Question

*Complete the journals for buying and selling inventory and put in the ending inventory value (using a T-account for inventory)

Bill's Music sells CDs. They have the following transactions for May.

5/1 Purchase 1000 CDs on account (2/10 n30 FOB Shipping) at $3 each and put into inventory

5/2 Freight on the 5/1 purchase was $250. Pay in cash

5/5 Sell 100 CDs for $1,200 - on account. CDs sold cost $300.

Terms are 1/10 n30

5/7 Return 50 of the CDs purchased on 5/1 - defective ($3 each)

5/8 Pay for the CDs (not the freight) purchased on 5/1 - net of returns/discount

5/9 Receive Payment for sale on 5/5

5/29 Pay salaries of $500

5/30 Buy 100 more CDs at $4 each - cash

5/31 Sell 200 CDs for $2,500 - all cash. CDs sold cost $600.

What is the ending balance of the Inventory Account ___________________

Answer 1

Journal Entries
Sr. No.	Date	Account Titles & Explanation	Debit ($)	Credit ($)
1	5/1	Purchases A/c                                          Dr.	3,000
		To Accounts payable		3,000
2	5/2	Freight Inward                                        Dr.	250
		To Cash		250
3	5/5	Accounts Receivables                           Dr.	1,200
		To sales		1,200
4	5/7	Accounts payables                                Dr.	150
		To Purchase return		150
5	5/8	Acconts payable                                    Dr.	2,850
		To Cash discount/ Allowance		57
		To Cash		2,793
6	5/9	Cash                                                          Dr.	1,188
		Cash Discount/Allowance		12
		To Accounts receivables		1,200
7	5/29	Salary                                                        Dr.	500
		To cash		500
8	5/30	Purchases A/c                                          Dr.	400
		To Cash		400
9	5/31	Cash                                                            Dr.	2,500
		To sales		2,500

Inventory A/c
Date	Particulars	Amount (In $)	Date	Particulars	Amount (In $)
5/1	To Balance b/d
5/1	To Purchases	3,000	5/5	By Sales	300
5/2	To Freight Inward	250	5/7	By Purchase return	150
5/30	To Purchases	400	5/31	By Sales	600
			5/31	By Balance C/d	2,600
		3,650			3,650
Ending Balance of Inventory Account is $2,600