Merchandising Operations and the Accounting Cycle - Pearson

270 Part One The Basic Structure of Accounting
Johnson & Johnson issued a credit memo for this amount and returned the goods,
in excellent condition, to inventory (cost $500).
June 17 Shoppers Drug Mart paid $4,000 of the invoice amount owed to Johnson &
Johnson for the June 8 purchase. This payment included none of the freight
charge. Shopper’s took the purchase discount on the partial payment.
26 Shoppers Drug Mart paid the remaining amount owed to Johnson & Johnson
for the June 8 purchase.
Required
Journalize these transactions, first on the books of Shoppers Drug Mart, and second
on the books of Johnson & Johnson.
Problem 5-3B Journalizing purchase and sale transactions under the perpetual inventory
system (Obj. 2)
Segal Furniture Company Ltd. engaged in the following transactions during July of
the current year:
July 2 Purchased inventory for cash, $1,200, less a quantity discount of $225.
5 Purchased store supplies on credit terms of net eom, $675.
8 Purchased inventory of $4,500 less a quantity discount of 10%, plus freight
charges of $230. Credit terms are 3/15 n/30.
9 Sold goods for cash, $1,800. Segal’s cost of these goods was $1,050.
11 Returned $300 (net amount after the quantity discount) of the inventory purchased
on July 8. It was damaged in shipment.
12 Purchased inventory on credit terms of 3/10 n/30, $5,000.
14 Sold inventory on credit terms of 2/10 n/30, for $14,400, less a $900 quantity
discount (cost, $7,500).
16 Received and paid the electricity and water bills, $400.
20 Received returned inventory from the July 14 sale, $600 (net amount after the
quantity discount). Segal shipped the wrong goods by mistake. Segal’s cost of the
inventory received was $375.
21 Borrowed the amount owed on the July 8 purchase. Signed a note payable to
the bank for $3,867.50, which takes into account the return of inventory on
July 11.
21 Paid supplier for goods purchased on July 8 less the discount and the return.
23 Received $10,290 cash in partial settlement of the account from the customer
who purchased inventory on July 14. Granted the customer a 2% discount and
credited his account receivable for $10,500.
30 Paid for the store supplies purchased on July 5.
Required
1. Journalize the preceding transactions on the books of Segal Furniture Company Ltd.
2. Compute the amount of the receivable at July 31 from the customer to whom
Segal sold inventory on July 14. What amount of cash discount applies to this receivable
at July 31?
Problem 5-4B Preparing a merchandiser’s work sheet under the perpetual inventory
system (Obj. 3)
Prairie Produce Company Ltd.’s trial balance on page 271 pertains to December
31, 2003.
Additional data at December 31, 2003:
a. Insurance expense for the year should total $12,180.
b. Store fixtures have an estimated useful life of ten years and are expected to have
no value when they are retired from service.
c. Accrued salaries at December 31, $2,520.
d. Accrued interest expense at December 31, $1,740.