Question

Inventory Transactions

The Journal Company has provided you with the following inventory transactions:

Oct 1	Journal Company purchased 2,500 red blankets from Warm Vendor with the following terms 2/10, n/30 FOB destination, and unit price is $26.
Oct 3	Received freight bill for Oct 1 transaction, $600 and paid
Oct 5	Returned 200 blankets from Oct 1 transaction
Oct 9	Paid the amount due to Warm Vendor
Oct 12	Sold 1,700 blankets to City Customer, terms 2/10, n/30, FOB Shipping Point, selling price is $58.
Oct 22	City Customer paid total amount owed
Oct 21	Journal Company purchased 1,900 red blankets from Warm Vendor with the following terms 2/10, n/30 FOB shipping point, unit price is $26
Oct 23	Received freight bill for Oct 21 transaction, $700 and paid.

Required

Prepare all of the necessary journal entries

Summarize your data and prepare the partial income statement

Heading

            Sales

           

            Cost of goods sold

            Freight in

            Purchase discounts

            Total Cost of Goods Sold

            Gross Profit

           

Answer 1

Journal entries
Date	Account Titles	Debit	Credit
Oct.1	Inventory	$65,000.00
	Warm Vendor		$65,000.00
Oct.3	Fright In Expenses	$600.00
	Cash		$600.00
Oct.5	Warm Vendor	$5,200.00
	Inventory		$5,200.00
Oct.9	Warm Vendor	$59,800.00
	Purchase Discount		$1,196.00
	Cash		$58,604.00
Oct.12	City Customer	$98,600.00
	Sales		$98,600.00
	Cost of goods sold	$44,200.00
	Inventory		$44,200.00
Oct.22	Cash	$96,628.00
	Sales Discount	$1,972.00
	City Customer		$98,600.00
Oct.21	Inventory	$49,400.00
	Warm Vendor		$49,400.00
Oct.23	Fright In Expenses	$700.00
	Cash		$700.00
Partial income statement
Sales			$98,600.00
Less : Cost of goods sold
- Cost of goods sold		$44,200.00
- Freight in		$1,300.00
- Purhcase discount		-$1,196.00
Total Cost of goods sold			$44,304.00
Gross Profit			$54,296.00