1.Utilize the following events to: A. Record the general journal entries for eac
ID: 2566220 • Letter: 1
Question
1.Utilize the following events to:
A. Record the general journal entries for each event assuming a Perpetual System.
B. Set up the following T-accounts: Cash (assume a $40,000 beginning balance), Inventory, Purchases, Cost of Goods Sold and Sales Revenue. Then post from your general journal entries in A. above to these accounts.
C. Prepare a short Income Statement and Balance Sheet.
Events:
a.Telly Visionpurchases 50 big screen sets for resale to his customers at a cost of $600 each, paying cash for the sets.
b.Telly Visionsells 35 of the sets for $800 each to customers for cash (make sure you record both the revenue and expense).
c.Telly Visioncounts his inventory, revealing a total of 14 sets in stock.
4.Utilize the events from problem 3 above for a Periodic Inventory System to:
A. Record the general journal entries for each event assuming a Periodic System.
B. Set up the following T-accounts: Cash (assume a $40,000 beginning balance), Inventory, Purchases, Cost of Goods Sold and Sales Revenue. Then post from your general journal entries in A. above to these accounts.
C. Prepare a short Income Statement and Balance Sheet.
Explanation / Answer
PERPETUAL INVENTORY SYSTEM General Journal Ref. Account Debit Credit a Inventory $30,000 (50*600) Cash $30,000 b Cash $28,000 (35*800) Sales $28,000 Cost of goods sold $21,000 (35*600) Inventory $21,000 c Cost of goods sold $600 Inventory $600 T-Accounts Ref CASH Debit Credit Ref INVENTORY Debit Credit Beginning balance $40,000 a Cash $30,000 a Inventory $30,000 b Cost of goods sold $21,000 b Sales $28,000 c Cost of goods sold $600 Closing balance $38,000 Closing balance $8,400 Ref SALES Debit Credit Ref COST OF GOODS SOLD Debit Credit b Cash $28,000 b Inventory $21,000 c Inventory $600 INCOME STATEMENT Sales Revenue $28,000 Cost of goods sold $21,600 Gross Profit $6,400 BALANCE SHEET(part) ASSETS Cash $38,000 Inventory $8,400 PERIODIC INVENTORY SYSTEM General Journal Ref. Account Debit Credit a Purchases $30,000 (50*600) Cash $30,000 b Cash $28,000 (35*800) Sales $28,000 c Closing inventory $8,400 (14*600) Cost of goods sold $21,600 Purchases $30,000 T-Accounts Ref CASH Debit Credit Ref PURCHASE Debit Credit Beginning balance $40,000 a Cash $30,000 a Purchase $30,000 c Cost of goods sold $30,000 b Sales $28,000 Closing balance $38,000 Ref SALES Debit Credit b Cash $28,000 INCOME STATEMENT Sales Revenue $28,000 Cost of goods sold $21,600 Gross Profit $6,400 BALANCE SHEET(part) ASSETS Cash $38,000 Closing Inventory $8,400
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