Question

2. On Sept 1, the beginning of the fiscal year, Campus Office Supply had a inventory of 10 calculators are a cost of $20 each. During September the following transactions occurred :

Sept 2 – Purchased 75 calculators for $20 each from Digital Corp on account, terms n/30

Sept 10-Returned 2 calculators to Digital for credit since they did not meet specifications

Sept 11- Sold 26 calculators for $30 each to the book store terms n/30

Sept 14- Granted credit to Book store for $30 for one calculator that was returned. It was placed back in Inventory

Sept 21- Sold 30 calculators for $30 each to Student Card Shop, terms 1/10 n/30.

Sept 29-Paid Digital the amount owing

Sept 30- Received payment in full from the Student Card Shop.

 

Instructions

a) Record the September transactions as journal entries

b) Create T accounts for the Merch Inventory and Cost of Goods sold. Post the opening balances and the Sept transactions and give ending balances for each in dollars. Also give the ending inventory of calculators in quantity

Answer 1

a)

Journal entries in the books of campus office supply for the period ended 30th sept
		Amount in $	Amount In $
Date	Particulars	Dr.	Cr.
2-Sep	Inventories (calculator) A/c-----------------Dr.                        To Digital Corp A/c. (Being 75 calculators purchased from digital corp @ 20 each on credit)	1500	1500
10-Sep	Digital corp A/c-----------------------------Dr.                         To Inventories(Calculator) A/c (Being 2 calculators retured to digital corp on credit as they did not meet the sepcifications @ 20 each)	40	40
11-Sep	Book Store A/c------------------------------Dr.                          To, Sales A/c (Being 26 calculators sold to book store for $ 30 each on credit terms n/30)	780	780
11-Sep	Cost of goods sold A/c-----------------------Dr.                           To, Inventories A/c (Being Inventories redued by 26 qty @ 20 each)	520	520
14-Sep	Sales Return A/c-------------------------------Dr.                          To, Book stores A/c (Being 1 inventory returned to book stors on credit for $ 30 each)	30	30
14-Sep	Inventories (calculator) A/c-----------------Dr.                        To Cost of Goods sold A/c. (Being 1 calculators returned from Book store and inventory increased by $ 20)	20	20
21-Sep	Student card shop A/c------------------------------Dr.                          To, Sales A/c (Being 30 calculators sold to Student card shop for $ 30 each on credit terms 1/10 n/30)	900	900
21-Sep	Cost of goods sold A/c-----------------------Dr.                           To, Inventories A/c (Being Inventories redued by 30 qty @ 20 each)	600	600
29-Sep	Digital corp A/c-----------------------------Dr.                         To Cash/Bank A/c (Being amount owed to digital corp paid)	1460	1460
30-Sep	Cash / Bank A/c----------------------------Dr. Cash Discount -----------------------------Dr.                         To Student Card shop (Being amount received from student card shop after allowing 1 % discount for paying in 10 days)	891 9	900
	Total	6750	6750

Part (b)

COGS A/c in the books of Campus office supply for the period ended 30th Sept
Date	Particulars	Amount in $	Date	Particulars	Amount in $
11-Sep	Inventories A/c	520	14-Sep	Inventories A/c	20
21-Sep	Inventories A/c	600		By Bal C/d	1100
	Total	1120		Total	1120

Inventories A/c in the books of Campus office supply for the period ended 30th Sept
Date	Particulars	Amount in $	Date	Particulars	Amount in $
1-Sep	To Bal B/d	200
2-Sep	To, Digital Corp	1500	10-Sep	By, Digital Corp	40
14-Sep	To. COGS a/c	20	11-Sep	By, Cost of goods sold A/c	520
			21-Sep	By COGS a/c	600
			30-Sep	By Bal c/d	560
	Total	1720		Total	1720

	Calculation of closing inventory( In Qty)
	Opening balance		10
Add:	Purchases		75
Less:	purchase return		-2
Less:	Sales		-26
Add:	Sales return		1
Less:	Sales		-30
	Closing Balance		28