BuyFindarrow_forward

Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881

Solutions

Chapter
Section
BuyFindarrow_forward

Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881
Textbook Problem
1 views

( Appendices 6A and 6B) Recording Purchases and Sales

Printer Supply Company sells computer printers and printer supplies. One of its products is a toner cartridge for laser printers. At the beginning of 2019, there were 225 cartridges on hand at a cost of $62 each. During 2019, Printer supply purchased 1,475 cartridges at $62 each, sold 830 cartridges at $95 each, and sold an additional 710 cartridges at $102 each after a midyear selling price increase. Printer Supply returned 15 defective cartridges to the supplier. In addition, customers returned 20 cartridges that were purchased at S102 to Printer Supply for various reasons.

Assume that Printer Supply uses a periodic inventory system.

Required:

1. Prepare journal entries to record the purchases, sales, and return of inventory. Assume that all purchases and sales are on credit and no returns were expected at the time of sale.

2. What is the cost of ending inventory, cost of goods sold, and gross profit for 2019?

3. CONCEPTUAL CONNECTION If you have previously worked Exercise 6-49, compare your answers. What are the differences? Be sure to explain why the differences occurred.

To determine

(a)

Periodic inventory system:

Under periodic inventory system, quantity and value of sales are recorded and sales are recorded only on value basis thus quantity of cost of goods sold and closing inventory was not available. At the year end, we calculate closing inventory with physical verification of stock and subtract with available quantity to determine actual quantity sold.

Recording the transaction:

The transactions of sales and purchases are recorded at the time of sale and purchase of goods by debiting one account and crediting the other account.

The journal entries to record the sale, purchase and return of inventory for Printer Supply Company.

Explanation

Ledgers prepared on the basis of journal entries. Whenever accounts are prepared, firstly there is journal entry than ledger prepares as per debit and credit entries of journals.

Following are the journal entries for 2019 :

Company purchased 1475 cartridges at the price of $62.

Date Particular Debit $ Credit $
Purchase account (1475×$62) 91450
Accounts Payable 91450
(To record purchase on account)

Company sold 830 cartridges at the price of $95.

Date Particular Debit $ Credit $
Accounts Receivables Account 78850
Sales Account 78850
(To record sales on account (830 catridges×$95) )

Company sold 710 cartridges at the price of $102

To determine

(b)

Inventory costing methods:

FIFO, LIFO and average cost method, are those method which used for calculation of closing inventory and cost of goods sold.

The cost of closing inventory, cost of goods sold, and gross profit for 2019.

To determine

(c)

Inventory costing methods:

FIFO, LIFO and average cost method, are those method which used for calculation of closing inventory and cost of goods sold.

The difference of the results in two same answers.

Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

Additional Business Solutions

Find more solutions based on key concepts

Show solutions add

Why should policymakers think about incentives?

Principles of Microeconomics (MindTap Course List)

Why should policymakers care about GDP?

Brief Principles of Macroeconomics (MindTap Course List)

What is civil law, and what does it accomplish?

Principles of Information Security (MindTap Course List)

Briefly define linear interpolation.

Precision Machining Technology (MindTap Course List)

For a building located in Baltimore, Maryland with annual heating degree-days (dd) of 4654, a heating load (hea...

Engineering Fundamentals: An Introduction to Engineering (MindTap Course List)

What types of catalyst are typically used to reduce NOx and to oxidize HC and CO?

Automotive Technology: A Systems Approach (MindTap Course List)

Will online transactions eventually replace person-to-person contact? Why or why not?

Systems Analysis and Design (Shelly Cashman Series) (MindTap Course List)

Same as Problem 5.15-7, except that the sag rods are al the third points.

Steel Design (Activate Learning with these NEW titles from Engineering!)

Describe the functions of USB adapters.

Enhanced Discovering Computers 2017 (Shelly Cashman Series) (MindTap Course List)