Question No1: 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. 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.) Jan. 6 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. Briefly describe the opening cycle of a merchandising company. Identify the assets and liabilities directly affected by this cycle. b. Prepare journal entries to record these transactions, assuming the LLP uses a perpetual inventory system in both of the books (Seller and Buyer).. c. Explain the information in part b that should be posted to subsidiary ledger accounts Computer the balance in the Inventory controlling account at the close of business on January 6.
Question No1: 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. 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.) Jan. 6 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. Briefly describe the opening cycle of a merchandising company. Identify the assets and liabilities directly affected by this cycle. b. Prepare journal entries to record these transactions, assuming the LLP uses a perpetual inventory system in both of the books (Seller and Buyer).. c. Explain the information in part b that should be posted to subsidiary ledger accounts Computer the balance in the Inventory controlling account at the close of business on January 6.
Century 21 Accounting General Journal
11th Edition
ISBN:9781337680059
Author:Gilbertson
Publisher:Gilbertson
Chapter20: Accounting For Inventory
Section: Chapter Questions
Problem 1MP
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Transcribed Image Text:Question No1: 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. Briefly describe the opening cycle of a merchandising company. Identify the assets and
liabilities directly affected by this cycle.
b. Prepare journal entries to record these transactions, assuming the LLP uses a perpetual
inventory system in both of the books (Seller and Buyer)
c. Explain the information in part b that should be posted to subsidiary ledger accounts
Computer the balance in the Inventory controlling account at the close of business on January
6.
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