Question

Home Hardware reported beginning inventory of 20 shovels, for a total cost of $100. The company had the following transactions during the month: Jan. 2 Sold 4 shovels on account at a selling price of $10 per unit. Jan 16 Sold 10 shovels on account at a selling price of $10 per unit. Jan 18 Bought 5 shovels on account at a cost of $5 per unit. Jan 19 Sold 10 shovels on account at a selling price of $10 per unit. Jan 24 Bought 10 shovels on account at a cost of $5 per unit. Jan 31 Counted inventory and determined that 10 units were on hand.

Record a journal entry that shows all goods initially on hand at the beginning of the period (in the Inventory account) and all goods bought during the period (in the purchases account) as having been sold by the end of the period.

Answer 1

Answer : preparation of journal Entries
Date	Account Titles and Explanation	Debit (in $)	Credit (in $)
02-Jan	Accounts Receivable	$40
	Sales Revenue                        (4 x $10)		$40
	(To record the Sale of shovels)
16-Jan	Accounts Receivable	$100
	Sales Revenue               (10 x $10)		$100
	(To record the Sale of shovels)
18-Jan	Purchases (5 x $5)	$25
	Accounts Payable		$25
	(To record the purchase of shovels)
19-Jan	Accounts Receivable	$100
	Sales Revenue                    (10 x $10)		$100
	(To record the Sale of shovels)
24-Jan	Purchases (10 x $5)	$50
	Accounts Payable		$50
	(To record the purchase of shovels)
31-Jan	Inventory -Stock in hand (10 x $5)	$50
	Cost of goods sold	$125
	Inventory stock (25 x $5)		$100
	Purchases (25+ 50)		$75
	(To record the Cost of Goods sold)