Beginning of current year, entitys inv

Consisted of 90 covers @ 1k each

Following events occurred during the yr
1.purch 800 covers on accnt, 1k each
2.return 50 defective covers to supplier
And received credit
3.paid 600 of the covers purchased
4.sold 790 covers @ 2k each
5.received 20 covers returned by cust.
And gave credit. Covers in good condition
6.receive cash for 680 covers sold
7.physical count at yr-end is
60 units on hand
Determine cost of sales under each
Inventory system

Periodic: DR-CR
1.Purch - A/P 800k
2.A/P - Purch Ret. 50k
3.A/P – Cash 600k
4.A/R – Sales 1580k
5.Sales Ret – A/R 40k
6.Cash – A/R 1360k
7. inv dec31 – inc summary 60k

Inv. Jan 1 90k

Purch 800k
Purch ret (50k) 750k
Goods av. For sale 840k
Less. Inv dec 31 60k
Cost of sales 780k

Perpetual: DR-CR
1.MI – A/P 800k
2.A/P – MI 50k
3.A/P – cash 600k
4.A/R – sales 1580k
Cost of sales – MI 790k
5.sales ret – A/R 40k
MI – cost of sales 20k
6.cash – A/R 1360k
7.inv. short – MI 10k
MI per book 70k
Physical count 60k
Shortage 10k
Cost of sales
Recorded (790k-20k) 770k
Inv. Shortage 10k
Adj. cost of sales 780k

1.purch merch @ invoice

Price, 4750k, excluding freight
2/10, n/30
2.freight paid, 250k
3.cash payment on purch, 3717k
Of w/c 1617 was paid w/in
Disc period
4.expected that all disc on
Unpaid A/P will be lost
5.dec 31, 1/5 of merch remains
On hand

Gross method
1.purch – A/P 4750k
2.freight in – cash 250k
3.A/P 1650k
Cash 1617k
Purch disc. 33k
4. no entry
5.inv. – inc. sum 1000k
Net Method
1.purch – A/P 4655k
2.freight in – cash 250k
3.A/P – cash 1617k
A/P 2058k
Purch disc lost 42k
Cash 2100k
4.Purch disc lost-A/P 20k
5.inv-inc sum 981k

Allow for D/A

Write/off Beg.
D/exp
Recovery

End

Accounts Receivable
Beg. Collection
Credit Writeoff
sales

end

Book bal
Add: CM
Total
Less: DM
Adj book bal

Bank bal
Add:DIT
Total
Less:OC
Adj bank bal

Book bal
Add: CM
OC
Less: DM
DIT
Bank bal

Bank bal
Add: DIT
DM
Less: OC
CM
Book bal

Notification basis
July 1 Assigned 1000k
A/R Bank loans 80%
Less 4% BSC
Signed prom note
For 1% int. per month
July 31 600k of assigned
Accnts were collected
Less 2% disc
Aug 31 300k of assigned
Accnts were collected
Final settlement made
w/ 100k uncollected
assigned accounts

july1 A/R as – A/R 1000k

Cash760kBSC40k–NPb800k
July31 NPb588kSD12k-ARA600k
Int exp – cash 8k
Aug.31
Cash 85880
Int exp 2120
NPb 212k
A/R A. 300k
A/R – A/R A. 100k

Loan from bank 800k

Less: july collec by bank 588k
Bal due by bank 212k

Aug. coll by bank 300k

Less: loan bal 212k
Excess collec 88k
Less: int(1%)(212k) = 2120
Remmitance frm bank 85880