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 (Purchased inventory on account)Feedback
In each transaction, consider whether the company is the buyer or the seller. From the buyer's perspective, the historical cost principle implies that inventory cost will include the purchase price of the inventory plus any cost of bringing the goods to a salable condition and location. From the seller's perspective, the sale or return of inventory requires two journal entries - one to record the revenue portion of the transaction and one to record the expense (and inventory) portion of the transaction.
Record the entry for the return, by Printer Supply Company, of the cartridges to its supplier.
Accounts Payable Inventory (Recorded return of defective cartridges sold)Feedback
In each transaction, consider whether the company is the buyer or the seller. From the buyer's perspective, the historical cost principle implies that inventory cost will include the purchase price of the inventory plus any cost of bringing the goods to a salable condition and location. From the seller's perspective, the sale or return of inventory requires two journal entries - one to record the revenue portion of the transaction and one to record the expense (and inventory) portion of the transaction.
Record the entry for the sales during the year.
Inventory Accounts Receivable (Sold inventory on account)Feedback
In each transaction, consider whether the company is the buyer or the seller. From the buyer's perspective, the historical cost principle implies that inventory cost will include the purchase price of the inventory plus any cost of bringing the goods to a salable condition and location. From the seller's perspective, the sale or return of inventory requires two journal entries - one to record the revenue portion of the transaction and one to record the expense (and inventory) portion of the transaction.
Record the entry for the cost of goods sold related to the sales during the year.
Accounts Receivable (Recorded cost of inventory sold)Feedback
In each transaction, consider whether the company is the buyer or the seller. From the buyer's perspective, the historical cost principle implies that inventory cost will include the purchase price of the inventory plus any cost of bringing the goods to a salable condition and location. From the seller's perspective, the sale or return of inventory requires two journal entries - one to record the revenue portion of the transaction and one to record the expense (and inventory) portion of the transaction.
Record the entry for the return, by customers, of the cartridges to Printer Supply Company.
(Recorded return of defective cartridges) (Recorded return of defective cartridges)Feedback
In each transaction, consider whether the company is the buyer or the seller. From the buyer's perspective, the historical cost principle implies that inventory cost will include the purchase price of the inventory plus any cost of bringing the goods to a salable condition and location. From the seller's perspective, the sale or return of inventory requires two journal entries - one to record the revenue portion of the transaction and one to record the expense (and inventory) portion of the transaction.
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$