Alpha Company uses the periodic inventory system for purchase & sales of merchandise. Discount...
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Alpha Company uses the periodic inventory system for purchase & sales of merchandise. Discount terms for both purchases & sales are, 2/10, n30 and the gross method is used. Unless otherwise noted, FOB Destination will apply to all purchases & sales. The value of inventory is based on periodic system. On January 1, 2016, beginning inventory consisted of 400 units of widgets costing $10 each. Alpha prepares monthly income statements. The following events occurred during the month of Jan.:
| Date | Activity | |
|---|---|---|
| a. | Jan. 3 | Purchased on account 350 widgets for $11 each. |
| b. | Jan. 5 | Sold on account 500 widgets for $30 each. Paid freight out with petty cash of $150. |
| c. | Jan. 10 | Purchased on account 650 widgets for $12 each. |
| d. | Jan. 11 | Shipping cost for the January 10 purchased merchandise was $400 was paid with a cheque by Alpha directly to the freight company. |
| e. | Jan. 12 | Returned 50 widgets received from Jan. 10 purchase as they were not the correct item ordered. |
| f. | Jan. 13 | Paid for the purchases made on Jan. 3. |
| g. | Jan. 21 | Sold on account 550 widgets for $30 each. Paid freight out with petty cash of $250. |
| h. | Jan. 22 | Authorize credit without return of goods for 50 widgets sold on Jan. 21 when customer advised that they were received in defective condition. |
| i. | Jan. 25 | Received payment for the sale made on Jan. 5. |
| j. | Jan. 26 | Paid for the purchases made on Jan. 10. |
| k. | Jan. 31 | Received payment for the sale made on Jan. 21. |
Use this information to prepare the General Journal entries (without explanation) for the January events.
Income Statement:
The income statement is also called the statement of financial performance. It covers a specific reporting period and balances are not cumulative as per the balance sheet. Items presented in the income statement are all temporary accounts.
Answer and Explanation: 1
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View this answer| Date | Account | Debit | Credit |
| January 3 | Purchases | 3,850 | |
| Accounts Payable | 3,850 | ||
| To record the purchase of inventory. |
| Date | Account | Debit | Credit |
| January 5 | Accou... |
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