WK-8-1

Signs Unlimited received a shipment of plastic sheets on April 3rd. The value of the plastic was $8,000, plus $100 of freight charges. Prepare the journal entry to record the receipt of goods by Signs Unlimited, assuming the payment would be made in May. Assume they use the perpetual inventory system.

Date	Account Title and Explanation	Debit	Credit

WK-8-2

Referring to WK-8-1 above, several of the plastic sheets delivered to Signs Unlimited were in the wrong colour. After some negotiation, the manager agreed to keep the products with a 10% discount. Prepare the entry on April 10th to record the purchase allowance. (Assume all plastic sheets were still in inventory.) Continue to assume they use the perpetual inventory system.

Date	Account Title and Explanation	Debit	Credit

WK-8-3

Refer to WK-8-1 and WK-8-2 above and journalize the transaction for Signs Unlimited when the payment is made on May 3rd. Continue to assume they use the perpetual inventory system.

Date	Account Title and Explanation	Debit	Credit

WK-8-4

On March 20th, Cup-A-Java received a shipment of gift mugs for resale from Cup Makers Inc. in the amount of $5,000, plus $200 shipping charges. The terms stated on the invoice

from Cup Makers Inc. were as follows: 3/15, n/60. Assume they use the perpetual inventory system. Journalize the following scenarios:

a) As the bookkeeper for Cup-A-Java, complete the original invoice transaction.

Date	Account Title and Explanation	Debit	Credit

If Cup-A-Java decided to take advantage of the early payment cash discount, by when should the payment be made to qualify for the discount?

The payment by Cup-A-Java to Cup Makers Inc. was made on March 31st. Prepare the journal entry for the payment of goods. Continue to assume they use the perpetual inventory system.

Date	Account Title and Explanation	Debit	Credit

Journalize the entry if payment was made on May 20th. Continue to assume they d) use the perpetual inventory system.

Date	Account Title and Explanation	Debit	Credit

Suppose 20% of the shipment was returned on March 25th because they were in the e) wrong colour. Cup Makers Inc. agreed to apply the same percentage deduction to the freight charges. The invoice has not been paid. Prepare the journal entry to record this transaction. Continue to assume they use the perpetual inventory system.

Date	Account Title and Explanation	Debit	Credit

Continue from part e, journalize the entry if Cup-A-Java took advantage of the f) early payment cash discount when paying for the balance of the cups on March 31st. Round off to the nearest dollar. Continue to assume they use the perpetual inventory system.

Date	Account Title and Explanation	Debit	Credit

WK-8-5

Petes Wholesalers imports and distributes towels. They sell their products to various retailers throughout the country and offer payment terms of 2/10, n/30. On October 1st, Petes made a large sale to Ernies Bathroom Retailers in the amount of $15,000, which cost Petes $9,000. Petes uses a perpetual inventory system. Complete the following:

a) Journalize the sale that was made on account

Date	Account Title and Explanation	Debit	Credit

By what date must Ernies pay the invoice to qualify for the early cash payment discount?

Assume Ernies paid the bill on October 5th. Record the journal entries. Continue to assume they use the perpetual inventory system.

Date	Account Title and Explanation	Debit	Credit

If Ernies had returned half the shipment and paid for the balance owing on October 5th, how would the transaction be journalized? Continue to assume they use the perpetual inventory system.

Date	Account Title and Explanation	Debit	Credit

Suppose Ernies found the goods unsatisfactory and agreed to keep the goods with a 10% discount. Prepare the journal entry to record the sales allowance and Ernies payment on October 20th. Continue to assume they use the perpetual inventory system.

Date	Account Title and Explanation	Debit	Credit

Referring to part a - Ernies kept the entire shipment and paid the invoice on f) October 10th to take advantage of the early payment discount. Record the journal entries for the payment to Petes. Continue to assume they use the perpetual inventory system.

Date	Account Title and Explanation	Debit	Credit

WK-8-6

Assume that you have to prepare quarterly financial statements, and the following information is available from the General Ledger:

	Sales		$200,000
	Opening inventory		67,000
	Purchases		90,000
	Gross Profit Margin (from examination of prior years statements)		= 30%
Required:
Calculate the estimated closing inventory using the gross profit method.
	Sales		$200,000
	COGS		140,000
	Gross profit		60,000
	Opening inventory		67,000
	Purchases		+90,000
	COGS		-140,000
	Closing/Ending inventory		17,000

WK-8-7

GB, a bookseller, had the following transactions during the month of August and uses the perpetual inventory system:

Aug 1	Novels	Bought 10 novels at $30 each
Aug 2	College bags	Bought 10 bags at $45 each
Aug 5	Novels	Sold 5 novels
Aug 10	Pencil case	Bought 15 at $5 each
Aug 21	College bags	Sold 3 bags

Required:

Calculate the value of inventory at each date using the specific identification method. Clearly show August ending inventory.

	Average Cost	Unit	Quantity	Value of	Unit	Inventor	Value of inventory
		Cost	bought	purchase	sold	y count

b) Calculate the COGS.

Item sold	Units sold	Cost / unit	COGS