Watt Wholesale Company purchases merchandise from a variety of manufacturers and sells the merchandise to a variety
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Question:
Watt Wholesale Company purchases merchandise from a variety of manufacturers and sells the merchandise to a variety of retailers. All sales are subject to a cash discount (2/10, n/30). Watt uses a perpetual inventory system.
The May 1 balance in Watt's Inventory account was a $70,000 debit. The following transactions occurred during May:
May | 2 | Purchased $5,,500 of merchandise from Ajax Manufacturing; terms are 1/10, n/30. |
4 | Paid $170 freight on the May 2 purchase. | |
12 | Paid Ajax for the May 2 purchase. | |
14 | Purchased $4,000 of merchandise from Baker Manufacturing; terms are 2/10, n/45. | |
16 | Received a $300 allowance on the May 14 purchase since some of the merchandise was the wrong color. All of the merchandise is salable at regular prices. | |
18 | Purchased $3,500 of merchandise from Charles Industries; terms are 2/10, n/30. | |
19 | Sold merchandise with a list price of $3,000 ($2,200 cost) to Daytime Industries. | |
22 | Daytime Industries returned 30 percent of the merchandise from the May 19 sale. | |
26 | Paid Baker Manufacturing for the May 14 purchase. | |
29 | Paid Charles Industries for the May 18 purchase. |
Required
Prepare a schedule that shows the impact of these transactions on Watt’s Inventory account. Use the following headings:
Date | Transaction | Debit Amount | Credit Amount | Account Balance | |||
---|---|---|---|---|---|---|---|
May | 1 | Balance | Answer | Answer | Answer | ||
2 | Purchase - Ajax | Answer | Answer | Answer | |||
4 | Freight - Ajax | Answer | Answer | Answer | |||
12 | Payment - Ajax | Answer | Answer | Answer | |||
14 | Purchase - Baker | Answer | Answer | Answer | |||
16 | Purchase allowance - Baker | Answer | Answer | Answer | |||
18 | Purchase - Charles | Answer | Answer | Answer | |||
19 | Sale - Daytime | Answer | Answer | Answer | |||
22 | Sales return - Daytime | Answer | Answer | Answer | |||
26 | Payment - Baker | Answer | Answer | Answer | |||
29 | Payment - Charles | Answer | Answer | Answer |
Related Book For
Intermediate accounting
ISBN: 978-0077647094
7th edition
Authors: J. David Spiceland, James Sepe, Mark Nelson
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