Question N: LLP sells copiers. At December 31, 2001. LLP’s inventory amounted to $400,000. During the first week of January 2002, the company made only one purchase and one sale. These transactions were as follows: Jan. 2 Purchased 50 machines from Twin, Inc. The total cost of these machines was $30,000, terms 3/10, n/60. Jan. 6 Sold 20 different types of products on account to Space Corporation. The total sales price was $25,000, terms 5/10, n/90. The total cost of these 20 units of LLP was $13,000 (net of the purchase discount.) LLP has a full-time accountant and a computer-based accounting system. It records sales at the gross sales price and purchases at net cost and maintains subsidiary ledgers for accounts receivable, inventory, and accounts payable. Instructions a. . Prepare journal entries to record these transactions, assuming the LLP uses a perpetual inventory system in both of the books (Seller and Buyer) .  b. Briefly describe the opening cycle of a merchandising company. Identify the assets and liabilities directly affected by this cycle. c. Explain the information in part b that should be posted to subsidiary ledger accounts d. Computer the balance in the Inventory controlling account at the close of business on January 6.  (Please solve the whole question, including all the sub parts)

Financial Accounting
15th Edition
ISBN:9781337272124
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Carl Warren, James M. Reeve, Jonathan Duchac
Chapter7: Inventories
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Problem 4CP: Golden Eagle Company began operations on April 1 by selling a single product. Data on purchases and...
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Question N: LLP sells copiers. At December 31, 2001. LLP’s inventory amounted to $400,000. During the first week of January 2002, the company made only one purchase and one sale. These transactions were as follows:

Jan. 2 Purchased 50 machines from Twin, Inc. The total cost of these machines was $30,000, terms 3/10, n/60.

Jan. 6 Sold 20 different types of products on account to Space Corporation. The total sales price was $25,000, terms 5/10, n/90. The total cost of these 20 units of LLP was $13,000 (net of the purchase discount.)

LLP has a full-time accountant and a computer-based accounting system. It records sales at the gross sales price and purchases at net cost and maintains subsidiary ledgers for accounts receivable, inventory, and accounts payable.

Instructions

a. . Prepare journal entries to record these transactions, assuming the LLP uses a perpetual inventory system in both of the books (Seller and Buyer) . 

b. Briefly describe the opening cycle of a merchandising company. Identify the assets and liabilities directly affected by this cycle.

c. Explain the information in part b that should be posted to subsidiary ledger accounts

d. Computer the balance in the Inventory controlling account at the close of business on January 6. 

(Please solve the whole question, including all the sub parts) 

 

 

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