Question

Part II: Wexler Wholesalers has an extensive line of sought after books, which has led to amassing an efficient distribution system to retailers. The following activities occurred during the first six months of 2020 with respect to its inventory:

1. Jan. 3, 2020: Wexler Wholesalers purchased 1,000 books from Jolly Publishers for $28 per book, terms 2/10,n30.

2. Jan. 7, 2020: Wexler Wholesalers returned 20 of the books purchased in transaction #1 for full credit.

3. Jan. 9, 2020: Wexler Wholesalers paid Jolly Publishers in full.

4. Feb. 1, 2020: Wexler Wholesalers purchased 1,200 books from Simon and Schuster for $34 each, terms 1/15,n30.

5. Feb. 2, 2020: Wexler Wholesalers phoned Simon and Schuster after receiving the order in transaction #4. The issue is the books were water damaged from sitting on a loading dock in the rain. Simon and Schuster offered Wexler Wholesalers a 75% allowance on the damaged books. Wexler Wholesalers accepted the offer.

6. Feb. 3, 2020: Wexler Wholesalers paid Simon and Schuster in full.

7. Feb. 27, 2020: Wexler Wholesalers sold inventory to Juniper Reading Nook costing $28 with a sales price of $60 each. A total of 180 books were sold, terms 3/15,n45.

8. Mar. 5, 2020: Wexler Wholesalers received payment from Juniper Retailers.

9. Jun. 3, 2020: Wexler Wholesalers sold 400 books to Read It Again Sam. The cost was $17 per book with a selling price of $55 each, terms 2/10,n30.

10. Jun. 8, 2020: Read It Again Sam returned 30 books to Wexler Wholesalers for full credit.

11. Jun. 9, 2020: Wexler Wholesalers received payment in full from Read It Again Sam.

12. Jun. 30, 2020: After being lost in the mail for months, Wexler Wholesalers received and paid $175 shipping costs associated with purchases from Simon and Schuster. Wexler Wholesalers is responsible for paying the shipping costs.

Part B: Prepare the income statement for Wexler Wholesalers for the first six months of the year through gross margin (gross profit). Part C: Wexler Wholesalers had opening inventory on January 1, 2020 of $11,500. What is the ending inventory as of June 30, 2020?

Answer 1

Expense	Amount ($)	Amount ($)	Income	Amount ($)	Amount ($)
Opening inventory		11,500
Purchase	68,800		Sale	32,800
Less: Purchase Return	560		Less: Sale Return	1,650
	68,240			31,150
Less:Purchase Discount	651		Less: Sale Discount	731	30,419
	67,589
Less:Purchase Allowance	30,600	36,989	Closing Stock		37,159
Freight Inward		175
Gross Profit		18,914
		67,578			67,578

Ending inventory= Opening inventory + Purchase -Cost of goods sold

= 11,500 + 36,989 - 5,040 - 6,800 + 510

= 37,159

Explanation:

Date	Accounts	Dr.	Cr.
Jan. 3, 2020	Purchase	28,000
	Accounts payable		28,000
Jan. 7, 2020	Accounts payable	560
	Purchase Return		560
Jan. 9, 2020	Accounts Payable	27,440
	Cash		26,891
	Purchase Discount		549
Feb. 1, 2020	Purchase	40,800
	Accounts Payable		40,800
Feb. 2, 2020	Accounts Payable	30,600
	Purchase Allowance		30,600
Feb. 3, 2020	Accounts Payable	10,200
	Cash		10,098
	Purchase Discount		102
Feb. 27, 2020	Accounts Receivable	10,800
	Sales		10,800
Feb. 27, 2020	Cost of goods sold	5,040
	Inventory		5,040
Mar. 5, 2020	Cash	10,476
	Sale Discount	324
	Accounts Receivable		10,800
Jun. 3, 2020	Accounts Receivable	22,000
	Sales		22,000
Jun. 3, 2020	Cost of goods sold	6,800
	Inventory		6,800
Jun. 8, 2020	Sales Reutrn	1,650
	Accounts Receivable		1,650
Jun. 8, 2020	Inventory	510
	Cost of goods sold		510
Jun. 9, 2020	Cash	19,943
	Sale Discount	407
	Accounts Receivable		20,350
Jun. 30, 2020	Freight Inward	175
	Cash		175