Week 2 Textbook Exercises

Topics: Inventory, Balance sheet, Revenue Pages: 2 (505 words) Published: September 11, 2012
E5-3 On September 1, Howe Office Supply had an inventory of 30 calculators at a cost of $18 each. The company uses a perpetual inventory system. During September, the following transactions occurred.

Sept. 6 Purchased 80 calculators at $20 each from DeVito Co. for cash. 9 Paid freight of $80 on calculators purchased from DeVito Co. 10 Returned 2 calculators to DeVito Co. for $42 credit (including freight) because they did not meet specifications.

12 Sold 26 calculators costing $21 (including freight) for $31 each to Mega Book Store, terms n/30.
14 Granted credit of $31 to Mega Book Store for the return of one calculator that was not ordered.
20 Sold 30 calculators costing $21 for $31 each to Barbara’s Card Shop, terms n/30.

Journalize the September transactions.

*E5-16 This information relates to Martinez Co.

1. On April 5 purchased merchandise from D. Norlan Company for $20,000, terms 2/10, net/30, FOB shipping point.
2. On April 6 paid freight costs of $900 on merchandise purchased from D. Norlan Company. 3. On April 7 purchased equipment on account for $26,000.
4. On April 8 returned some of April 5 merchandise to D. Norlan Company which cost $2,800. 5. On April 15 paid the amount due to D. Norlan Company in full.

(a) Prepare the journal entries to record these transactions on the books of Martinez Co. using a periodic inventory system.

(b) Assume that Martinez Co. paid the balance due to D. Norlan Company on May 4 instead of April 15. Prepare the journal entry to record this payment.

E6-7 Jones Company had 100 units in beginning inventory at a total cost of $10,000. The company purchased 200 units at a total cost of $26,000. At the end of the year, Jones had 80 units in ending inventory. Instructions

(a) Compute the cost of the ending inventory and the cost of goods sold under (1) FIFO: ending inventory – 80 units $10,400, Cost of Goods Sold - $25,600 (2) LIFO: ending inventory – 80 units...
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