Data for Leeland Company are presented in P5-3B.
In P5-3
Oct. 2 Purchased merchandise on account from Gregory Company at a cost of $35,000, terms 2/10, n/30, FOB destination.
4 The correct company paid freight charges of $900 to Rail Company for shipping the merchandise purchased on October 2.
5 Returned damaged goods having a gross invoice cost of $6,000 to Gregory Company. Received a credit for this.
11 Paid Gregory Company the balance owing for the October 2 purchase.
17 Sold the remaining merchandise purchased from Gregory Company to Kurji Company for $62,500, terms 2/10, n/30, FOB shipping point.
18 The correct company paid Intermodal Co. $800 freight costs for the October 17 sale.
19 Issued Kurji Company a sales allowance of $2,500 because some of the goods did not meet Kurji's exact specifications.
27 Received the balance owing from Kurji Company for the October 17 sale.
Nov. 1 Purchased merchandise on account from Romeo Company at a cost of $60,000, terms 1/15, n/30, FOB shipping point.
2 The correct company paid freight charges of $4,000.
5 Sold the merchandise purchased from Romeo Company to Bear Company for $110,500, terms 2/10, n/30, FOB destination.
6 The correct company paid freight charges of $2,600.
7 Issued Bear Company a credit of $7,000 for returned goods. These goods had cost Leeland $4,050 and were returned to inventory.
29 Received a cheque from Bear Company for the balance owing on the November 5 sale.
30 Paid Romeo Company the amount owing on the November 1 purchase.
Instructions
Record the October and November transactions for Leeland Company, assuming a periodic inventory system is used instead of a perpetual inventory system.
Taking It Further
Why might a periodic system be better than a perpetual system for Leeland Company?