Question

Presented here are selected transactions for Alpine Tours Inc. during September of the current year. Alpine Tours uses a perpetual inventory system. Alpine Tours estimates a return rate of 5% based on past experience.

Sept.	2		Purchased equipment on account for $65,000, terms n/30, FOB destination.
	3		Freight charges of $1,010 were paid by the appropriate party on the September 2 purchase of equipment.
	4		Purchased supplies for $3,700 cash.
	6		Purchased inventory on account from Winterholt Company at a cost of $61,400, terms 1/15, n/30, FOB shipping point.
	7		Freight charges of $1,600 were paid by the appropriate party on the September 6 inventory purchase.
	8		Returned damaged goods costing $5,100 that were originally purchased from Winterholt Company on September 6. Received a credit on account.
	9		Sold goods costing $16,400 to Fischer Limited for $20,100 on account, terms 2/10, n/30, FOB destination.
	10		Freight charges of $400 were paid by the appropriate party on the September 9 sale of inventory.
	17		Received the balance due from Fischer.
	20		Paid Winterholt Company the balance due.
	21		Purchased inventory for $5,600 cash.
	22		Sold inventory costing $20,300 to Kun-Tai Inc. for $29,500 on account, terms n/30, FOB shipping point.
	23		Freight charges of $600 were paid by the appropriate party on the September 22 sale of inventory.
	28		Kun-Tai returned goods sold for $1,030 that cost $710. The merchandise was restored to inventory.

a. Record the September transactions on Alpine Tours’s books. (List all debit entries before credit entries. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round answers to the nearest whole dollar, e.g. 5,275.)

b. Determine Alpine Tours’s sales and cost of goods sold for September.
c. Calculate Alpine Tours’s gross profit as a dollar amount and the gross profit margin as a percentage. (Round gross profit margin to 1 decimal place, e.g. 15.2%.)

Answer 1

a) Journal Entries
Date	Account Titles and Explanation	Debit	Credit
Sep. 2	Equipment	$65,000
	Accounts Payable		$65,000
	(To record the purchase of equipment on account)
Sep. 3	No Entry
	In case of FOB destination, the seller is responsible to pay the freight charges.
Sep. 4	Supplies	$3,700
	Cash		$3,700
	(To record the purchase of supplies by cash)
Sep. 6	Inventory	$61,400
	Accounts Payable		$61,400
	(To record the purchase of inventory on account)
Sep. 7	Freight Expenses	$1,600
	Cash		$1,600
	(To record the payment of freight charges)
Sep. 8	Accounts Payable	$5,100
	Inventory		$5,100
	(To record the return of merchandise purchased on account)
Sep. 9	Accounts Receivable	$20,100
	Sales Revenue		$20,100
	(To record the sales made on account)
Sep. 9	Cost of Goods Sold	$16,400
	Inventory		$16,400
	(To record the cost of goods sold)
Sep. 10	Freight Expenses	$400
	Cash		$400
	(To record the payment of freight charges)
Sep. 17	Cash ($20,100 - $402)	$19,698
	Sales Discount ($20,100*2/100)	$402
	Accounts Receivable		$20,100
	(To record the collection of accounts receivable within discount period)
Sep. 20	Accounts Payable ($61,400 - $5,100)	$56,300
	Purchase Discount ($56,300*1/100)		$563
	Cash ($56,300 - $563)		$55,737
	(To record the payment of accounts payable within discount period)
Sep. 21	Inventory	$5,600
	Cash		$5,600
	(To record the purchase of inventory by cash)
Sep. 22	Accounts Receivable	$29,500
	Sales Revenue		$29,500
	(To record the sales made on account)
Sep. 22	Cost of Goods Sold	$20,300
	Inventory		$20,300
	(To record the cost of goods sold)
Sep. 23	No Entry
	In case of FOB shipping point, the buyer is responsible to pay the freight charges.
Sep. 28	Sales Returns and Allowances	$1,030
	Accounts Receivable		$1,030
	(To record the sales returns that were made on account)
Sep. 28	Inventory	$710
	Cost of Goods Sold		$710
	(To record the cost of returned merchandise)
	b)
	Sales -
	Sep. 9	$20,100
	Sep. 22	$29,500
	Total sales revenue	$49,600
	Less: Sales returns and allowances	($1,030)
	Less: Sales discount	($402)
	Net Sales Revenue	$48,168
	Cost of Goods Sold -
	Sep. 9	$16,400
	Sep. 22	$20,300
	Less: Return of cost of goods sold	($710)
	Cost of Goods Sold	$35,990
	c)
	Net sales revenue	$48,168
	Less: Cost of goods sold	($35,990)
	Gross Profit as a dollar amount	$12,178
	Gross Profit Margin as a percentage ($12,178/$48,168*100)	25.3%