Thelma's Amusements completed the following transactions during November 2012. Nov 1 Purchased...
Question:
Thelma's Amusements completed the following transactions during November 2012.
| Nov 1 | Purchased supplies for cash, $700. |
| 4 | Purchased inventory on credit terms of 3/10, n/eom, $9,600. |
| 8 | Returned half the inventory purchased on November 4. It was not the inventory ordered. |
| 10 | Sold goods for cash, $1,200 (cost, $700). |
| 13 | Sold inventory on credit terms of 2/15, n/45, $9,900 (cost, $5,300). |
| 14 | Paid the amount owed on the account from November 4, less the return (November 8) and the discount. |
| 17 | Received defective inventory as a sales return from the November 13 sale, $600. Thelma's cost of the inventory received was $450. |
| 18 | Purchased inventory of $4,100 on the account. Payment terms were 2/10, net 30. |
| 26 | Paid the net amount owed for the November 18 purchase. |
| 28 | Received cash in full settlement of the account from the customer who purchased inventory on November 13, less the return and the discount. |
| 29 | Purchased inventory for cash, $12,000, plus freight charges of $200. |
Journalize the transactions on the books of Thelma's Amusements.
Purchases
Purchases can be accounted for using either the periodic system or the perpetual system. Under the periodic system, the default system, purchases are recorded in a nominal account titled Purchases. Also, discounts, returns, allowances, and other items related to the acquisition of inventory are charged to each individual account. Under the perpetual system, any changes in inventory are directly debited or credited to the Merchandise Inventory account.
Answer and Explanation: 1
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View this answerNov 1 Purchased supplies for cash, $700.
| Account Description | Debit | Credit |
|---|---|---|
| Supplies | 700 | |
| Cas... |
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Accounting for Inventory Purchases
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Chapter 6 / Lesson 4
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Accounting of inventory purchases, or merchandise that is stored to be sold directly to customers, involves calculating far more than simple stock and unit costs. Learn how the original price, discounts, returns/allowances, transportation, and ownership/transfer fees are all factored into accounting for inventory purposes.
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