On June 10, Rebecca Company purchased $8,600 of merchandise from Clinton Company

Question

On June 10, Rebecca Company purchased $8,600 of merchandise from Clinton Company, FOB shipping point, terms 2/10, n/30. Rebecca pays the freight costs of $540 on June 11. Damaged goods totaling $500 are returned to Clinton for credit on June 12. The fair value of these goods is $110. On June 19, Rebecca pays Clinton Company in full, less the purchase discount. Both companies use a perpetual inventory system. Prepare separate entries for each transaction on the books of Rebecca Company Prepare separate entries for each transaction for Clinton Company. The merchandise purchased by Rebecca on June 10 had cost Clinton $5,020. Twix Company had the following account balances at year-end: Cost of Goods Sold $62,010; Inventory $14,630; Operating Expenses $29,510; Sales Revenue $126,140; Sales Discounts $1,140; and Sales Returns and Allowances $2,070. A physical count of inventory determines that merchandise inventory on hand is $12,390. Prepare the adjusting entry necessary as.a.r.result of the physical count. Prepare closing entries.

Explanation / Answer

3 Rebecca's Book a Journal Entry Date Account Dr $ Cr$ Jun10. Merchandise Inventory                     8,600 Accounts Payable                 8,600 Jun11. Merchandise Inventory                         540 Cash                    540 Jun 12. Merchandise Inventory                    500 Accounts Payable                         500 ( goods returned) Jun 19. Merchandise Inventory                    162 Accounts Payable                     8,100 Cash                 7,938 (Paid less discount) b Clintons Book Journal Entry Date Account Dr $ Cr$ Jun10. Accounts Receivable                     8,600 Sales                 8,600 Merchandise Inventory                 5,020 Cost of Merchadise sold                     5,020 Jun 12. Accounts Receivable                    500 Sales Return                         500 Merchandise Inventory                         292 Cost of Merchadise sold                    292 (proportionate cost of return adjusted) Jun 19. Accounts Receivable                 8,100 Cash                     7,938 Sales Discount                         162 4 Twix company Year end balance Account Dr $ Cr $ Sales Revenue            126,140 Sales Discount                     1,140 Sales Returns & Allowances                     2,070 Cost of goods Sold                   62,010 Inventory                   14,630 Operating Expenses                   29,510 Inventory on Hand                   12,390 Inventory shortage                     2,240 Journal Entry Date Account Dr $ Cr$ Inventory write off loss                     2,240 Inventory                 2,240 Closing Entries at the year end Accounts Dr $ Cr $ Sales Revenue                126,140 Sales Discount                 1,140 Sales Returns & Allowances                 2,070 Income Statement            122,930 Cost of goods Sold              62,010 Operating Expenses              29,510 Inventory write off loss                 1,140 Income Statement                   91,520

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