Question

On March 1, 2017, Company “Z” had 1800 merchandise inventories at a cost of $59.90 each. The company uses periodic inventory system and has completed the following merchandising transactions during the month:

March. 3         Purchased 5000 merchandise at $61.90 each from Company “X”, terms 3/10. n/60, FOB shipping point, appropriate party also paid $2000 freight charges on that day.

9        Returned 200 merchandise due to damage during shipment to Company “X”, Company “X” approved credit for the damage.

            12        Paid Company “X” in full.

            17        Sold 5000 merchandise on account to Company “Y” for $99.90 each, terms 2/10, n/60, FOB destination, appropriate party also paid $1500 for freight charges.

            21        Purchased 2000 merchandise at $63.90 each from Company “L”, terms 1/10, n/30, FOB destination, appropriate party also paid for $1000 freight charges on that day.

            30        Received payment from Company “Y” in full.

Merchandise inventory on March 31^st is worth of $222,840.

Instructions:

1. Prepare the journal entries to record these transactions on the books of Company “Z” using periodic inventory system.                                                                                   

ii.Prepare the cost of goods sold section for the month ended 31^st March 2017 for Company “Z”.                                                   

Answer 1

Journal Entries
Date	Particulars	Debit	Credit
03-03-17	Purchases A/c….Dr	$        309,500
	To Accounts Payables A/c		$        309,500
03-09-17	Accounts Payables A/c…..Dr	$          12,380
	To Purchase Retuns A/c		$          12,380
03-12-17	Accounts Payables A/c…..Dr	$        288,206
	To Cash/Bank A/c		$        288,206
03-12-17	Accounts Payables A/c…..Dr	$            8,914
	To Purchase Discount A/c		$            8,914
03-17-2017	Accounts Recievables…..Dr	$        499,500
	To Sales A/c		$        499,500
03-21-2017	Purchases A/c….Dr	$        127,800
	To Accounts Payables A/c		$        127,800
03-30-17	Cash / Bank A/c…..Dr	$        499,500
	To Accounts Recievables A/c		$        499,500
3-31-17	Inventory A/c ( Closing Inventory)….. Dr	$        222,840
	Cost of Goods Sold…Dr	$        300,986
	To Inventory ( Opening Inventory) A/c		$        107,820
	To Purchases A/c		$        416,006

Cost of Goods Sold Working
	Particulars	Amount
	Opening Inventory	$        107,820
Add:	Purchases	$        437,300
Less :	Discounts and Returns	$          21,294
		$        523,826
Less :	Closing Inventory	$        222,840
	Cost of Goods Sold	$        300,986