Sun Corporation (Sun) is engaged in purchases and sales of reusable drinking bottles. The company adopts perpetual inventory system to record inventory and costs of sales. Besides, the company records purchases of goods at gross invoice price. The following information was extracted from the unadjusted trial balance dated on 30 November 2020:

	Dr. ($)	Cr. ($)
Sales		2,500,000
Sales returns and allowances	5,000
Cost of goods sold	1,580,000
Sales discounts	10,000
Inventory	258,000

 

Moon Corporation (Moon), one of the major customers of Sun Corporation, is engaged in exporting reusable drinking bottles to Malaysia. Periodic inventory system is adopted. Besides, the company records purchases of goods at gross invoice price. For any returns on purchase, the company will record in “Purchases returns” account.

The following transactions occurred in December 2020:

Dec 2	Sun purchased $400,000 plastic bottles from its supplier with credit term 1/15, n/30.
Dec 3	Sun returned $10,000 plastic bottles, purchased on 2 December, with full credit as the bottles’ color is not correct.
Dec 4	Sun sold $500,000 plastic bottles to Moon with credit term 2/10, n/30. The gross profit rate is 20%.
Dec 10	Moon returned $5,000 incorrect products purchased on 4 December to Sun with full credit.
Dec 11	Sun sold $100,000 plastic bottles to Moon in cash. The gross profit rate is 25%.
Dec 12	Sun received a check from Moon regarding to credit sale in December.
Dec 22	Sun settled the outstanding balance in full regarding to the purchase in December.
Dec 31	Sun conducted physical count and revealed $160,000 inventory was on hand.

 

Required:

1. Prepare journal entries for Sun Corporation regarding to the above transactions in December.                                                                                                     

Prepare Partial Income Statement of Sun Corporation for the year ended 31 December 2020 to show gross profit of the year.

Answer rating: 100% (QA)

The following transactions occurred in Dec 2 Sun Purchased 400000 plastic bottles from its supplier with credit term 115 n30 bebit Purchases Account T... View the full answer