Question

Merryland's had inventory balance $32 570 at close of accounting period. the following sales & purchases are for current period. (1) purchased goods on account for $27 190 (2) returned part of the above purchase that had an original purchase price of $1590 (3) paid for the balance of the purchase in time to receive discount of 2% of the purchase price (4) sold goods costing $24 900 for $49 820. cash of $23 000 was received, with the balance due on account. (5) goods sold on credit for $2020 (cost $1010) were returned

1- Prepare general journal entries assuming perpetual inventory system is used and Business is registered for GST (i.e. GST is to be added to the figures where appropriate).

2 - A physical count of the inventory at the end of the current period shows inventory of $30,000 to be on hand. Present the entries (if any) required under perpetual inventory system to adjust for any discrepancy.

Answer 1

1.

S No.	Account Title	Debit	Credit
1	Inventory	$      27,190.00
	Accounts Payable		$   27,190.00
	(To record inventory purchases)
2	Accounts Payable	$        1,590.00
	Inventoy		$     1,590.00
	(To record purchase return)
3	Accounts Payable (27190-1590)*98%	$      25,600.00
	Inventory		$        544.00
	Cash		$   25,056.00
	(To record payment)
4	Cash	$      23,000.00
	Accouts Receivable	$      26,820.00
	Sales		$   49,820.00
	(to record sales)
	Cost of goods sold	$      24,900.00
	Inventory		$   24,900.00
	(To record cost of goods sold)
5	Sales Return	$        2,020.00
	Accounts Receivable		$     2,020.00
	(To record sales return)
	Inventory	$        1,010.00
	Cost of goods sold		$     1,010.00
	(To record sales return)

GST details are not provided  

2. Closing entry required :

	Cost of goods sold	$        3,736.00
	Inventory		$     3,736.00

Working :

Inventory (Beginning)	$         32,570.00
Purchases	$         25,056.00
Sales	$         23,890.00
Closing	$         33,736.00
Physical	$         30,000.00
Difference	$           3,736.00