Comprehensive Problem - Chapter 4

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Journal Entry Workshop: COMPREHENSIVE PROBLEM - CHAPTER 4 At the beginning of Year 2. EuRo Enterprises had the following balances in its accounts: During Year 2, EuRo Enterprises experienced the following events: 1. Purchased inventory that cost $11,200 on account from lvey company under terms 2/10,n/30. The merchandise was delivered FOB shipping point. Freight costs of $800 were paid in cash. 2. Returned $600 of the inventory that it had purchased because the inventory was damaged in transit. The seller agreed to pay the return freight cost. 3. Paid the amount due on its account payable to lvey company within the cash discount period. 4. Sold inventory that had cost $8,000 for $13,500. The sale was on account under terms 2/10,n/45. 5. Received merchandise returned from a customer. The merchandise had originally cost $1,200 and had been sold to the customer for $2,100 cash. The customer was paid $2,100 cash for the returned merchandise. 6. Delivered goods in Event 4FOB destination. Freight costs of $800 were paid in cash. 7. Collected the amount due on accounts receivable within the discount period. 8. Sold the land for $3,500. 9. Recognized $500 of accrued interest revenue. 10. Took a physical count indicating that $6,500 of inventory was on hand at the end of the accounting period. Hint: Determine the current balance in the inventory account before calculating the amount of the inventory write down (shrinkage). Required: a) Record the events in general journal format b) Open ledger T-accounts and post the beginning balances and the events to the accounts