On September 1, the beginning of its fiscal year, Burke Wholesale Company Ltd. h

Question

On September 1, the beginning of its fiscal year, Burke Wholesale Company Ltd. had an inventory of 99 calculators at a cost of $21 each. The company uses a perpetual inventory system. During September, the following transactions occurred:

Received payment in full from the Student Card Shop.

Sept. 2 Purchased 730 calculators for $21 each from Digital Corp. on account, terms n/30. 10 Returned 11 calculators to Digital for $231 credit because they did not meet specifications. 11 Sold 278 calculators for $30 each to Burke Book Store, terms n/30. 14 Granted credit of $300 to Burke Book Store for the return of 10 calculators that were not ordered. The calculator were restored to inventory. 21 Sold 290 calculators for $30 each to Student Card Shop, terms 1/10, n/30. 29 Paid Digital the amount owing. 30

Received payment in full from the Student Card Shop.

14 Sales Returns and Allowances 30 Accounts Receivable 30 (To record return of goods) 14 Inventory 21 Cost of Goods Sold 21 To record cost of merchandise returned) 21 Accounts Receivable 6090 Sales 6090 (To record credit sale) 21Cost of Goods Sold 8700 Inventory 8700 (To record cost of merchandise sold) 29 Accounts Payable 15099 Cash 15099 30 Cash 6029.1

Explanation / Answer

Journal entries:

Date

Account title

Debit

Credit

Sept 2

Inventory
Accounts payable (730*$21)

15,330

15,330

Sept 10

Accounts payable (11*$21)
Inventory

231

231

Sept 11

Accounts receivable
    Sales revenue (278*$30)

8,340

8,340

Sept 11

Cost of goods sold
    Inventory (278*$21)

5,838

5,838

Sept 14

Sales returns and allowances
    Accounts receivable

300

300

Sept 14

Inventory ($30*10)
   Cost of goods sold

300

300

Sept 21

Accounts receivable (290*$30)
   Sales

8,700

8,700

Sept 21

Cost of goods sold
    Inventory (290*$21)

6,090

6,090

Sept 29

Accounts payable
   Cash(15,330-231)

15,099

15,099

Sept 30

Cash
Sales discount
    Accounts receivable

8,613
87

8,700

Number of calculators

Cost if calculators

Ending inventory

               161

           161*21 = 3,381

Cost of goods sold

730-11-161 = 558

         558*21 = 11,718

Working notes:

Date

Details

Number of calculators

2

Purchased

               730

10

Returned

               (11)

11

Sold

             (278)

14

Granted Credit

                 10

21

Sold

             (290)

Ending inventory

               161

Date

Account title

Debit

Credit

Sept 2

Inventory
Accounts payable (730*$21)

15,330

15,330

Sept 10

Accounts payable (11*$21)
Inventory

231

231

Sept 11

Accounts receivable
    Sales revenue (278*$30)

8,340

8,340

Sept 11

Cost of goods sold
    Inventory (278*$21)

5,838

5,838

Sept 14

Sales returns and allowances
    Accounts receivable

300

300

Sept 14

Inventory ($30*10)
   Cost of goods sold

300

300

Sept 21

Accounts receivable (290*$30)
   Sales

8,700

8,700

Sept 21

Cost of goods sold
    Inventory (290*$21)

6,090

6,090

Sept 29

Accounts payable
   Cash(15,330-231)

15,099

15,099

Sept 30

Cash
Sales discount
    Accounts receivable

8,613
87

8,700

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