Assume you are the senior accountant on an audit engagement of a fictitious business, Pine Street Company (PSC). Assume the instructor is the engagement partner. You are to prepare an audit program for PSC. The firm manufactures and sells bicycles. The audit program must be in one of the following areas of the business: accounts receivable and revenues; inventories and costs of goods sold; accounts payable; payroll; or property, plant and equipment.

Week 1-Assume you are applying for an accounting position at PSC. The controller asks you to prepare the journal entries to record the following transactions for retail store operations of PSC. Assume a perpetual inventory system.

April 2

Purchased merchandise from Johns Company under the following terms: $5,900 price, invoice dated

April 2

Explaincredit terms of 2/15/, n/60, and FOB shipping point in a sentence or two.

April 3

Paid $330 for shipping charges on April 2 purchases.

April 4

Returned to Johns Company unacceptable merchandise that had an invoice price of $900.

April 17

Sent a check to Johns Company for the April 2 purchase, net of the discount and the returned merchandise.

April 18

Purchased merchandise from William Corp. under the following terms: $12,250 price, invoice dated April 18, credit terms of 2/10, n/30, and FOB destination.

April 21

After negotiations, received from William Corp. a $3,250 allowance on April 18 purchase.

April 28

Sent check to William paying for the April 18 purchase, net of the discount and allowance.