P5-2A Phantom Book Warehouse Ltd. distributes hardcover books to retail stores.
ID: 2603304 • Letter: P
Question
P5-2A
Phantom Book Warehouse Ltd. distributes hardcover books to retail stores. At the end of May, Phantom's inventory consists of 250 books purchased at $18 each. Phantom uses a perpetual inventory system.
During the month of June, the following merchandise transactions occurred:
June 1
Purchased 180 books on account for $16 each from Reader's World Publishers, terms n/45.
3
Sold 220 books on account to The Book Nook for $25 each, with an average cost of $17, terms 2/10, n/45.
5
Received a $160 credit for 10 books returned to Reader's World Publishers.
8
Sold 80 books on account to Read-A-Lot Bookstore for $22 each, with an average cost of $17, terms 2/10, n/45.
9
Issued a $264 credit memorandum to Read-A-Lot Bookstore for the return of 12 damaged books. The books were determined to be no longer saleable and were destroyed.
11
Purchased 130 books on account for $15 each from Read More Publishers, terms n/45.
12
Received payment in full from The Book Nook.
17
Received payment in full from Read-A-Lot Bookstore.
22
Sold 125 books on account to Reader's Bookstore for $25 each, with an average cost of $17, terms 2/10, n/45.
25
Granted Reader's Bookstore a $375 credit for 15 returned books. These books were restored to inventory.
29
Paid Reader's World Publishers in full.
(b) Record the June transactions
(c) Create a T account for the Inventory account. Enter the opening balance, post the June transactions related to Inventory prepared in part (b), and determine the ending balance in the account.
June 1
Purchased 180 books on account for $16 each from Reader's World Publishers, terms n/45.
3
Sold 220 books on account to The Book Nook for $25 each, with an average cost of $17, terms 2/10, n/45.
5
Received a $160 credit for 10 books returned to Reader's World Publishers.
8
Sold 80 books on account to Read-A-Lot Bookstore for $22 each, with an average cost of $17, terms 2/10, n/45.
9
Issued a $264 credit memorandum to Read-A-Lot Bookstore for the return of 12 damaged books. The books were determined to be no longer saleable and were destroyed.
11
Purchased 130 books on account for $15 each from Read More Publishers, terms n/45.
12
Received payment in full from The Book Nook.
17
Received payment in full from Read-A-Lot Bookstore.
22
Sold 125 books on account to Reader's Bookstore for $25 each, with an average cost of $17, terms 2/10, n/45.
25
Granted Reader's Bookstore a $375 credit for 15 returned books. These books were restored to inventory.
29
Paid Reader's World Publishers in full.
Explanation / Answer
(b)
(c) Ending balance of in the account is $2,200.
Phantom Book Warehouse Ltd. Journal entries for the month of June Date Account title Debit Credit 6/1 Inventory 2880.00 Accounts payable 2880.00 (Purchase of books on account from Readers World Publishers) 6/3 Accounts Receivable 5500.00 Sales 5500.00 (Sale of 220 books @$25 each to The Book) Cost of goods sold 3740.00 Inventory 3740.00 (Cost of the books sold to The Book Nook) 6/5 Accounts payable 160.00 Inventory 160.00 (Credit received from Readers World for returned books) 6/8 Accounts Receivable 1760.00 Sales 1760.00 (Sale of 80 books @$22 each to Read-a-Lot Bookstore) Cost of goods sold 1360.00 Inventory 1360.00 (Cost of the books sold to Read-a-Lot Bookstore) 6/9 Sales 264.00 Accounts Receivable 264.00 (Credit memeo issued to Read-a-Lot Bookstore for 12 books returned) 6/11 Inventory 1950.00 Accounts payable 1950.00 (Purchase of books on account from Read More Publishers) 6/12 Cash 3665.20 Sales discount 74.80 Accounts Receivable 3740.00 (Payment received from The Book Nook) 6/17 Cash 1466.08 Sales discount 29.92 Accounts Receivable 1496.00 (Payment received from Read-a-Lot Book Store) 6/22 Accounts Receivable 3125.00 Sales 3125.00 (Sale of 125 books @$25 each to Reader's Bookstore) Cost of goods sold 2125.00 Inventory 2125.00 (Cost of books sold to Reader's Bookstore) 6/25 Sales 375.00 Accounts Receivable 375.00 (Credit memo issued for return of 15 books to Readers' Bokstore) Inventory 255.00 Cost of goods sold 255.00 (Cost of books returned by Readers' Bookstore) 6/29 Accounts payable 2720.00 Cash 2720.00 (Payment made to Readers World Publishers)Related Questions
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