Chapter 5: Q8SE (page 296)
Jeana’s Furniture’s unadjusted Merchandise Inventory account at year-end is \(69,000. The physical count of inventory came up with a total of \)67,600. Journalize the adjusting entry needed to account for inventory shrinkage.
Answer
Inventory shrinkage expense for the company is$1,400.
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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.
Consider the following transactions for Toys and More:
May 8 Toys and More buys \(113,300 worth of MegoBlock toys on account with credit terms of 2/10, n/60.
12 Toys and More returns \)11,250 of the merchandise to MegoBlock due to damage during shipment.
15 Toys and More paid the amount due, less the return and discount.
Requirements
1. Journalize the purchase transactions. Explanations are not required.
2. In the final analysis, how much did the inventory cost Toys and More?
What is inventory shrinkage? Describe the adjusting entry that would be recorded to account for inventory shrinkage.
Journalize the following sales transactions for Straight Shot Archery using the periodic inventory system. Explanations are not required. The company estimates sales returns and allowances at the end of each month.
Aug. 1 Sold \(6,500 of equipment on the account; credit terms are 1/10, n/30.
8 Straight Shot received payment from the customer on the amount due from August 1, less the discount.
15 Sold \)3,100 of equipment on the account; credit terms are n/45, FOB destination.
15 Straight Shot paid \(90 on freight out.
20 Straight Shot negotiated a \)500 allowance on the goods sold on August 15.
24 Received payment from the customer on the amount due from August 15, less the allowance.
Journalize the following sales transactions for Paul Sportswear. Explanations are not required.
Aug. 1 Paul sold \(66,000 of women’s sportswear on account, credit terms are 2/10, n/30. Cost of goods is \)33,000. Paul uses the gross method to record sales revenue.
25 Paul receives payment from the customer on the amount due.
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