Following are the merchandising transactions of Dollar Store.November 1 Dollar Store purchases merchandise for $2,800 on terms of 2/5, n/30, FOB shipping point, invoice dated November 1.November 5 Dollar Store pays cash for the November 1 purchase.November 7Dollar Store discovers and returns $100 of defective merchandise purchased on November 1, and paid for on November5, for a cash refund.November 10Dollar Store pays $140 cash for transportation costs for the November 1 purchase.November 13 Dollar Store sells merchandise for $3,024 with terms n/30. The cost of the merchandise is $1,512.November 16 Merchandise is returned to the Dollar Store from the November 13 transaction. The returned items are priced at $205and cost $103; the items were not damaged and were returned to inventory.Journalize the above merchandising transactions for the Dollar Store assuming it uses a perpetual inventory system and the grossmethod.

Answered: Following are the merchandising…

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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Following are the merchandising transactions of Dollar Store.
November 1 Dollar Store purchases merchandise for $2,800 on terms of 2/5, n/30, FOB shipping point, invoice dated November 1.
November 5 Dollar Store pays cash for the November 1 purchase.
November 7
Dollar Store discovers and returns $100 of defective merchandise purchased on November 1, and paid for on November
5, for a cash refund.
November 10
Dollar Store pays $140 cash for transportation costs for the November 1 purchase.
November 13 Dollar Store sells merchandise for $3,024 with terms n/30. The cost of the merchandise is $1,512.
November 16 Merchandise is returned to the Dollar Store from the November 13 transaction. The returned items are priced at $205
and cost $103; the items were not damaged and were returned to inventory.
Journalize the above merchandising transactions for the Dollar Store assuming it uses a perpetual inventory system and the gross
method.

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Step 1 Introduction

A perpetual inventory system is a computer software that makes ongoing estimations of your stock by consulting your electronic records rather than doing a physical count of your goods. This system establishes a baseline based on a physical count, and then it adjusts itself according to the purchases that come in and the shipments that go out.

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