Rickers Ltd is a seller of merchandises and purchases it’s merchandise from various wholesalers. At the beginning of the month, Rickers Ltd had inventories on hand worth $7,200. On March 2 , Rickers Ltd purchased inventories worth $75,000, under the term FOB Shipping Point, out of which

goods costing $5,000 was returned back to the wholesalers on the same day, as the quality of the inventories was not up to the mark. The freight cost of $500 was paid on March 5. Williams and Williams Co. is a new client of Rickers Ltd who purchased goods worth $130,000 on

March 12, under the terms 3/10, n/45 and FOB Destination. The freight cost of $450 was paid on the same day. Some of the goods delivered were damaged, therefore Williams and Williams Co. returned merchandise worth $5,000, back to the seller. The goods were returned on March 14. On

March 22, the client made the settlement of the final amount due to the seller.

Required:

i. Prepare the journal entries that are to be recorded in the books of Rickers Ltd. Assume that Rickers Ltd follows a periodic inventory system. (8 marks)

 Additional information regarding Rickers Ltd: One of the delivery trucks which was collecting the purchased inventories from the suppliers was fined for $1500 for speeding up. Rickers Ltd paid it’s employees salaries of $8,800 for

 the month of March. Rickers Ltd also paid rent of $6,000 and utility bills of $1,000 for the month of March. The trial balance on March 31 of Rickers Ltd shows an inventory balance

 of $9,800.

ii. Prepare the Multiple Step Income Statement for Rickers Ltd, for the month ended March 31, 2022. (15 marks)

Answer rating: 100% (QA)

Rickers la Journal Particulars Mar 2 Merchandise Inventory Accounts Payable To record ... View the full answer