Question

Inventory Purchases

Sunflower Soccer Club is a soccer club for dedicated youth soccer players. Use the following information and the t-accounts provided to record the club’s April purchase transactions, assuming it uses the perpetual inventory system.

• Sunflower purchased 420 engraved medals on account from Evans Engraving for $3.40 each on April 8. The terms of the purchase were 4/10, n/30. The medals were for the winners of a soccer tournament the following weekend.
• When Sunflower received the medals on April 12, it noticed the engraving was slightly crooked on 22 of the medals. Evans gave Sunflower a $19 purchase allowance related to those medals.
• Sunflower also noticed that 10 of the medals were incorrectly engraved. It returned those medals to Evans and requested a refund because it had overestimated the number of medals needed in the original order.
• On April 16, Sunflower paid Evans for the full amount owed on account.

Enter dollar values with no dollar sign and appropriate commas (e.g. 5,000). Every box in each t-account relates to a separate transaction and every box needs an answer. If there is no dollar value for the box, put a "0" in the space provided.

Answer 1

It was given in the problem that Sunflower soccer club used Perpetual inventory system.

Under the perpetual inventory system, an entity continually updates its inventory records to account for additions to and subtractions from inventory for any activities related to inventory such as:

1. Received inventory items

2. Goods sold from stock

3. Items picked from inventory for use in the production process

4. Items scrapped

1. Sunflower purchased 420 medals @ $3.40 each on April 8

Journal entry

Inventory A/c Dr.......... $ 1,428

......To Accounts Payable A/c $ 1,428

2. On April 12 Purchase allowance of $19 is given

Accounts payable A/c Dr......$19

............. To Inventory A/c ...........$19

3. On April 16 Sunflowe paid the entire amount due

As per 4/10 net 30 terms if the payment is made within 10 days 4% discount is given

Accounts payable A/c Dr.......$57

.....To Inventory A/c(420*$3.40*4%) $57

Remaining balance due is payable in cash which is 1428-57-19= $1352

Accounts payable A/c Dr.... $1352

........To Cash/ Bank A/c.........$1352

4. For Purchase returns of 10 medals

Cash A/c........Dr $33

..To Inventory A/c $33

Cost of goods consumed A/c Dr $1319

..........To Inventory A/c ............$1319

Inventory A/c

Date	Particulars	Amount	Date	Particulars	Amount
Apr 2	To Acc. Payable	1428	Apr 12	By Acc. Payable	19
			Apr 12	By Acc. Payable	57
			Apr 16	By Cash	33
			Apr 16	By Cost of consumable	1319
		1428			1428

Accounts payable A/c

Date	Particulars	Amount	Date	Particulars	Amount
Apr 12	To Inventory	19	Apr 2	By Inventory	1428
Apr 12	To Inventory	57
Apr 16	To Cash	1352
		1428			1428

Cash A/c

Date	Particulars	Amount	Date	Particulars	Amount
	Opening balance		Apr 16	By Acc. Payable	1352
Apr 16	To Inventory	33