Question 1 The following summarised transactions, for the financial year ending June 30 2021, relate to the business of Emma Clarke, a sole trader, who sells mens and womens clothing Emma uses a perpetual inventory system in the business Transactions are GST inclusive Purchased clothing with a list price of $330 000 on credit As this was a bulk purchase the supplier gave a trade discount of 15 off the list price Emma paid cash of $4 400 for transportation inwards costs Made cash sales of $220 000 and credit sales of $143 000 Cost of goods sold was $137 000 Some of the clothing purchased during the year was damaged upon delivery The clothing was returned to the supplier who agreed to cancel $3 300 of the original purchase Paid $44 000 for selling and administrative expenses Paid cash totalling $270 000 to suppliers having received discounts totalling $11 000 for prompt payments Unhappy credit customers returned clothing with a selling price of $3 300 and these were returned to stock The cost of goods returned was $1 500 Received cash totalling $110 000 from trade debtors having given discounts of $5 500 for prompt payments After trading finished on 30 June 2021, a stocktake showed that the cost of unsold clothing on hand was $165 000 The Inventory Ledger Account, prior to the transactions listed above, had a balance at 1 July 2020 of $55 000 Required Prepare the general journal entries to record the above transactions You are not required to complete narrations or posting references Use the Excel template provided Complete the Inventory ledger account (running balance format) You are not required to complete posting references Use the Excel template provided Emma is concerned about regular stock shortages that have been revealed in the end of month stocktakes What type of decisions could Emma make to prevent stock shortages

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Aug 07, 2024

Question 1 The following summarised transactions, for the financial year ending June 30 2021, relate to the business of Emma Clarke, a sole trader, who

Question 1

The following summarised transactions, for the financial year ending June 30 2021, relate to the business of Emma Clarke, a sole trader, who sells mens and womens clothing. Emma uses a perpetual inventory system in the business. Transactions are GST inclusive.

Purchased clothing with a list price of $330 000 on credit. As this was a bulk purchase the supplier gave a trade discount of 15% off the list price. Emma paid cash of $4 400 for transportation inwards costs.

Made cash sales of $220 000 and credit sales of $143 000. Cost of goods sold was $137 000.

Some of the clothing purchased during the year was damaged upon delivery. The clothing was returned to the supplier who agreed to cancel $3 300 of the original purchase.

Paid $44 000 for selling and administrative expenses.

Paid cash totalling $270 000 to suppliers having received discounts totalling

$11 000 for prompt payments.

Unhappy credit customers returned clothing with a selling price of $3 300 and these were returned to stock. The cost of goods returned was $1 500.

Received cash totalling $110 000 from trade debtors having given discounts of

$5 500 for prompt payments.

After trading finished on 30 June 2021, a stocktake showed that the cost of unsold clothing on hand was $165 000.

The Inventory Ledger Account, prior to the transactions listed above, had a balance at

1 July 2020 of $55 000.

Required:

Prepare the general journal entries to record the above transactions. You are not required to complete narrations or posting references. Use the Excel template provided.
Complete the Inventory ledger account (running balance format). You are not required to complete posting references. Use the Excel template provided.
Emma is concerned about regular stock shortages that have been revealed in the end of month stocktakes. What type of decisions could Emma make to prevent stock shortages?