Question

At the beginning of the current season on April 1, the ledger of Flint Hills Pro Shop showed Cash $2,500; Inventory $3,500; and Common Stock $6,000. The following transactions were completed during April 2014.Apr. 5 Purchased golf bags, clubs, and balls on account from Akers Co. $1,500, terms 3/10, n/60. 7 Paid freight on Akers purchase $80. 9 Received credit from Akers Co. for merchandise returned $200. 10 Sold merchandise on account to members $1,340, terms n/30. The merchandise sold had a cost of $820. 12 Purchased golf shoes, sweaters, and other accessories on account from Palmer Sportswear $830, terms 1/10, n/30. 14 Paid Akers Co. in full 17 Received credit from Palmer Sportswear for merchandise returned $30. 20 Made sales on account to members $810, terms n/30. The cost of the merchandise sold was $550. 21 Paid Palmer Sportswear in full. 27 Granted an allowance to members for clothing that did not fit properly $80. 30 Received payments on account from members $1,220.Journalize the April transactions using a perpetual inventory system.

Answer 1

Answer:

A perpetual inventory system is a way of recording real time transactions as shown below, for Flint Hills Pro Shop for the month of April.

Explanation:

Date: April 5

Debit: Inventory $1,500

          Credit: Akers Co. $1,500

To record Purchases on account.

Date: April 7

Debit: Freight Expense $80

          Credit: Cash $80

To record payment of freight.

Date: April 9

Debit: Akers Co. $200

          Credit: Inventory $200

To record Purchase Return from Akers Co.

Date: April 10

Debit: Account Receivables $1,340

          Credit: Sales $1,340

To record Sales on account.

Debit: Cost of Goods Sold $820

          Credit: Inventory $820

To record Cost of Goods Sold.

Date: April 12

Debit: Inventory $830

          Credit: Palmer Sportswear $830

To record Purchases on account.

Date: April 14

Debit: Akers Co. $1,300

          Credit: Cash $1,261

          Credit: Discount Received $39

To record Payment to Akers Co.

*Akers Co. Total Liability = Initial Credit - Purchase Return

Akers Co. Total Liability = $1,500 - $200

Akers Co. Total Liability = $1,300

As per payment terms if Flint Hills pays its dues owed to Akers Co. within 10 days of purchases than Flint Hills will avail 3% discount.

Discount Received = $1,300 x 3%

Discount Received = $39

Date: April 17

Debit: Palmer Sportwear $30

          Credit: Inventory $30

To record Purchases Return.

Date: April 20

Debit: Accounts Receivables $810

          Credit: Sales $810

To record Sales on account.

Debit: Cost of Goods Sold $550

          Credit: Inventory $550

To record Cost of Goods Sold.

Date: April 21

Debit: Palmer Sportswear $800

          Credit: Cash $792

          Credit: Discount Received $792

To record payment to Palmer Sportswear.

*Palmer Sportswear Total Liability = Initial Credit - Purchase Return

Palmer Sportswear Total Liability = $830 - $30

Palmer Sportswear Total Liability = $800

As per payment terms if Flint Hills pays its dues owed to Palmer Sportswear within 10 days of purchases than Flint Hills will avail 1% discount.

Discount Received = $800 x 1%

Discount Received = $8

Date: April 27

Debit: Sales Discount $80

          Credit: Accounts Receivables $80

To record Sales Discount.

Date: April 30

Debit: Cash $1,220

          Credit: Accounts Receivables $1,220

To record Sales on account.