Concord Warehouse distributes suitcases to retail stores and extends credit terms of n/30 to all of its customers. Concord Warehouse uses a perpetual inventory system the earnings approach. At the end of June its inventory consisted of 40 suitcases purchased at $ 30 each. During the month of July, the following merchandising transactions occurred: July 1 Purchased 50 suitcases on account for $30 each from Trunk Manufacturers, terms n/30, FOB destination. 2 The correct company paid $ 125 freight on the July 1 purchase. 4 Received $ 150 credit for five suitcases returned to Trunk Manufacturers because they were damaged. 10 Sold 45 suitcases that cost $ 30 each to Satchel World for $ 80 each on account. 12 Issued a $ 400 credit for five suitcases returned by Satchel World because they were the wrong colour. The suitcases were returned to inventory. 15 Purchased 60 additional suitcases from Trunk Manufacturers for $27.50 each, terms n/30, FOB shipping point. 18 Paid $ 150 freight to AA Trucking Company for merchandise purchased from Trunk Manufacturers. 21 Sold 63 suitcases that cost $ 30 each to Fly-By-Night for $ 80 each on account. 23 Gave Fly-By-Night a $ 160 credit for two returned suitcases. The suitcases had been damaged and were sent to the recyclers. 30 Paid Trunk Manufacturers for the July 1 purchase. 31 Received balance owing from Satchel World. July 1 Merchandise Inventory 1,500 Accounts Payable 1,500 (Purchase on account.) July 2 V No Entry 0 No Entry 0 July 4 Accounts Payable 150 Merchandise Inventory 150 (To record credit for goods returned.) July 10 Accounts Receivable 3,600 Sales 3,600 (To record sales on account.) July 10 Cost of Goods Sold 1.350 Merchandise Inventory 1,350 (To record cost of goods sold.) July 12 Sales Returns and Allowances 400 Accounts Receivable 400 (To record sales return.) July 12 Merchandise Inventory 150 Cost of Goods Sold 150 (Cost of goods returned.) July 15 Merchandise Inventory 1,650 Accounts Payable 1,650 (Purchase on account.) July 18 Merchandise Inventory 150 Cash 150 (To record freight on purchase.) July 21 v Accounts Receivable 5,040 Sales 5,040 (To record sales on account.) July 21 Cost of Goods Sold 1,890 Merchandise Inventory 1,890 (To record cost of goods sold.) July 237 Sales Returns and Allowances 160 Accounts Receivable 160 (To record sales return.) July 30 Accounts Payable 1,350 Cash 1,350 Cash 1,350 (Payment on account.) July 31 V Cash 3,200 Accounts Receivable 3,200 (Collection on account.) Create a T account for Merchandise Inventory. Post the opening balance and July's transactions, and calculate the July 31 balance. (Post entries in the order of journal entries presented in the previous part.) Merchandise Inventory Bal. 1,200 July 4 150 July 1 1,500 July 10 1.350 July 12 V 150 July 21 1,890 July 15 1,650 July 18 150 Bal. V 1,260 (c) * Your answer is incorrect. Determine the number of suitcases on hand at the end of the month and calculate the average cost per suitcase of the inventory on hand. Number of suitcases on hand 60 Average cost per suitcase $ 27.5
