Inventory and cost of goods sold and journal entries

Reference no: EM1315633

Inventory and cost of goods sold and journal entries.

Assuming the Perpetual Inventory System is used, complete journal entries for the following transactions as directed.
1. On 3/15, Janet's Spa purchased 90 plush robes from Randy's Spa Supplies. Randy's charged Janet's Spa $15,750 for the robes. The shipment was delivered FOB Shipping. The freight bill was for $270. Randy paid the shipper and included the amount in Janet's invoice. Credit terms offered by Randy's were 1/10, n/30. Prepare the entry for Janet's Spa, for this purchase.
On 3/15, Janet's Spa purchased 90 plush robes from Randy's Spa Supplies. Randy's charged Janet's Spa $15,750 for the robes. The shipment was delivered FOB Shipping. The freight bill was for $270. Randy paid the shipper and included the amount in Janet's invoice. Credit terms offered by Randy's were 1/10, n/30. Randy's inventory records show a value of $6,480 for the robes.
2. Prepare the sales portion of the entry for this sale on Randy's books.
3. Prepare the cost of sales portion of the entry for this sale on Randy's books.
On 3/17, Janet's Spa sold two of the plush robes from her inventory to one of her customers, Tom Cruise. Janet charged Mr. Cruise $1,750 for the robes ($875 apiece). Janet always pays any shipping charges, and she paid her shipper $140. Mr. Cruise has an account with Janet, and she offers terms of n/30 to her customers. The inventory value of the two robes was $178 apiece.
4. Prepare the sales portion of the entry for this sale on Janet's books.
5. Prepare the cost of sales portion of the entry for this sale on Janet's books
On 3/22, Janet returned 4 of the robes to Randy because the silk linings had minor flaws. Randy issued a credit for $700 to Janet's Spa. Record this return of Janet's purchases on Randy's books.
6. Prepare the sales return portion of the entry for this sales return on Randy's books.
7. Prepare inventory return portion of the entry for this sales return on Randy's books
8. Record this return of purchases on Janet's books.
9. On 3/24, Janet paid the amount owed for the 3/15 purchase (less the returns). Record this payment on Janet's books.
10. On 3/24, Janet paid the amount owed for the 3/15 purchase (less the returns). Record this payment on Randy's books.

Reference no: EM1315633

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