Explorer Scopes sells state-of-the-art relescopes to individuais and organizations interested in studying the solar systern At December 31 last year, the company's inventory amounted to $120,000. During the first week of January this year, the company made only one purchase and one sale. These transactions were as follows: Jan. 2 Sold one telescope costing $37,200 to Centfal State University for cash. $62,000. Jan. 5 Purchased merchandise on account from Luriar Optics, S80,000. Terms, net 30 days. Instructions a. Prepare joumal entries to record these transactions. assuming that Explorer Scopes uses the perpetual inventory system. Use separate entries to record the sales revenue and the cost of goods sold for the sale on January 2. b. Compute the balance of the Iaventory account on January 7. c. Prepare journal entries to record the two transactions, assuming that Explorer Scopes uses the periodic inventory system.

Explorer Scopes sells state-of-the-art relescopes to individuais and organizations interested in studying the solar systern At December 31 last year, the company's inventory amounted to $120,000. During the first week of January this year, the company made only one purchase and one sale. These transactions were as follows: Jan. 2 Sold one telescope costing $37,200 to Centfal State University for cash. $62,000. Jan. 5 Purchased merchandise on account from Luriar Optics, S80,000. Terms, net 30 days. Instructions a. Prepare joumal entries to record these transactions. assuming that Explorer Scopes uses the perpetual inventory system. Use separate entries to record the sales revenue and the cost of goods sold for the sale on January 2. b. Compute the balance of the Iaventory account on January 7. c. Prepare journal entries to record the two transactions, assuming that Explorer Scopes uses the periodic inventory system.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

C. Explain sômé ol lhe ais2
store.
Explorer Scopes sells state-of-the-art relescopes to individuais and organizations interested in
studying the solar systern At December 31 last year, the company's inventory amounted to
$120,000. During the first week of January this year, the company made only one purchase and
one sale. These transactions were as follows:
PROBLEM 5.5
Çomparison of Inventory Systems
LO 3, 4, 5
Sold one telescope costing S37,200 to Central State University for cash. $62,000.
Purchased merchandise on account from Lunar Optics, $80,000. Terms, net 30 days.
Jan. 2
Jan. 5
Instructions
a. Prepare joumal entries to record these transactions. assuming that Explorer Scopes uses the
perpetual inventory system. Use separate entries to record the sales revenue and the cost of
goods sold for the sale on January 2.
b. Compute the balance of the Inventory account on January 7.
c. Prepare journal entries to record the two transactions, assuming that Explorer Scopes uses the
periodic inventory system.
d. Compute the cost of goods sold for the first week of January assuming use of a periodic in-
ventory system. Use your answer to part b as the ending inventory.
e. Which inventory system do you believe that a company such as Explorer Scopes would prob-
ably use? Explain your reasoning.

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