Hong Kong Shue Yan University
ACCT100 Fall 2021
Lecturer: SC Chak
Chapter 6: Merchandising Activities
Class Exercise
Summary: Merchandising Activities
There are two types of inventory systems : Perpetual inventory system, Periodic inventory systems.
Periodic inventory system (physical count at the end of the period)
Purchases on account
Purchase
$
Accounts payable 應付帳款(on credit, on account 賒帳買貨)
Credit term: examples:
➢ 2/10: 2% discount if payment made within 10 days
➢ n/30: no cash discount, payment within 30 days
Question 1 Journalizing purchase transactions – periodic inventory system
Consider the following transactions for Garnier Packing Supplies:
Apr 10
Garnier buys $156,000 worth of merchandise inventory on account with credit
terms of 3/10, n/30
Apr 12
Garnier returns $11,000 of the merchandise to the vendor due to damage during
shipment.
Apr 19
Garnier paid the amount due, less the return and discount
Required:
(a) Journalize the purchase and payment transactions using the periodic inventory system.
April 10 Purchase
156,000
Accounts Payable
156,000
April 12
April 19
Accounts Payable
Purchase Returns
11,000
Accounts Payable (156000-11000)
Purchase Discounts
Cash (145000x0.97)
145,000
11,000
(b) What is the amount of net purchases?
$156,000 – 11,000 – 4350 = $140,650
1
4,350
140,650
Question 2 – Journalizing sales transactions
Consider the following transactions for Sandal Camera Store
Dec 3
Sandal sold $42,400 of camera equipment on account, credit terms are 2/15,
n/EOM.
Dec 5
Sandal received a $1,000 sales return on damaged goods from the customer.
Dec. 17
Sandal receives payment from the customer on the amount due, less the return
and discount.
Required:
Journalize the above sales and receipt transactions.
Dec 3
Accounts Receivable
Sales Revenue
Dec. 5
Dec. 17
42400
42400
Sales Returns & Allowances
Accounts Receivable
1000
Cash
Sales Discounts2%
Accounts Receivable
40572
828
1000
41400
Question 3 Journalizing purchase & sales transaction – Periodic inventory system
Moody Bicycles company has the following transactions in November 2021.
Nov. 2
Purchased $3700 of merchandise inventory on account under terms 3/10, n/EOM.
Nov. 6
Returned $600 of defective merchandise purchased on November 2.
Paid freight bill of $150 on November 2 purchase.運輸費用
Nov. 8
Nov. 10 Sold merchandise inventory on account for $6,200. Payment terms were 1/15,(get
1%in 15days) n/45(don’t have discounts in 45days) The cost of inventory was
$3720.
Nov. 11 Paid amount owed on credit purchase of November 2, less the return and discount.
Nov. 15 Give a sales allowance 銷售折讓 of $400 on the November 10 sale.
Nov. 22 Received cash from November 10 in full settlement of their debt, less the
allowance and discount.
2
Deliver to customer :freight out. Buy :Freight in
Required:
(a) Write journal entries for November transactions.
Nov. 1
Purchased
Accounts payable
Nov. 6
Nov. 8
Nov. 10
3700
3700
Sales returned
Accounts receivable
600
Freight in
Cash
150
Accounts receivable
Revenue//sales //sales revenue
6200
600
150
6200
Nov. 10: No journal entry for cost of good sold.
Nov. 11
Nov. 15
Nov. 22
Accounts payable (3700-600)
Purchase discount (3100*3%)
Cash (3100-93)
3100
Sales allowance
Accounts receivable
400
Cash(5800-58)
Sales discounts (5800*1%)
Accounts receivable (6200-400)
5742
58
93
3007
400
(b) Compute the following: i. Net sales revenue, Gross profit.
6200-400-58=$5742
Net sales revenue(the
amount you get)
Gross profit
5742-3007=$2735
Gross profit %
2735/5742=47.83%
3
5800