M Wholesale Company began the year with merchandise inventory of $5,000. During the year, M purchased $93,000 of goods and returned $6,600 due to damage. M also paid freight charges of $1,200 on inventory purchases. At year-end, M’s ending merchandise inventory balance stood at $17,200. Assume that M uses the periodic inventory system. Compute M’s cost of goods sold for the year.
The cost of goods sold is $75,400.
In accounting, the cost of goods sold denotes the amount of money a business spends to sell its goods. It includes the cost of inventories available, inventories purchases during the year, and excludes the inventory left at the end of the period.
Less: Goods returned
Add: Freight charges
Less: Closing inventory
Cost of goods sold
D & T Printing Supplies’ accounting records include the following accounts at December 31, 2018.
Purchases $ 185,200 Accumulated Depreciation—Building $ 21,000
Accounts Payable 7,700 Cash 18,100
Rent Expense 8,600 Sales Revenue 257,800
Building 42,800 Depreciation Expense—Building 4,700
Common Stock 55,000 Dividends 26,500
Retained Earnings 30,400 Interest Expense 1,900
Beginning 119,000 Merchandise Inventory,
Notes Payable 11,300 Purchase Returns and Allowances 20,700
Purchase Discounts 2,900
1. Journalize the required closing entries for D & T Printing Supplies assuming that D & T uses the periodic inventory system.
2. Determine the ending balance in the Retained Earnings account.
Journalize the following sales transactions for Straight Shot Archery using the periodic inventory system. Explanations are not required. The company estimates sales returns and allowances at the end of each month.
Aug. 1 Sold $6,500 of equipment on the account; credit terms are 1/10, n/30.
8 Straight Shot received payment from the customer on the amount due from August 1, less the discount.
15 Sold $3,100 of equipment on the account; credit terms are n/45, FOB destination.
15 Straight Shot paid $90 on freight out.
20 Straight Shot negotiated a $500 allowance on the goods sold on August 15.
24 Received payment from the customer on the amount due from August 15, less the allowance.
Consider the following transactions for Garman Packing Supplies:
Apr. 10 Garman Packing Supplies buys $175,000 worth of merchandise inventory on account with credit terms of 1/10, n/30.
12 Garman returns $15,200 of the merchandise to the vendor due to damage during shipment.
19 Garman paid the amount due, less the return and discount.
1. Journalize the purchase transactions assuming Garman Packing Supplies uses the periodic inventory system. Explanations are not required.
2. What is the amount of net purchases?
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