ransactions for Rockford Corporation. Prepaic J ourchases merchandise from a var
ID: 2413578 • Letter: R
Question
ransactions for Rockford Corporation. Prepaic J ourchases merchandise from a variety of manufacturers and sells the merchandise to a variety of re- The May 1 balance in Watt's Inventory account was a $70.000 debit. The following transactions oc- eets of Transactions on the Inventory Account-Perpetual System Watt Wholesale Company LO2, 3 ers. All sales are subject to a cash discount (2/10, n/30). Watt uses a perpetual inventory system. curred during May: May 2 Purchased $5.500 of merchandise from Ajax Manufacturing: terms are 1/10, n/30. 4 Paid $200 freight on the May 2 purchase. 12 Paid Ajax for the May 2 purchase. 14 Purchased $4,000 of merchandise from Baker Manufacturing: terms are 2/10, n/45 16 Received a $300 allowance on the May 14 purchase since some of the merchandise was the wrong color. All of the merchandise is salable at regular prices.
Explanation / Answer
Date Transaction Debit account Credit account Account balance 01-May Beginning balance 70000 02-May Purchased 5500 75500 04-May Freight 200 75700 12-May Purchase return and allowance 55 75645 14-May Purchase 4000 79645 16-May Purchase return and allowance 300 79345 18-May Purchase 2500 81845 19-May Cost of goods sold 1200 80645 22-May Sales return 480 81125
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