Question

the following transactions occurred during the first year of operations for dave's tvs,inc,. a retail company thats uses a perpetual inventory system: (prepare journal entries in summary form for the year ) that were made to record these transactions and a partial income statement through gross profit .

a) purchases appliances for $400,000

b) sold appliance that cost $360,000 for $470,000

c) collected $345,000 on account

d) paid $285,000

e) a physical count of inventory at the end of the year on december 31 showed the cost of the ending inventory on hand was $39,600

Answer 1

Journal Entries:

	Account title and Explanation	Debit	Credit
(a)	Inventory	$400,000
	Accounts payable		$400,000
	[To record purchase of inventory on account]
(b)	Accounts receivable	$470,000
	Sales revenue		$470,000
	[To record credit sales]
	Cost of goods sold	$360,000
	Inventory		$360,000
	[To record cost of goods sold]
(c)	Cash	$345,000
	Accounts receivable		$345,000
	[To record collections from customers]
(d)	Accounts payable	$285,000
	Cash		$285,000
	[To record cash paid for accounts payable]
(e)	Cost of goods sold	$400
	Inventory*		$400
	[To reduce the inventory value to inventory on hand]

*Reduction in inventory = Purchases - Cost of goods sold - Inventory on hand = $400,000 - $360,000 - $39,600 = $400

Income statement :

Income statement (partial)
Sales	$470,000
Cost of goods sold (360000+400)	($360,400)
Gross profit	$109,600