Question

Problem 5-3A

Singh Distributing Company uses the perpetual inventory system and engaged in the
following transactions during May of the current year:

Journalizing purchase and sale transactions under the perpetual inventory system

may 3- Purchased office supplies for cash, $22,000

7 may - Purchased inventory on credit terms of 3/10, net eom, $76,000.

8 may -Returned 25 percent of the inventory purchased on May 7. It was not the inventory ordered

10 may -Sold goods for cash, $34,000 (cost, $20,400)

13 may. - Sold inventory on credit terms of 2/15, n/45 for $150,800, less $15,080 quantity discount offered to customers who purchase in large quantities (cost,
$90,480)

16 may - Paid the amount owed on account from the purchase of May 7, less the discount and the return

17 may -Received wrong-sized inventory as a sales return from May 13 sale, $12,400, which is the net amount after the quantity discount. Singh's cost of the inventory received was $7,440

18 may -Purchased inventory of $164,000 on account. Payment terms were 2/10 net 30

26 may -Paid supplier for goods purchased on May 18.

28 may -Received cash in full settlement of the account from the customer who purchased inventory on May 13

31may - Prchased inventory for cash, $96,000, less a quantity discount of $9,600, plus freight charges of $2,200

Required
1. Journalize the preceding transactions on the books of Singh Distributing Company
2. Suppose the balance in Inventory was $20,000 on May 1. What is the balance in inventory on May 31?

Answer 1

1)

Date	Account title	Debit	credit
May 3	supplies	22000
	cash		22000
May 7	Merchandise inventory	76000
	Accounts payable		76000
8	Accounts payable (76000*.25)	19000
	Merchandise inventory		19000
10	cash	34000
	sales revenue		34000
	cost of goods sold	20400
	Merchandise inventory		20400
13	Accounts receivable	135720
	sales Discount	15080
	sales revenue		150800
	cost of goods sold	90480
	Merchandise inventory		90480
16	Accounts payable (76000-19000)	57000
	Merchandise inventory(57000*.03)		1710
	cash		55290
17	sales return and allowance	12400
	Accounts receivable		12400
	Merchandise inventory	7440
	cost of goods sold		7440

18	Merchandise inventory	164000
	Accounts payable		164000
26	Accounts payable	164000
	Merchandise inventory (164000*.02)		3280
	cash		160720
may 28	cash	120853.6
	sales discount (123320*.02)	2466.4
	Accounts receivable (135720-12400)		123320
31	merchandise inventory (96000-9600+2200)	88600
	cash		88600

2)Net purchase (purchase net of return and discount -cost of sales) :201170      [sum of above transaction]

May 31 = 20000+201170= 221170