Chapter Five

Exercise $2$

Expands on: E$5-3$

LO: $2,3$

On September $1,$ Rhea Office Supply had an inventory of $30$ calculators at a cost of $$20$ each. The company uses a perpetual inventory system. During September, the following transactions occurred.

Sept. $6$ Purchased $70$ calculators at $$22$ each from Danny Co$.$ for cash.

$9$ Paid freight of $$70$ on calculators purchased from Danny Co$.$

$10$ Returned $2$ calculators to Danny Co$.$ for $$46$ credit $($including freight$)$ because they did not meet

specifications.

$12$ Sold $33$ calculators $(30$ costing $$20,$ and $3$ costing $$23$ including freight$)$

for $$33$ each to Great Big Book

Store, terms $\frac{n}{30}.$

$14$ Granted credit of $$33$ to Great Big Book Store for the return of one calculator that was not ordered.

$20$ Sold $40$ calculators costing $$23$ for $$33$ each to Bush$$s Card Shop, terms $\frac{n}{30}.$

Instructions:

a$)$ Journalize the September transactions.

b$)$ What amount would Rhea report as net sales in the September income statement?

c$)$ What amount would Rhea report as gross profit in the September income statement?