Travel Warehouse Ltd. distributes suitcases to retail stores. At the end of June, Travel Warehouse's inventory consisted of 60 suitcases purchased at $50 each. Travel Warehouse uses a perpetual inventory system. During the month of July, the following merchandising transactions occurred:
July 2 Purchased 75 suitcases on account for $60 each from Trunk Manufacturers Ltd., terms 2/10, n/30.
3 Received a $240 credit from Trunk Manufacturers after returning four suitcases because they were damaged.
6 Sold 55 suitcases on account to Satchel World Inc. for $90 each, with an average cost of $50, terms 2/15, n/45.
7 Issued a $270 credit for three suitcases returned by Satchel World because they were the wrong model. The suitcases were returned to inventory.
9 Sold three suitcases-this time the right model number-on account to Satchel World Inc. for $100 each, with an average cost of $60, terms 2/15, n/45.
11 Paid Trunk Manufacturers the balance owing.
13 Sold 25 suitcases on account to The Going Concern Limited for $100 each, with an average cost of $60, terms 2/15, n/45.
16 Purchased 70 suitcases on account for $4,340 from Holiday Manufacturers, terms n/45.
17 Issued a $500 credit for five 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. (Record transactions to the nearest dollar.)
(c) Set up a T account for the Inventory account. Enter the opening balance, post the transactions related to inventory prepared in part (b), and determine the ending 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? (Hint: Divide the ending balance in the Inventory account calculated in part (c) and divide it by the number of suitcases on hand at July 31. Round your answer to the nearest dollar.)