JaCo uses the periodic method and records merchandise purchases net. Its 20X4 en

ID: 2394872 • Letter: J

Question

JaCo uses the periodic method and records merchandise purchases net. Its 20X4 ending inventory is $69,000. During 20X5, JaCo pu merchandise for $878,000, with freight-in of $11,000. Purchase $17.000, purchase discounts lost are $4,000, and the on hand at year end is $91,000. At year end, JaCo records the foll entry: a $15,600b$31,200 11. returns are cost of merchandise a. Ending Inventory Purchase Returns Cost of Goods Sold 91,000 17,000 850,000 Purchases Freight-In Beginning Inventory 878,000 11,000 69,000 91,000 17,000 846,000 4,000 b. Ending Inventory Purchase Returns Cost of Goods Sold Purchase Discounts Lost Purchases Freight-In 878,000 11,000 69,000 Beginning Inventory c. Ending Inventory Purchase Returns Cost of Goods Sold 91,000 17,000 854,000 Purchases Freight-In Beginning Inventory Purchase Discounts Lost 878,000 11,000 69,000 4,000 d. Beginning Inventory Purchase Returns Cost of Goods Sold 69,000 17,000 894,000 Purchases Freight-In Ending Inventory 878,000 11,000 91,000

Explanation / Answer

Solution: Option a

Explanation: It will be a closing entry for computing the value of cost of goods and for closing all the nominal accounts directly

Debit

Credit

Ending inventory (cost of merchandise at year end)

91,000

Purchase returns

17,000

COGS

850,000

Purchase

878,000

Freight in

11,000

Beginning inventory

69,000