In anticipation of the annual keep fit athletics challenge race to be held in November. Jayden Ross formed a small enterprise $($JR$$s$)$ selling water bottles and T$-$shirts with various race slogans, to be used and worn by athletes and spectators on the day.

JR$\text{'}$s only supplier, Prints $4$ U$,$ produced and printed all the required merchandise. The total invoice price for all water bottles and T$-$shirts purchased was R$1550\mathrm{.}00$; $($R$1550000$ below?$).$ This amount included $20000$ water bottles at R$17,50$ each. The quantity of T$-$shirts purchased was not disclosed. Prints $4$ U offered a settlement discount of $10\%$ if the total amount owing was paid within $15$ days. Sadly, Jayden was experiencing cash flow problems and was unable to take advantage of the settlement discount with the result that he was forced to pay the full amount of R$1550000.$ The goods were delivered, and JR was invoiced on $1$ November $2023$ and the supplier was paid on $30$ November $2023.$

JR$\text{'}$s selling price for each item was R$30$ per water bottle and R$120$ per T$-$shirt. All sales made were for cash. Sales of the goods were not as successful as Jayden had anticipated, and the day after the race, stocks of $2500$ water bottles and $3800$ T$-$shirts were still on hand. Because the race day was over, the price of these remaining goods would have to be drastically reduced for them to be sold to the public.

On $30$ November $2023,$ it was estimated that the selling price of the water bottles would need to be reduced to R$15,$ and that the T$-$shirts could be sold at $50\%$ of their original selling price. JR uses the perpetual system to account for its inventory movement.

Prepare the journal entries for the information provided above. Show all calculations

Answer rating: 100% (QA)

To prepare the journal entries we need to account for the purchase of merchandise payment to the sup... View the full answer