Chapter 5: Q5-2RQ (page 294)
What are the two types of merchandisers? How do they differ?
The merchandisers are generally classified into categories: Wholesalers and retailers.
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Lawrence Appliances had the following purchase transactions. Journalize all necessary transactions using the periodic inventory system. Explanations are not required.
Sep. 4 Purchased inventory of \(6,900 on account from Max Appliance Wholesale, an appliance wholesaler. Terms were 3/15, n/30, FOB shipping point.
4 Paid freight charges, \)480.
10 Returned \(300 of inventory to Max.
17 Paid Max Appliance Wholesale, less return, and discount.
20 Purchased inventory of \)3,900 from MY Appliance, an appliance wholesaler. Terms were 1/10, n/45, FOB destination.
22 Received a $400 allowance from MY Appliance for damaged but usable goods.
29 Paid MY Appliance, less allowance and discount.
Journalize the following transactions that occurred in November 2018 for Julie’s Fun World. No explanations are needed. Identify each accounts payable and accounts receivable with the vendor or customer name. Julie’s Fun World estimates sales returns at the end of each month.
Nov. 4 Purchased merchandise inventory on account from Vera Company, \(5,000. Terms 3/10, n/EOM, FOB shipping point.
6 Paid freight bill of \)100 on November 4 purchase
8 Returned half the inventory purchased on November 4 from Vera Company.
10 Sold merchandise inventory for cash, \(1,100. Cost of goods, \)400. FOB destination.
11 Sold merchandise inventory to Geary Corporation, \(11,100, on account, terms of 2/10, n/EOM. Cost of goods, \)6,105. FOB shipping point.
12 Paid freight bill of \(20 on November 10 sale.
13 Sold merchandise inventory to Caldwell Company, \)9,500, on account, terms of n/45. Cost of goods, \(5,225. FOB shipping point.
14 Paid the amount owed on account from November 4, less return and discount.
17 Received defective inventory as a sales return from the November 13 sale, \)500. Cost of goods, \(275.
18 Purchased inventory of \)3,600 on account from Rainman Corporation. Payment terms were 2/10, n/30, FOB destination.
20 Received cash from Geary Corporation, less discount.
26 Paid amount owed on account from November 18, less discount.
28 Received cash from Caldwell Company, less return.
29 Purchased inventory from Sandra Corporation for cash, \(12,300, FOB shipping point. Freight in paid to shipping company, \)170.
What account is debited when recording the payment of freight when using the periodic inventory system?
Clink Electric uses the periodic inventory system. Clink reported the following selected amounts at May 31, 2018:
Merchandise Inventory, June 1, 2017 \( 16,000 Freight In \) 6,000
Merchandise Inventory, May 31, 2018 21,500 Net Sales Revenue 138,000
Purchases 81,000 Common Stock 32,000
Purchase Discounts 3,000 Retained Earnings 17,000
Purchase Returns and Allowances 6,600
Compute the following for Clink:
a. Cost of goods sold.
b. Gross profit.
Journalize the following sales transactions for Sierra Tractors. Explanations are not required.
June 5 Sierra sold \(20,000 of inventory on account, credit terms are 4/10, n/30. Cost of goods is \)10,000. Sierra uses the gross method to record sales revenue.
12 Sierra receives payment from the customer on the amount due, less the discount.
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