1. You may have shopped at a Ronny's store. Suppose Ronny's purchased T-shirts on account for $18,130. Credit terms are 3/15, n/45. Ronny's paid within the discount period.
Requirements
R1. If Ronny's uses a periodic inventory system, when will the purchase of inventory be recorded as an expense-when it is purchased or when it is sol d?
R2. If Ronny's uses the perpetual inventory system, when will the purchase of inventory be recorded as an expense-when it is purchased or when i t is sold?
2. Suppose The Funhouse, Inc., buys $105,900 worth of PegaBlock toys on credit terms of 2/10, n/45. Some of the goods are damaged in shipment, so Funhouse returns $10,540 of the merchandise to PegaBlock.
Requirement
R1. How much must The Funhouse pay PegaBlock: a. After the discount period? b. Within the discount period?
3.Suppose a BullsEye store purchases $60,000 of women's sportswear on account from Muddy John on July 1, 2011. Credit terms are 2/10, net 45. BullsEye pays electronically, and Muddy John receives the money on July 10, 2011.
Requirements
R1. Journalize BullsEye's transactions for July 1, 2011, and July 10, 2011. R2. What was BullsEye's net cost of this inventory