Introduction to Inventories Practice Problems
Demonstration problem
Solution to demonstration problem
a.
General Journal
|
Date |
Account Titles and Explanation |
Post Ref. |
Debit |
Credit |
|
|
2010 |
1 |
Accounts Payable |
4,000 |
||
|
June |
4 |
Purchase Return and Allowances |
4,000 |
||
|
Received an allowance from Company D for damaged goods. |
|||||
|
2 |
Accounts Payable |
8,000 |
|||
|
3 |
Purchase Returns and Allowances |
8,000 |
|||
|
Returned merchandise to Company D because of improper quality |
|||||
|
3 |
Accounts Payable ($80,000 - $4,000 - $8,000) |
68,000 |
|||
|
0 |
Purchase Discounts ($68,000 x 0.02) |
1,360 |
|||
|
Cash ($68,000 - $1,360) |
66,640 |
||||
|
Paid the amount due to Company D. |
b.
General Journal
|
Date |
Account Titles and Explanation |
Post. Ref |
Debit |
Credit |
|
|
2010 |
1 |
Company D |
|||
|
June |
0 |
Accounts Receivable |
8000 |
||
|
Sales |
8000 |
||||
|
Sold merchandise to Company C; terms 2/lO/EOM, n/60 |
|||||
|
1 |
Delivery Expense |
1200 |
|||
|
1 |
Cash |
1200 |
|||
|
Paid freight on sale of merchandise shipped FOB destinaion, freight prepaid. |
|||||
|
1 |
Sales Returns and Allowances |
4000 |
|||
|
4 |
Accounts Receivable |
4000 |
|||
|
Granted an allowance to Company C for damaged goods. |
|||||
|
2 |
Sales Returns and Allowances |
8,000 |
|||
|
3 |
Accounts Receivable |
8,000 |
|||
|
Merchandise returned from Company C due to improper quality. |
|||||
|
30 |
Cash ($68,000 - $1,360) |
66,640 |
|||
|
Sales Discounts ($68,000 x 0.02) |
1,360 |
||||
|
Accounts Receivable ($80,000 - $4,000 - $8,000) |
68,000 |
||||
|
Received the amount due from Company C. |