Homework SourseP53B Presented here are selected transactions for Shaoshi In
P5-3B
Presented here are selected transactions for Shaoshi Inc. during October of the current year. Shaoshi uses a perpetual inventory system.
Oct.1
Purchased merchandise on account from Micron Ltd. at a cost of $86,000, terms 1/15, n/30, FOB shipping point.
1
Freight charges of $1,400 were paid by the appropriate party on the October 1 purchase of merchandise.
2
Returned for credit $4,000 of damaged goods purchased from Micron on October 1.
6
Purchased supplies for $2,800 cash.
8
Sold the remaining merchandise purchased from Micron to Guidant Corp. for $140,000 on account, terms 2/10, n/30, FOB destination.
9
Freight charges of $2,300 were paid by the appropriate party on the October 8 sale of merchandise.
10
Purchased equipment on account for $62,000.
12
Guidant returned damaged merchandise that was purchased on October 8 for a $3,500 credit on account. The merchandise originally cost $2,185 and was not restored to inventory.
15
Purchased merchandise for $36,300 cash.
17
Received the balance owing from Guidant.
28
Sold merchandise for $30,000 on account to Deux Ltée, terms 2/10, n/30, FOB shipping point. The merchandise had a cost of $18,000.
29
Freight charges of $750 were paid by the appropriate party on the October 28 sale of merchandise.
30
Paid Micron the balance owing.
31
Deux returned some of the merchandise that was purchased on October 28 for a $5,000 credit on account. The merchandise originally cost $3,000 and was restored to inventory.
Instructions
(a) Record the October transactions.
(b) Assume that Shaoshi took advantage of the 1% purchase discount offered by Micron Ltd. and paid Micron on October 14 rather than October 30. Record the entry that Shaoshi would make on October 14 and determine the cost of missing this purchase discount to Shaoshi.
Record and post purchase and sales transactions; prepare trial balance.
| Oct.1 | Purchased merchandise on account from Micron Ltd. at a cost of $86,000, terms 1/15, n/30, FOB shipping point. |
| 1 | Freight charges of $1,400 were paid by the appropriate party on the October 1 purchase of merchandise. |
| 2 | Returned for credit $4,000 of damaged goods purchased from Micron on October 1. |
| 6 | Purchased supplies for $2,800 cash. |
| 8 | Sold the remaining merchandise purchased from Micron to Guidant Corp. for $140,000 on account, terms 2/10, n/30, FOB destination. |
| 9 | Freight charges of $2,300 were paid by the appropriate party on the October 8 sale of merchandise. |
| 10 | Purchased equipment on account for $62,000. |
| 12 | Guidant returned damaged merchandise that was purchased on October 8 for a $3,500 credit on account. The merchandise originally cost $2,185 and was not restored to inventory. |
| 15 | Purchased merchandise for $36,300 cash. |
| 17 | Received the balance owing from Guidant. |
| 28 | Sold merchandise for $30,000 on account to Deux Ltée, terms 2/10, n/30, FOB shipping point. The merchandise had a cost of $18,000. |
| 29 | Freight charges of $750 were paid by the appropriate party on the October 28 sale of merchandise. |
| 30 | Paid Micron the balance owing. |
| 31 | Deux returned some of the merchandise that was purchased on October 28 for a $5,000 credit on account. The merchandise originally cost $3,000 and was restored to inventory. |
Solution
(a)
(b)
| Shaoshi Inc. | |||
| General journal for the month of October , current year | |||
| Date | Account Title | Debit | Credit |
| Oct.1 | Merchandise inventory | 86000 | |
| Accounts payable | 86000 | ||
| (Purchase of merchandise on account from Micron) | |||
| Oct.1 | Merchandise inventory | 1400 | |
| Cash | 1400 | ||
| (Freight charges paid for the purchase dated Oct.1) | |||
| Oct.2 | Accounts payable | 4000 | |
| Merchandise inventory | 4000 | ||
| (Return of damaged goods to supplier) | |||
| Oct.6 | Supplies | 2800 | |
| Cash | 2800 | ||
| (Purchase of supplies for cash) | |||
| Oct.8 | Accounts receivable | 140000 | |
| Sales | 140000 | ||
| (Sale of goods received from Micron to Guidant Corp) | |||
| Cost of goods sold | 83400 | ||
| Merchandise inventory | 83400 | ||
| (Cost of goods sold to Guidant Corp.) | |||
| Oct.9 | Freight outward | 2300 | |
| Cash | 2300 | ||
| (Freight charges paid for the sale made to Guidant Corp.) | |||
| Oct.10 | Equipment | 62000 | |
| Accounts payable | 62000 | ||
| (Purchase of equipment on account) | |||
| Oct.12 | Sales returns and allowances | 3500 | |
| Accounts receivable | 3500 | ||
| (Sale value of goods returned by Guidant Corp.) | |||
| Since the goods are not taken into inventory no entry needed for cost | |||
| Oct.15 | Merchandise inventory | 36300 | |
| Cash | 36300 | ||
| (Merchandise purchased for cash) | |||
| Oct.17 | Cash | 133770 | |
| Sales discount | 2730 | ||
| Accounts receivable | 146500 | ||
| (Payment received from Guidant Corp.) | |||
| Oct.28 | Accounts receivable | 30000 | |
| Sales | 30000 | ||
| (Sale of merchandise to Deux Ltee on account) | |||
| Cost of goods sold | 18000 | ||
| Merchandise inventory | 18000 | ||
| (Cost of merchandise sold to Deux Ltee ) | |||
| Oct.29 | No entry required as the freight charges are paid by the buyer | ||
| Oct.30 | Accounts payable | 82000 | |
| Cash | 82000 | ||
| (Payment made to Micron) | |||
| Oct.31 | Sales returns and allowances | 5000 | |
| Accounts receivable | 5000 | ||
| (Credit for the goods received from Deux Ltee) | |||
| Merchandise inventory | 3000 | ||
| Cost of goods sold | 3000 | ||
| (Cost of the goods returned by Deux Ltee into inventory) |
