Assignment on Merchandise Inventory

LAST DATE OF SUBMISSION: November 20, 2023

QUESTION NO 1:
Information related to Almond Co. is presented below.
1. On April 5, purchased merchandise from Morris Company for $23,000, terms 2/10, net/30,
FOB shipping point.
2. On April 6, paid freight costs of $900 on merchandise purchased from Morris.
3. On April 7, purchased equipment on account for $26,000.
4. On April 8, returned damaged merchandise to Morris Company and was granted a $3,000
credit for returned merchandise.
5. On April 15, paid the amount due to Morris Company in full.

Instructions:
(a) Prepare the journal entries to record these transactions on the books of Almond Co. under a
perpetual inventory system.
(b) Assume that Almond Co. paid the balance due to Morris Company on May 4 instead of
April 15. Prepare the journal entry to record this payment.

QUESTION NO 2:
Presented below are transactions related to Sayid Company.
1. On December 3, Sayid Company sold $570,000 of merchandise to Shephard Co., terms 2/10,
n/30, FOB shipping point. The cost of the merchandise sold was $350,000.
2. On December 8, Shephard Co. was granted an allowance of $20,000 for merchandise
purchased on December 3.
3. On December 13, Sayid Company received the balance due from Shephard Co.

Instructions
(a) Prepare the journal entries to record these transactions on the books of Sayid Company
using a perpetual inventory system.
(b) Assume that Sayid Company received the balance due from Shephard Co. on January 2 of
the following year instead of December 13. Prepare the journal entry to record the receipt of
payment on January 2.

QUESTION NO 3:
O’Quinn Co. distributes suitcases to retail stores and extends credit terms of 1/10, n/30
to all of its customers. At the end of June, O’Quinn’s inventory consisted of suitcases costing
$1,200. During the month of July, the following merchandising transactions occurred:

July 1 Purchased suitcases on account for $1,800 from Emerson Manufacturers, FOB
 Assignment on Merchandise Inventory
LAST DATE OF SUBMISSION: November 20, 2023
destination, terms 2/10, n/30. The appropriate party also made a cash payment of
$100 for freight on this date.
July 3 Sold suitcases on account to Straume Satchels for $2,000. The cost of suitcases sold
is $1,200.
July 9 Paid Emerson Manufacturers in full.
July 12 Received payment in full from Straume Satchels.
July 17 Sold suitcases on account to The Going Concern for $1,800. The cost of the suitcases
sold was $1,080.
July 18 Purchased suitcases on account for $1,900 from Hume Manufacturers, FOB
shipping point, terms 1/10, n/30. The appropriate party also made a cash payment
of $125 for freight on this date.
July 20 Received $300 credit (including freight) for suitcases returned to Hume
Manufacturers.
July 21 Received payment in full from The Going Concern.
July 22 Sold suitcases on account to Desmond’s for $2,250. The cost of suitcases sold was
$1,350.
July 30 Paid Hume Manufacturers in full.
July 31 Granted Desmond’s $200 credit for suitcases returned costing $120.
Requirements:
Journalize the transactions for the month of July for O’Quinn using a perpetual inventory
system.
QUESTION NO 4:
At the end of Rutherford Department Store’s fiscal year on December 31, 2020, these
accounts appeared in its adjusted trial balance:
Freight In $5,600
Beginning Inventory 40,500
Purchases 447,000
Purchase return and allowance 12,000
Sales Revenue 6,400
Sales return and allowance 725,000
Ending Inventory 11,000
Freight out 2,000
Selling expense 12,000
Administrative expense 8,000
Rutherford Department Store uses a periodic system.
Instructions: Prepare a cost of goods sold and multiple step income statement for the year.