sold lumber to Hard Hat Construction for $19,700 with a cost of $10,300. Big Oak later collected payment and purchased lumber from LHP Company. At year-end, Big Oak's inventory count was $114,000 but the records showed $116,500 with a cost of goods sold of $721,000. Journal entries are needed for periodic and perpetual inventory systems.

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    Big Oak sold lumber to Hard Hat Construction for $19,700 with a cost of $10,300. Big Oak later collected payment and purchased lumber from LHP Company. At year-end, Big Oak's inventory count was $114,000 but the records showed $116,500 with a cost of goods sold of $721,000. Journal entries are needed for periodic and perpetual inventory systems.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    66 views2 pages

    Assignment 4 - Merchandising Operations

    Uploaded by

    Shehzad Qureshi
    Big Oak sold lumber to Hard Hat Construction for $19,700 with a cost of $10,300. Big Oak later collected payment and purchased lumber from LHP Company. At year-end, Big Oak's inventory count was $114,000 but the records showed $116,500 with a cost of goods sold of $721,000. Journal entries are needed for periodic and perpetual inventory systems.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
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    Question 1: Big Oak’s Company

    Apr. 15 Sold lumber on account to Hard Hat Construction, $19,700. The inventory subsidiary
    ledger shows the cost of this merchandise was $10,300.

    Apr. 19 Purchased lumber on account from LHP Company, $3,700.

    May 10 Collected in cash the $19,700 account receivable from Hard Hat Construction.

    May 19 Paid the $3,700 owed to LHP Company.

    Dec. 31 Big Oak’s personnel counted the inventory on hand and determined its cost to be
    $114,000. The accounting records, however, indicate inventory of $116,500 and a cost
    of goods sold of $721,000. The physical count of the inventory was observed by the
    company’s auditors and is considered correct.

    Prepare journal entries for both periodic and perpetual inventory systems.

    Question 2

    The following is a series of related transactions between Hip Pants and Sleek, a chain of retail clothing
    stores:

    Oct. 12 Hip Pants sold Sleek 300 pairs of pants on account, terms 1/10, n/30. The cost of these
    pants to Hip Pants was $20 per pair, and the sales price was $60 per pair.

    Oct. 15 Wings Express charged $50 for delivering this merchandise to Sleek. These charges were
    split evenly between the buyer and the seller and were paid immediately in cash.

    Oct. 16 Sleek returned four pairs of pants to Hip Pants because they were the wrong size. Hip
    Pants allowed Sleek full credit for this return.

    Oct. 22 Sleek paid the remaining balance due to Hip Pants within the discount period.

    Required:

    a) Prepare journal entries for Hip Pants under periodic and perpetual inventory systems.
    b) Prepare journal entries for Sleek under periodic and perpetual inventory systems.
    Question 3

    Below are transactions for March, 2016 for Angel Ltd.:

    March 1 Purchased $25,000 of merchandise on account for terms 2/10, n30.

    March 3 Sold merchandise to a customer for $5,000 for terms 1/10, n30. (Cost $2,600)

    March 4 Customer from March 3 returned $200 of some unsuitable goods which were returned
    to inventory. (Cost $100)

    March 5 Purchased $15,000 of merchandise from a supplier for cash and arranged for shipping,
    fob shipping point.

    March 6 Paid $200 for shipping on the March 5 purchase.

    March 7 Contacted the supplier from March 5 regarding $2,000 of merchandise with some minor
    damages. Supplier agreed to reduce the price and offered an allowance of $500 cash,
    which was accepted.

    March 8 Sold $25,000 of merchandise for terms 1.5/10, n30. (Cost $13,000). Agreed to pay
    shipping costs for the goods sold to the customer.

    March 9 Shipped the goods sold on March 8 to customer, fob destination for $500 cash.

    March 11 Paid for fifty percent of the March 1 purchase to the supplier.

    March 13 Collected the account owing from the customer from March 3.

    March 15 Purchased office supplies on account for $540 for terms 1/10, n30.

    March 18 Ordered merchandise inventory from a supplier totalling $15,000. Goods to be shipped
    on April 10, fob shipping point.

    March 20 Collected $6,010 cash from an account owing from two months ago. The early payment
    discount had expired.

    March 25 Paid for the March 15 purchase.

    March 27 Sold $12,500 of merchandise inventory for cash (Cost $5,000).

    March 31 Paid the remaining of the amount owing from the March 1 purchase.

    Required: Prepare the journal entries, if any, for Angel Ltd.

    (Both Perpetual and Periodic Inventory Systems)

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