Instructions:

1) Prepare journal entries using both the gross and net purchases methods, in the table provided below and account for GST, where appropriate, in each of the journal entries. When given the cost of items sold or returned (in the transactions of June 3, June 17, June 28, and June 30), you may assume those figures are net of GST and that they are the same for both the gross and net purchases methods. For guidance, the cost of goods sold entry is provided for you for the June 3 transaction. Other figures, such as June 1 purchase of $1,850, include GST.

2) For the event on the 15^th, Ex Libris did not take the discount. For the event on the 24^th, Bargain Books paid less the discount taken.

3) Please round to the nearest dollar. Narrations and cross referencing are not required.

4) The chart of accounts also includes the following: No. 210 GST Clearing; and No. 550 Discounts Lost.

5) After you have finished 1) above, consider the following what if: what if the payment on June 26 had taken place after the discount period had expired? Answer this question by preparing journal entries under both the gross and net purchases methods in the table provided.

Date	Gross Purchases method:			Net Purchases method:
June	Account:	Dr	Cr	Account:	Dr	Cr
1
3
	COGS	1,440		COGS	1,440
	Inventory		1,440	Inventory		1,440
6
9
15
17
20
24
26
28
30
	5) What if?			5) What if?
26

P5-1B Book Nook Warehouse, AG distributes hardcover books to retail stores and extends credit terms of 2/10, n/30 to all of its customers. At the end of May, Book Nook's inventory consisted of books purchased for 2,100. During June, the following merchandising tran:s actions occurred. June Purchased books on account for 1,850 from Phantom Publishers, FOB destin- ation, terms 2/10, n/30. The appropriate party also made a cash payment of 50 for the freight on this date 3 Sold books on account to Ex Libris for 2,600. The cost of the books sold was 1,440 6 Received 150 credit for books returned to Phantom Publishers. 9 Paid Phantom Publishers in full, less discount. 15 Received payment in full from Ex Libris. 17 Sold books on account to Bargain Books for 1,800. The cost of the books sold was 1,040 Purchased books on account for 1,500 from Bookem Publishers, FOB destin- ation, terms 2/15, n/30. The appropriate party also made a cash payment of 50 for the freight on this date Received payment in full from Bargain Books. Paid Bookem Publishers in full, less discount Sold books on account to Corner Bookstore for 1,300. The cost of the books sold was 850 20 24 26 28 30 Granted Corner Bookstore 125 credit for books returned costing 74 Book Nook Warehouse's chart of accounts includes the following: No. 101 Cash, No. 112 Accounts Receivable, No. 120 Inventory, No. 201 Accounts Payable, No. 401 Sales Revenue, No. 412 Sales Returns and Allowances, No. 414 Sales Discounts, and No. 505 Cost of Goods Sold