Question

Excel complete exercises E6-10 E6-10, E6-17, and E6-18

BE6–18 Refer to the BE6–11 Shankar Company uses a perpetual system to record inventory transactions. The company purchases inventory on account on February 2 for $40,000.

, but now assume that Shankar uses a periodic system to record inventory transactions. Record the purchase of inventory on February 2, including the freight charges.

E6–10 Sundance Systems has the following transactions during July.

July ?5	Purchases 40 LCD televisions on account from Red River Supplies for $2,500 each, terms 3/10, n/30.
July ?8	Returns to Red River two televisions that had defective sound.
July 13	Pays the full amount due to Red River.
July 28	Sells remaining 38 televisions from July 5 for $3,000 each on account.

Required:

Record the transactions of Sundance Systems, assuming the company uses a perpetual inventory system.

E6–18 Refer to the transactions in E6–10.

Required:

1.	Record the transactions of Sundance Systems, assuming the company uses a periodic inventory system.
2.	Record the period-end adjustment to cost of goods sold on July 31, assuming the company has no beginning inventory.

Answer 1

1) Assuming the company uses a perpetual inventory system

Jul-05	Inventory	100,000
	Accounts payable		100,000
Jul-08	Accounts payable	5,000
	Inventory		5,000
Jul-13	Accounts payable	95,000
	Inventory		2,850
	Cash		92,150
	95,000*3% = 2850
	100,000 - 5,000 - 2850 = 92150
Jul-28	Accounts receivable	114,000
	Sales revenue		114,000
Jul-28	COGS	92,150
	Inventory		92,150

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2) Assuming the company uses a periodic inventory system.

Jul-05	Purchases	100,000
	Accounts payable		100,000
Jul-08	Accounts payable	5,000
	Inventory		5,000
Jul-13	Accounts payable	95,000
	Inventory		2,850
	Cash		92,150
	95,000*3% = 2850
	100,000 - 5,000 - 2850 = 92150
Jul-28	Accounts receivable	114,000
	Sales revenue		114,000
Jul-28	No journal entry required

3) Assuming the company has no beginning or ending inventory

Jul-31	COGS	92,150
	Purchases return	5000
	Purchases discount	2,850
	Purchases		100,000

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