Dundas Desks buys desks for $80 each and sells them for $140 each. On 1 August 2016, 86 desks were in inventory. Dundas Desks completed the transactions below during August.
|
Aug. |
2 3 4 8 10 12 13 18 20 23 |
Purchased 140 desks on account. Terms: 2/10, n/30, EXW supplier’s warehouse. Paid freight cost of $120 on 2 August purchase. Sold 80 desks on account. Terms: 3/10, n/30, DDP acquirer’s warehouse. Paid freight cost of $60. Returned 30 of the desks purchased on 2 August and paid the amount due on the desks retained in stock. A customer returned 11 of the desks sold on 4 August. The desks were not defective and were returned to stock. Purchased 72 desks on credit. Terms: 2/10, n/30, EXW supplier’s warehouse. Received payment from customer for the amount due on 4 August sale. Sold 140 desks for cash at $120 each. Six of the desks sold on 18 August were returned by the customer for a cash refund. The desks were not defective. Paid the supplier the amount owed for the 12 August purchase. |
A physical inventory count taken on 31 August 2016 showed 63 desks in stock.
Required
A. In two columns and ignoring GST, prepare general journal entries to record the transactions assuming:
1. a perpetual inventory system is used
2. a periodic inventory system is used. Narrations are not required.
B. Repeat requirement A but assume the business is registered for the GST.
C. Assuming Dundas Desks closes its accounts at month end; prepare relevant entries to close the accounts under both inventory systems.
D. Prepare two separate income statements showing gross profit and profit for August, assuming that:
1. the perpetual inventory system was used
2. the periodic inventory system was used.
Enjoy 24/7 customer support for any queries or concerns you have.
Phone: +1 213 3772458
Email: support@gradeessays.com