Question

Iryna Cosmetics uses the perpetual inventory system to record its inventory. Beginning inventory on 1 May included 80 packets of skin care packs at $5 each. The firm completed the following transactions during May:

May 1	Sold 10 packets of skin care packs at $15 each for cash
4	Purchased 25 packets of skin care packs at $5 each on account. Terms 2/10, n/30.
5	A customer returned 4 of the packets of skin care packs sold on 1 May and received a cash refund. The packets of skin care packs were not defective.
10	Returned 5 of the packets of skin care packs purchased on 4 May.
12	Sold 20 packets of skin care packs at $20 each on account. Credit terms 2/10, n/30.
13	Paid the supplier the amount due on the 4 May purchase (and return).

Required:

(a)    Record the above transactions in the general journal using the perpetual inventory system. (Explanations not required)

          Note: Ignore GST.

(b)      Record the journal entry on May 4 (purchase) and May 12 (sale). Add the GST to the transactions. Assume periodic inventory. Round to the nearest cent. (Explanation not required)

Answer 1

(a)

Date	Account Titles	Debit	Credit
May-01	Cash	$               150
	Sales Revenue		$               150
	Cost of Goods Sold	$                 50
	Inventory		$                 50
May-04	Inventory	$               125
	Accounts Payable		$               125
May-05	Sales Returns and Allowances	$                 60
	Cash		$                 60
	Inventory	$                 20
	Cost of Goods Sold		$                 20
May-10	Accounts Payable	$                 25
	Inventory		$                 25
May-12	Accounts Receivable	$               400
	Sales Revenue		$               400
	Cost of Goods Sold	$               100
	Inventory		$               100
May-13	Accounts Payable	$               100
	Cash		$                 98
	Inventory		$                    2

(b) GST Rate not given,

Date	Account Titles	Debit	Credit
May-04	Purchase	$               125
	GST Input
	Accounts Payable		$               125
May-12	Accounts Receivable	$               400
	Sales Revenue		$               400
	GST Payable