Homework SourseP52A Phantom Book Warehouse Ltd distributes hardcover books
P5-2A
Phantom Book Warehouse Ltd. distributes hardcover books to retail stores. At the end of May, Phantom\'s inventory consists of 250 books purchased at $18 each. Phantom uses a perpetual inventory system.
During the month of June, the following merchandise transactions occurred:
June 1
Purchased 180 books on account for $16 each from Reader\'s World Publishers, terms n/45.
3
Sold 220 books on account to The Book Nook for $25 each, with an average cost of $17, terms 2/10, n/45.
5
Received a $160 credit for 10 books returned to Reader\'s World Publishers.
8
Sold 80 books on account to Read-A-Lot Bookstore for $22 each, with an average cost of $17, terms 2/10, n/45.
9
Issued a $264 credit memorandum to Read-A-Lot Bookstore for the return of 12 damaged books. The books were determined to be no longer saleable and were destroyed.
11
Purchased 130 books on account for $15 each from Read More Publishers, terms n/45.
12
Received payment in full from The Book Nook.
17
Received payment in full from Read-A-Lot Bookstore.
22
Sold 125 books on account to Reader\'s Bookstore for $25 each, with an average cost of $17, terms 2/10, n/45.
25
Granted Reader\'s Bookstore a $375 credit for 15 returned books. These books were restored to inventory.
29
Paid Reader\'s World Publishers in full.
(b) Record the June transactions
(c) Create a T account for the Inventory account. Enter the opening balance, post the June transactions related to Inventory prepared in part (b), and determine the ending balance in the account.
| June 1 | Purchased 180 books on account for $16 each from Reader\'s World Publishers, terms n/45. |
| 3 | Sold 220 books on account to The Book Nook for $25 each, with an average cost of $17, terms 2/10, n/45. |
| 5 | Received a $160 credit for 10 books returned to Reader\'s World Publishers. |
| 8 | Sold 80 books on account to Read-A-Lot Bookstore for $22 each, with an average cost of $17, terms 2/10, n/45. |
| 9 | Issued a $264 credit memorandum to Read-A-Lot Bookstore for the return of 12 damaged books. The books were determined to be no longer saleable and were destroyed. |
| 11 | Purchased 130 books on account for $15 each from Read More Publishers, terms n/45. |
| 12 | Received payment in full from The Book Nook. |
| 17 | Received payment in full from Read-A-Lot Bookstore. |
| 22 | Sold 125 books on account to Reader\'s Bookstore for $25 each, with an average cost of $17, terms 2/10, n/45. |
| 25 | Granted Reader\'s Bookstore a $375 credit for 15 returned books. These books were restored to inventory. |
| 29 | Paid Reader\'s World Publishers in full. |
Solution
(b)
(c) Ending balance of in the account is $2,200.
| Phantom Book Warehouse Ltd. | |||
| Journal entries for the month of June | |||
| Date | Account title | Debit | Credit |
| 6/1 | Inventory | 2880.00 | |
| Accounts payable | 2880.00 | ||
| (Purchase of books on account from Readers World Publishers) | |||
| 6/3 | Accounts Receivable | 5500.00 | |
| Sales | 5500.00 | ||
| (Sale of 220 books @$25 each to The Book) | |||
| Cost of goods sold | 3740.00 | ||
| Inventory | 3740.00 | ||
| (Cost of the books sold to The Book Nook) | |||
| 6/5 | Accounts payable | 160.00 | |
| Inventory | 160.00 | ||
| (Credit received from Readers World for returned books) | |||
| 6/8 | Accounts Receivable | 1760.00 | |
| Sales | 1760.00 | ||
| (Sale of 80 books @$22 each to Read-a-Lot Bookstore) | |||
| Cost of goods sold | 1360.00 | ||
| Inventory | 1360.00 | ||
| (Cost of the books sold to Read-a-Lot Bookstore) | |||
| 6/9 | Sales | 264.00 | |
| Accounts Receivable | 264.00 | ||
| (Credit memeo issued to Read-a-Lot Bookstore for 12 books returned) | |||
| 6/11 | Inventory | 1950.00 | |
| Accounts payable | 1950.00 | ||
| (Purchase of books on account from Read More Publishers) | |||
| 6/12 | Cash | 3665.20 | |
| Sales discount | 74.80 | ||
| Accounts Receivable | 3740.00 | ||
| (Payment received from The Book Nook) | |||
| 6/17 | Cash | 1466.08 | |
| Sales discount | 29.92 | ||
| Accounts Receivable | 1496.00 | ||
| (Payment received from Read-a-Lot Book Store) | |||
| 6/22 | Accounts Receivable | 3125.00 | |
| Sales | 3125.00 | ||
| (Sale of 125 books @$25 each to Reader\'s Bookstore) | |||
| Cost of goods sold | 2125.00 | ||
| Inventory | 2125.00 | ||
| (Cost of books sold to Reader\'s Bookstore) | |||
| 6/25 | Sales | 375.00 | |
| Accounts Receivable | 375.00 | ||
| (Credit memo issued for return of 15 books to Readers\' Bokstore) | |||
| Inventory | 255.00 | ||
| Cost of goods sold | 255.00 | ||
| (Cost of books returned by Readers\' Bookstore) | |||
| 6/29 | Accounts payable | 2720.00 | |
| Cash | 2720.00 | ||
| (Payment made to Readers World Publishers) |
