Cliff Clarendon opened a wine store on 1 June 2019. The business trades under the name of Wine to Dine and uses a perpetual inventory system to account for its inventory. All credit sales are made on the following terms: 2/10, n/30.

Transactions for the business in June 2019 were as follows.

At the end of the month, Cliff Clarendon undertook a physical stocktake and calculated that inventory worth $79 800 was still on hand and that promotional supplies of $8600 were still in storage. He also estimated that electricity usage for the month was $500 and that telephone usage for the month was $320. No tax invoices had been received from either supplier by 30 June.

Required

(a) Prepare general journal entries for June 2019 for the above transactions, including any adjusting entries at the end of the month.

(b) Calculate the profit for the business for the month of June 2019.

(c) Explain how the entries in (a) would differ if the business had used the periodic inventory system.

Transcribed Image Text:

June Clarendon invested $185 000 cash and $48720 of store equipment into the business. The store equipment is to be depreciated evenly over 7 years. Purchased an inventory of wine from Blacktown Winery on credit for $55 200; terms: 2/15, n/30. Paid $1800 rent for June 2019. Purchased an additional inventory of wine from Hall Wines on credit for $38 000; terms: n/30. Sold some merchandise to C. Tamarara on credit for $14000. Cost of this merchandise was $9200. Purchased promotional supplies for cash from G. Epping for $11 440. Purchased a supply of white wines from Voss Vineyard for $27 600 cash. Sold merchandise costing $21 100 to Oatville Hotel on credit for $28 000. Purchased wine from Gladwood Estate on credit for $23 000; terms: 2/10, n/30. Paid Blacktown Winery for 2 June purchase. Received payment from C. Tamarara in payment of the account. The discount had been taken by Tamarara. 18 Sold merchandise costing $13800 to J. Haberfield on credit for $22 000. 18 Received payment from Oatville Hotel in payment of its account, less discount. 21 Sold merchandise costing $11500 to Slater Ltd on credit for $18400. Paid Gladwood Estate for 12 June purchase. Purchased additional merchandise from Blacktown Winery on credit for $28000; terms: 2/15, n/30. 1 2 34 3 4 5 6802415 12 15 RN 22228 21 22 Sold for cash wine costing $8600 to walk-in customers for $14 900. 25 Returned bad wine that cost $6600 back to Blacktown Winery. Sold wines costing $28000 to Berrillee Partners on credit for $41000. 29 Purchased inventory from K. Leonay on credit for $9200; terms: 1/10, n/30. 30 Paid month's salary to sales assistant, $2900. 23