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    Exercise 6,2018

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    thanhthao020606

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    Exercise 6,2018

    Uploaded by

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    11 views3 pages

    Exercise 6,2018

    Uploaded by

    thanhthao020606

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 3

    1

    Exercise 6.1
    Journal entries for both buyer and seller — periodic inventory system
    (a) Prepare general journal entries to record the following transactions (i) for Elwood Ltd
    and (ii) for Balaclava Ltd. Both companies use a periodic inventory system. (Assume
    neither is registered for GST.)

    (b) Indicate how each relevant account balance should be reported in the financial
    statements of Elwood Ltd and Balaclava Ltd.

    Exercise 6.2 Journal entries — perpetual inventory system

    Using the perpetual inventory system, record the following


    transactions in the general journal of Fitzroy Ltd (assume GST does
    not apply):

    1. Purchased 240 units for $220 each on credit.


    2. Returned 12 units to the supplier.
    3. Sold 48 units for $380 each on credit.
    4. Purchased office supplies for $360 cash.
    5. Customer returned 6 of the units sold in (3).
    6. Sold 42 units for $390 each on credit.
    7. The physical inventory count at the end of the period consisted of 140 units of inventory.

    Exercise 6.5 Discounts and returns

    Chloe’s Clothing Importers sells clothing with credit terms of 3/15, n/30. A trade discount
    of 30% is given to purchases made by wholesalers. On 6 September 2019, Kingsbury
    Wholesalers purchased clothing with a list price of $176 000 from Chloe’s Clothing
    Importers. The clothes had cost the business $80 000 to import from Thailand. Ignore
    GST.Required
    (a) Determine the amount of the trade discount given to Kingsbury Wholesalers.
    (b) Assume that Kingsbury Wholesalers returned clothing with an original list price of
    $2640, and a cost of $1200. What source documents would be used by each business to
    note the transaction? Prepare journal entries to record the return in the accounting
    records of both entities.
    (c) What is the discount period? If Kingsbury Wholesalers pays on the last day of the
    discount period, how much is the sales discount recorded by Chloe’s Clothing
    Importers? (Don’t forget the return.) Record the journal entry made by both entities.
    (d) If Kingsbury Wholesalers does not pay within the discount period, when is the net
    amount due? What would be the effective annual interest rate assuming that Kingsbury
    2

    Wholesalers pays on the day the net amount is due?


    Exercise 6.7 Income Statement — periodic inventory system
    Use the following information from the records of Preston Partners to prepare an income
    statement under the periodic inventory system for the year ended 30 June 2020.

    Exercise 6.8 Income statement — perpetual inventory system


    The account balances below are taken from the records of Gilberton Retail Prepare an
    income statement under the perpetual inventory system for the year ended 30 June 2019.

    Exercise 6.10 Closing entries — periodic inventory system


    The following information is taken from the trial balance of Petra’s Pedicure Parlour.

    (a) Given that the cost of the inventory on 30 June 2020 is $25 300, prepare the closing
    3

    entries on 30 June 2020.

    Exercise 6.11

    Closing entries — perpetual inventory system

    The trial balance of Westmeadow Weightlifting contains the following account balances at
    30 June.

    Required
    (a) Prepare the closing entries under the perpetual inventory system.

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