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Homework answers / question archive / Book Nook Warehouse distributes hardcover books to retail stores and extends credit terms of 2/10, n/30 to all of its customers

Book Nook Warehouse distributes hardcover books to retail stores and extends credit terms of 2/10, n/30 to all of its customers

Accounting

Book Nook Warehouse distributes hardcover books to retail stores and extends credit terms of 2/10, n/30 to all of its customers. At the end of May, Book Nook's inventory consisted of books purchased for €1,800. During June, the following merchandising transactions occurred. June 1Purchased books on account for $2,850 from Bees Publishers, FOB shipping point, terms 2/10, n/30. They paid $150 for the freight on this date. 3 Sold books on account to DAR for $3,500. The cost of the books sold was $2,800. 6 Received $300 credit for books returned to Bees Publishers. 9 Pald Bees Publishers in full 15 Received payment in full from DAR Required Journalize the above transactions using perpetual system (Show us the ending balance of inventory IT account 2

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Answer:

2/10 n/30 means 2% discount will be given if the payments received within 10 days and total payments should be received within 30 days.

WN -1

Bees Publishers A/C
Purchases 2850
Returns -300
Total 2550
Less : Discount @2% 51
Due 2499
Freights 150
Total Due 2649

Discount is only taken on value of books purchased.

Date Account Title and Explanation Amount ($)
Dr Cr
Jun-01 Purchase A/C Dr 2850  
            To Bees Publishers   2850
[Being books purchased from Bees Publishers on Credit ]
       
Jun-01 Freights A/C Dr 150  
            To Bees Publishers   150
[Being freights are paid by Bees publishers on purchase of Books]
       
Jun-03 DAR A/C Dr 3500  
         To Sales A/C   3500
[Being goods sold to DAR]
       
Jun-06 Bees Publishers A/C Dr 300  
            To Purchase returns A/C   300
[Being Books returned to Bees Publishers]
       
Jun-09 Bees Publishers A/C Dr 2649  
          To Bank A/C   2649
[Being payments made to Bees Publishers] WN -1
       
Jun-09 Bees Publishers A/C Dr 51  
          To Discount received A/C   51
[Being Discount received from Bees Publishers] WN -1
       
Jun-15 Bank A/C Dr 3500  
         To DAR A/C   3500
[Being payments received From DAR]
Calculation of Ending balance of Inventory
Particulars Amount ($)
Opening inventory 1800
Purchases 2850
Books available for sale 4650
Less : Cost of Books sold 2800
Closing Inventory 1850

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