Alpha Company uses the periodic Inventory system for purchase & salofmerchandse

Question

Alpha Company uses the periodic Inventory system for purchase & salofmerchandse Discount terms for both purchases & salles are, 2/10, n30 and the gross method ts used. Unless otherwise noted, FOB Destination will apply to all purchases& sales. The value of Inventory Is based on periodic system. On January 1, 2016, beginning Inventory consisted of 350 unlts of widgets costing $10 each. Alpha prepares monthly Income statements The following events occurred during the month of Jan: Date Actvity a Jan.3 Purchased on account 350 widgets for $11 each b. Jan.5 Sold on account 400 widgets for $30 each. Pald freight out with petty cash of $150. c Jan. 10 Purchased on account 625 widgets for $12 each. Shipping cost for the January 10 purchased merchandise was $400 was pald with a cheque by Alpha directly to the freight company. d Jan. 11 Jan. 12 Returned 50 widgets received from Jan. 10 purchase as they were not the correct Item ordered t Jan. 13 Paid for the purchases made on lan 3. Sold on account 550 widgets for $30 each. Pald freight out with petty cash of Jan 21 $250 Authortze credit without retum of goods for 50 widgets sold on lan. 21 when customer advised that they were recetved In defective condition h. Jan. 22

Explanation / Answer

general journal

date

explanation

debit

credit

3-Jan

purchase

3850

accounts payable

3850

5-Jan

accounts receivables

12000

freight expense (petty cash)

150

sales

12000

petty cash

150

10-Jan

purchase

7500

accounts payable

7500

11-Jan

shipping expense

400

cash

400

12-Jan

accounts payable

600

purchase return and allowance

600

13-Jan

accounts payable

3850

cash

3773

discount

77

21-Jan

accounts receivables

16500

freight expense (petty cash)

250

sales

16500

petty cash

250

22-Jan

sales return

1500

accounts receivables

1500

25-Jan

cash

10500

accounts receivables

10500

26-Jan

accounts payable

7500

cash

7500

31-Jan

cash

14700

discount

300

accounts receivables

15000

general journal

date

explanation

debit

credit

3-Jan

purchase

3850

accounts payable

3850

5-Jan

accounts receivables

12000

freight expense (petty cash)

150

sales

12000

petty cash

150

10-Jan

purchase

7500

accounts payable

7500

11-Jan

shipping expense

400

cash

400

12-Jan

accounts payable

600

purchase return and allowance

600

13-Jan

accounts payable

3850

cash

3773

discount

77

21-Jan

accounts receivables

16500

freight expense (petty cash)

250

sales

16500

petty cash

250

22-Jan

sales return

1500

accounts receivables

1500

25-Jan

cash

10500

accounts receivables

10500

26-Jan

accounts payable

7500

cash

7500

31-Jan

cash

14700

discount

300

accounts receivables

15000

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