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Q5-8TI

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Horngren'S Financial And Managerial Accounting
Found in: Page 280

Short Answer

Click Computers has the following transactions in July related to purchasing and sale of merchandise inventory.

July 1 Purchase of $20,500 worth of computers on account, terms of 2/10, n/30.

3 Return of $4,000 of the computers to the vendor.

9 Payment made on the account.

12 Sold computers on account for $8,000 to a customer, terms 3/15, n/30.

26 Received payment from customer on balance due.

Journalize the transactions for Click Computers assuming that the company uses the periodic inventory system.

The total debit and credit of the journal are $56,760.

See the step by step solution

Step by Step Solution

Meaning of Periodic Inventory System

An inventory system that periodically updates the inventory transactions is termed a periodic inventory system. Under this system, a business entity updates its inventory accounts at the end of an accounting period and tracks its beginning and closing inventories.

Preparation of journal entries

Date

Accounts and Explanation

Debit ($)

Credit ($)

July 1

Purchases

20,500

Accounts payable

20,500

(To record the purchase of computers)

July 3

Accounts payable

4,000

Purchase return

4,000

(To record the return of goods)

July 9

Accounts payable

16,500

Cash

16,170

Purchase discount

330

(To record the payment within the discount period)

July 12

Accounts receivable

8,000

Sales revenue

8,000

(To record the sale of computers)

July 26

Cash

7,760

Sales discount

240

Accounts receivable

8,000

(Cash received within the discount period)

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