Question: Recording Purchases and Sales
Printer Supply Company sells computer printers and printer supplies. One of its products is a toner cartridge for laser printers. At the beginning of 2019, there were 200 cartridges on hand at a cost of $60 each. During 2019, Printer Supply Company purchased 1,400 cartridges at $60 each. After inspection, Printer determined that 10 cartridges were defective and returned them to the supplier. Printer also sold 800 cartridges at $93 each and sold an additional 750 cartridges at $102 each after a midyear selling price increase. Customers returned 15 of the cartridges that were purchased at $102 to Printer for miscellaneous reasons. Assume that Printer Supply Company uses a perpetual inventory system.
Required: 1. Prepare summary journal entries to record the purchases, sales, and return of inventory. Assume that all purchases and sales are on credit but no discounts were offered. Make journal entries in the order that transactions are presented above.
Record the entry for the purchases during the year.
Inventory Accounts Payable
Record the entry for the return, by Printer Supply Company, of the cartridges to its supplier.
Accounts Payable Inventory
Record the entry for the sales during the year.
Accounts Receivable Sales Revenue
Record the entry for the cost of goods sold related to the sales during the year.
Cost of Goods Sold Inventory
Record the entry for the return, by customers, of the cartridges to Printer Supply Company.
Sales Returns and Allowances Accounts Receivable (Recorded return of defective cartridges) Inventory Cost of Goods Sold
2. What is the cost of ending inventory, cost of goods sold, and gross profit for 2019?
Cost of ending inventory$Cost of goods sold $ Gross profit