(1)

The income statement of Leangs Luggage includes the items listed below:

Net sales $875,000

Gross profit 305,000

Beginning inventory 75,000

Purchase discounts 12,000

Purchase returns and allowances 8,000

Freight-in 10,000

Operating expenses 320,000

Purchases 560,000

Instructions

Use the appropriate items listed above as a basis for determining:

(a) Cost of goods sold.

(b) Cost of goods available for sale.

(c) Ending inventory.

(2)

Record the following transactions in general journal form for Karen Heller Company.

July 1 Received a $20,000, 8%, 3-month note, dated July 1, from Nancy Freeman in payment of her open account.

Oct. 1 Received notification from Nancy Freeman that she was unable to honor her note at this time. It is expected that Freeman will pay at a later date.

Nov. 15 Received full payment from Nancy Freeman for her note receivable previously dishonored.