Gamit Ltd. Completed the following selected (and summarized) transactions during 20X5:

a. Merchandise inventory on hand 1 Jan 20X5, $105,000 (at cost, which was the same as lower of cost or NRV)

b. During the year, purchased merchandise for resale at cost of $200,000 on credit, terms 2/10, n/30. Immediately paid 85% of the cash cost

c. Paid freight on Merchandise purchased, $10,000 cash

d. Paid 40% of the accounts payable within the discount period . the remaining payable were unpaid at the end of 20X5 and were still within the discount period

e. Merchandise that had a quoted price of $3,000 (terms 2/10, n/30) was returned to a supplier. A cash refund of $2,940 was received because the items were unsatisfactory

f. During the year, sold merchandise for $370,000, of which 10% was on credit

g. A television set caught fire and was damaged internally; it was returned by the customer. The set was originally sold for $600, of which $400 cash was refunded. The set originally cost the company $420. Estimates are that the set, when repaired, can be sold for $240. Estimated repair costs are $50, and selling costs are estimated to be $10.

h. Operating expenses (administrative and distribution) paid in cash, $120,000; includes the $10 (in thousands)

i. Excluded from the purchase given in (b) and from the ending inventory was a shipment for $7,000 (net of discount). This shipment was in transit, FOB shipping point at 31 Dec 20X5. The invoice had arrived.

j. Paid $50 cash to repair the damaged television set; see (g) above.

k. The ending Inventory (as counted) was $110,000 at cost, and $107,000 at NRV. Income tax expense is $19,500. Income tax expense is $19,500.

Accounting Policies followed by the company are as follows:

1 - The annual accounting period ends 31 December

2 - a periodic inventory system is used

3 - Purchases and A/P are recorded net of cash discounts

4 - Freight charges are allocated to merchandise when purchased

5 - all cash discounts are taken

6 - used and damaged merchandise is carried in a separate inventory account

7 - Inventories are reported at lower of cost or NRV, and the allowance method is used

Required:

• Journal entries for transactions (b) through (k)
• Give the end of period adjusting entries