You are accountant for New Horizon Merchandising Company. New Horizon Merchandising Company buys and sells a product called Zoom. Company uses Perpetual Inventory System with LIFO method for inventory valuation. New Horizon uses Net Method for accounting for its purchases and sales. On January 1, 2019, New Horizon’s merchandise inventory on hand consisted of the following: Zoom: Quantity Cost per Unit 1st Purchase 200 $4 2nd Purchase 110 $5 45. New Horizon Company purchased 300 units of Zoom at $5.50 each plus $99 sales taxes. Terms were 2/10, n/30, FOB Shipping Point.Shipping cost was $51.Provide the necessary journal entry to record the transaction. Debit Credit 46. Assume New Horizon paid for the above purchase within discount period. Provide the necessary journal entry to record the transaction. Debit Credit 47. Assume New Horizon paid for the above purchase after the discount period. Provide the necessary journal entry to record the transaction. Debit Credit
You are accountant for New Horizon Merchandising Company. New Horizon Merchandising Company buys and sells a product called Zoom. Company uses Perpetual Inventory System with LIFO method for
On January 1, 2019, New Horizon’s merchandise inventory on hand consisted of the following:
|
Zoom: |
Quantity |
Cost per Unit |
|
1st Purchase |
200 |
$4 |
|
2nd Purchase |
110 |
$5 |
45. New Horizon Company purchased 300 units of Zoom at $5.50 each plus $99 sales taxes. Terms were 2/10, n/30, FOB Shipping Point.Shipping cost was $51.Provide the necessary
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Debit |
Credit |
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46. Assume New Horizon paid for the above purchase within discount period. Provide the necessary journal entry to record the transaction.
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Debit |
Credit |
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47. Assume New Horizon paid for the above purchase after the discount period. Provide the necessary journal entry to record the transaction.
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Debit |
Credit |
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Perpetual inventory system: Under this accounting method for companies moving large amounts of stock. The inventory accounts are constantly updated when buying or selling stock. Other movement in stock is also recorded, such as obsolete or damaged stock raw materials used in the production, and stock transferred to a different location.
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Transaction |
Particular |
Debit Amount ($) |
Credit Amount ($) |
|
1 |
Inventory account Debit |
1,749 |
|
|
|
To account payable account Credit (Being the purchase the inventory) (Working note -1) |
|
1,749 |
|
2 |
Inventory account Debit |
51 |
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To cash account Credit (Being the fright paid inventory) |
|
51 |
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Transaction |
Particular |
Debit Amount ($) |
Credit Amount ($) |
|
1 |
Account payable account Debit |
34.98 |
|
|
|
To Inventory account Credit (Being the discount received from creditors) (Working note -2) |
|
34.98 |
|
2 |
Account payable account Debit |
1,714.02 |
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To cash account Credit (Being the payment to the creditors) (working note -3) |
|
1,714.02 |
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