Question

At the beginning of the current golf season, on April 1, 2021, Swing-Town Golf Shop's merchandise inventory included 20 specialty hybrid golf clubs at a cost of $160 each. SwingTown uses a perpetual inventory system . The following transactions occurred in April:

April 2 Purchased 100 additional clubs from Weir Inc. for $16,000, terms n/30.

4 Received credit from Weir for five returned damaged clubs purchased on April 2.

5 Sold 20 clubs to Big Golf Practice Range for $265 each, terms n/30.

6 Big Golf Practice Range returned eight of the clubs after determining it had purchased more clubs than it needed. Swing-Town gave Big Golf Practice Range a credit on its account and returned the clubs to inventory. 10 Sold 30 clubs at $265 each to cash customers.

12 Ten of these clubs were returned for cash. The customers claimed they never play golf and had no idea how they had been talked into purchasing the clubs. Refunded cash to these customers and returned the clubs to inventory.

17 An additional 10 of the clubs sold on April 10 were returned because the clubs were damaged. The customers were refunded cash and the clubs were sent to a local recycler.

25 Sold 45 clubs to Pro-Shop for $265 each, terms n/30.

29 Pro-Shop returned 25 of the clubs after the golf pro had examined them and determined that these clubs were of inferior quality. Swing-Town gave Pro-Shop a credit and decided to return the clubs to inventory with plans to sell them for the reduced price of $185 each.

Instructions

a. Record the transactions via journal entries for the month of April for Swing-Town Golf.

b. Create T accounts for 1)Sales, 2)Sales Returns and Allowances, 3)Cost of Goods Sold, and 4)Merchandise Inventory. Post the opening balance and April's transactions, and calculate the April 30 balances.

Answer 1

(A)

Swing-Town Golf Shop
Journal Entries
	Date	Accounts and Explanation	Debit	Credit
(a)	2 April, 2020	Purchases A/c                                             Dr.	$       16,000.00
		To Weir Inc. A/c		$       16,000.00
		(Being 100 clubs purchased from Weir Inc. )
(b)	4 April, 2020	Weir Inc. A/c                                             Dr.	$           800.00
		To Purchase Returns		$           800.00
		(Being 5 damaged clubs returned)
(c)	5 April, 2020	Big Golf Practice Range A/c             Dr.	$        5,300.00
		To Sales A/c		$        5,300.00
		(Being 20 clubs sold to Big Golf Practice Range for $265 each)
(d)	6 April, 2020	Sales Return & Allowances A/c                                Dr.	$        2,120.00
		To Big Golf Practice Range A/c		$        2,120.00
		(Being 8 clubs sold returned)
(e)	10 April, 2020	Bank A/c                                           Dr.	$        7,950.00
		To Sales A/c		$        7,950.00
		(Being 30 clubs sold for cash for $265 each)
(f)	12 April, 2020	Sales Return & Allowances A/c                                Dr.	$        2,650.00
		To Bank A/c		$        2,650.00
		(Being 10 clubs sold for cash returned)
(g)	17 April, 2020	Sales Return & Allowances A/c                                Dr.	$        2,650.00
		To Bank A/c		$        2,650.00
		(Being 10 clubs sold for cash returned but sent to local recycler)
(h)	25 April, 2020	Pro Shop A/c                                           Dr.	$       11,925.00
		To Sales A/c		$       11,925.00
		(Being 45 clubs sold to Pro Shop for $265 each)
(i)	29 April, 2020	Sales Return & Allowances A/c                                Dr.	$        6,625.00
		To Pro Shop A/c		$        6,625.00
		(Being 25 clubs sold to Pro Shop returned)

(b)

		T Accounts/ Ledger Accounts
	Sales A/c
Date	Paticulars	Debit	Date	Particulars	Credit
30.04.2020	To Bal c/d or P& L Account	$ 15,200.00	05.04.2020	By Big Golf Practice Range	$    3,200.00
	(T/f to P&L A/c every month or at year end)		10.04.2020	By Bank A/c	$    4,800.00
		25.04.2020	By Pro Shop A/c	$    7,200.00
		$ 15,200.00			$ 15,200.00
	Sales Returns & Allowances A/c
Date	Paticulars	Debit	Date	Particulars	Credit
06.04.2020	To Big Golf Practice Range	$    1,280.00		By Bal c/d or P& L Account	$    6,880.00
12.04.2020	To Bank A/c	$    1,600.00		(T/f to P&L A/c every month or at year end)
29.04.2020	To Pro Shop A/c	$    4,000.00
		$    6,880.00			$    6,880.00
Cost of Goods Sold A/c
Date	Paticulars	Debit	Date	Particulars	Credit
01.04.2020	To merchandise Inventory A/c	$    3,200.00	04.04.2020	To Purchase Returns	$        800.00
02.04.2020	To Purchases	$ 16,000.00	30.04.2020	To Closing Inventory	$ 10,080.00
			30.04.2020	To P&L Account	$    8,320.00
		$ 19,200.00			$ 19,200.00

Merchandise Inventory A/c
Date	Paticulars	Units	Rate	Debit	Date	Particulars	Units	Rate	Credit
01.04.2020	To Bal b/d	20	$ 160.00	$    3,200.00	04.04.2020	By Purchase Return	5	$ 160.00	$        800.00
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