Journal entries to record the sale and purchase transactions

Reference no: EM131218919

Problem

Recording Sale and Purchase Transactions

Alpharack Company sells a line of tennis equipment to retailers. Alpharack uses the perpetual inventory system and engaged in the following transactions during April 2013, its first month of operations:

a. On April 2, Alpharack purchased, on credit, 360 Wilbur T-100 tennis rackets with credit terms of 2/10, n/30. The rackets were purchased at a cost of $30 each. Alpharack paid Barker Trucking $195 to transport the tennis rackets from the manufacturer to Alpharack's warehouse, shipping terms were F.O.B. shipping point, and the items were shipped on April 2.

b. On April 3, Alpharack purchased, for cash, 115 packs of tennis balls for $10 per pack.

c. On April 4, Alpharack purchased tennis clothing, on credit, from Designer Tennis Wear. The cost of the clothing was $8,250. Credit terms were 2/10, n/25.

d. On April 10, Alpharack paid for the purchase of the tennis rackets in Transaction a.

e. On April 15, Alpharack determined that $325 of the tennis clothing was defective. Alpharack returned the defective merchandise to Designer Tennis Wear.

f. On April 20, Alpharack sold 118 tennis rackets at $90 each, 92 packs of tennis balls at $12 per pack, and $5,380 of tennis clothing. All sales were for cash. The cost of the merchandise sold was $7,580.

g. On April 23, customers returned $860 of the merchandise purchased on April 20. The cost of the merchandise returned was $450.

h. On April 25, Alpharack sold another 55 tennis rackets, on credit, for $90 each and 15 packs of tennis balls at $12 per pack, for cash. The cost of the merchandise sold was $1,800.

i. On April 29, Alpharack paid Designer Tennis Wear for the clothing purchased on April 4 minus the return on April 15.

J. On April 30, Alpharack purchased 20 tennis bags, on credit, from Bag Designs for $320. The bags were shipped F.O.B. destination and arrived at Alpharack on May 3.

Required:

1. Prepare the journal entries to record the sale and purchase transactions for Aipharack during April 2013. If no entry is required, select "No entry required' and leave the amount boxes blank. For a compound transaction, if an amount box does not require an entry, leave it blank.

2. Assuming operating expenSes OF $8,500 and income taxes of 11,180, Prepare Alpharack's income statement for April 2013.

Problem 6-67A

Inventory Costing Methods

Anderson's Department Store has the following data for inventory, purchases, and sales of merchandise for December:

Adivity	Units	Purchase Price (per unit)	Sale Price (per unit)
Beginning inventory	10	88.00
Purchase 1. Dec. 2	22	8.80
Purchase 2. Dcc. 5	26	9.05
Sale 1. Dec. 7	19		52000
Sale 2. Dec. 10	25		20.00
Purchase 3. Dec. 12	12	9.80
Sale 3. Dec. 14	20		20.00

Andersoo's uses a perpetual inventory system. MI purchases and sales were for cash.

Required:

1. Compute cost of goods sold and the cost of ending inventory using FIFO. If required, round your answers to the nearest cent.

2. Compute cost of goods sold and the cost of ending inventory using LIFO. If required round your answers to the nearest cent.

3. Compute cost of goods sold and the cost of ending inventory, using the average cost method. (Note: Use four decimal rates for per unit calculations.) Round your answers to the neatest cent.

Prepare the journal entries to record these transactions assuming Anderson chooses to use the FIFO method. If requited, round your answers to the nearest cent.

Reference no: EM131218919

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