Travel Warehouse Ltd. distributes suitcases to retail stores. At the end of June, Travel Warehouse's inventory consisted of 30 suitcases purchased at $45 each. Travel Warehouse uses a perpetual inventory system. During the month of July, the following merchandising transactions occurred:

July 2 Purchased 55 suitcases on account for $45 each from Trunk Manufacturers Ltd., terms 2/10, n/30.

3 Received a $225 credit from Trunk Manufacturers after returning five suitcases because they were damaged.

6 Sold 50 suitcases on account to Satchel World Inc. for $80 each, with a cost of $45, terms 2/15, n/45.

7 Issued a $400 credit for five suitcases returned by Satchel World because they were the wrong model. The suitcases were returned to inventory.

9 Sold five suitcases-this time the right model number-on account to Satchel World Inc. for $90 each, with a cost of $45, terms 2/15, n/45.

11 Paid Trunk Manufacturers the balance owing.

13 Sold 25 suitcases on account to The Going Concern, Limited for $80 each, with a cost of $45, terms

2/15, n/45.

16 Purchased 70 suitcases on account for $3,500 from Holiday Manufacturers, terms n/45.

17 Issued a $800 credit for ten suitcases returned by The Going Concern because they were damaged. These suitcases were not restored to inventory.

20 Received payment in full from Satchel World for all transactions.

27 Received payment in full from The Going Concern.

Instructions

(a) Is Travel Warehouse a retailer or a wholesaler? Explain.

(b) Record the July transactions for Travel Warehouse

(c) Create a T account for the Merchandise Inventory account. Post the opening balance and July transactions, and calculate the July 31 balance in the account.

(d) Determine the number of suitcases Travel Warehouse has on hand on July 31. What is the average cost of these suitcases on July 31?