Question

Piper Specialty Store Ltd. completed the following merchandising transactions in the month of May 2021. At the beginning of May, Piper’s ledger showed Cash $9,800; Accounts Receivable $3,300; Inventory $4,900; Common Shares $10,600; and Retained Earnings $7,400. Piper Specialty has experienced a return rate of 2% of sales and uses a perpetual inventory system.

May	1		Purchased merchandise on account from Depot Wholesale Supply Ltd. for $6,740, terms 1/10, n/30, FOB shipping point.
	3		Freight charges of $179 were paid by the appropriate party on the merchandise purchased on May 1.
	4		Sold merchandise on account to Yip Company for $4,900, terms n/30, FOB destination. The cost of the merchandise was $3,800.
	7		Freight charges of $114 were paid by the appropriate party on the May 4 sale.
	8		Received a $140 credit from Depot Wholesale Supply when merchandise was returned.
	9		Paid Depot Wholesale Supply in full.
	11		Purchased supplies for $530 cash.
	14		Received payment in full from Yip Company for merchandise sold on account on May 4.
	15		Collected $1,220 of the accounts receivable outstanding at the beginning of the month. All accounts were originally sold on terms of n/30.
	18		Purchased merchandise from Harlow Distributors Inc. for $3,700, terms n/30, FOB destination.
	21		Freight of $61 was paid by the appropriate party on the May 18 purchase of merchandise.
	22		Sold merchandise to various customers for $9,400 cash. The cost of the merchandise was $5,200.
	29		Paid a $122 cash refund to customers for returned merchandise. The cost of the returned merchandise was $69. It was restored to inventory.
	31		A physical inventory count was taken and determined that there was $6,180 of inventory on hand. Prepare any adjustment required.

Answer 1

Answer: Journal Entries-

Date	Account Title and Explanation	Debit $	Credit $
May 1	Inventory	6,740
	Accounts Payable		6,740
	(To record inventory purchased on account)
May 3	Inventory	179
	Cash		179
	(To record payment of freight on goods purchased)
May 4	Accounts receivable	4,900
	Sales		4,900
	(To record sales on account)
May 4	Cost of goods sold	3,800
	Inventory		3,800
	(To record cost)
May 7	No Entry
May 8	Accounts payable	140
	Inventory		140
	(To record purchase returns)
May 9	Accounts Payable (6,740-140)	6,600
	Cash		6,534
	Inventory (6,600*1%)		66
	(To record cash paid to Depot Wholesale Supply)
May 11	Supplies	530
	Cash		530
	(To record supplies purchased for cash)
May 14	Cash	4,802
	Sales Discount (4,900*2%)	98
	Accounts receivable		4,900
	(To record cash received from Yip Company)
May 15	Cash	1,220
	Accounts receivable		1,220
	(To record cash received from beginning accounts receivable outstanding)
May 18	Inventory	3,700
	Accounts payable		3,700
	(To record goods purchased on account)
May 21	No Entry
May 22	Cash	9,400
	Sales		9,400
	(To record sale for cash)
May 22	Cost of goods sold	5,200
	Inventory		5,200
	(To record cost)
May 29	Sales return and allowance	122
	Cash		122
	(To record cash paid for sales return)
May 29	Inventory	69
	Cost of goods sold		69
	(To record cost of the returned merchandise and restored to inventory)
May 31	Cost of goods sold	202
	Inventory (6,382-6,180)		202
	(To record inventory written off)