Homework 8 due date 18 October 2021

Ignore VAT

Winter Wholesalers sell hair products in bulk. They use the perpetual method to account for inventory and a 20% gross profit percentage to calculate selling prices.

The following transactions took place during the month ended 28 February 2015:

1. Winter Wholesalers purchased 100 boxes of conditioner on 5 February from Hair Design Warehouse, amounting to R32 000 and was offered a settlement discount of 10% if payment was made within 10 days. Winter Wholesalers was of the opinion they could pay within 10 days. Delivery costs paid amounted to R6 794.

2. Sold inventory to Xolile&Co. with a selling price of R55 000.

3. Purchased 70 boxes of shampoo from True Hair Manufacturers for cash, R136 800. True Manufacturers Traders allowed a 5% cash discount.

4. Xolile&Co. returned inventory with a cost price of 4 000. A credit note was issued to them.

5. Sold inventory to Hermans Hair with a cost price of R45 200. A trade discount of 10% was issued to them.

6. Three of the boxes of shampoo purchased from True Hair Manufacturers were damaged and were therefore returned. True Hair Manufacturers refunded the amount to Winter Wholesalers.

7. Xolile&Co. paid half of the amount owing to Winter Wholesalers.

8. Winter Wholesalers settled their account with Hair Design Warehouse on 20 February.

You are required to:

1. Prepare the journal entries to account for the above transactions.
2. Prepare the Trading Statement for the month of February 2015.