DS Unlimited has the following transactions during August. August 6 Purchases 82 handheld game devices on account from GameGirl, Inc., for $260 each, terms 3/10, n/60.

August 7 Pays $460 to Sure Shipping for freight charges associated with the August 6 purchase.

August 10 Returns to GameGirl seven game devices that were defective.

August 14 Pays the full amount due to GameGirl.

August 23 Sells 62 game devices purchased on August 6 for $280 each to customers on account. The total cost of the 62 game devices sold is $16,016.67.

Required:

Record the transactions of DS Unlimited, assuming the company uses a perpetual inventory system.

Solution:

Inventory 21,320 debit

A/P 21,320 credit

--to record purchase from Game Girl - -

Inventory 360 debit

Cash 360 credit

--to record the freight-in--

A/P 1,560 debit

Inventory 1,560 credit

--to record returned goods to GameGirl--

A/P 19,760 debit

Inventory 395 credit

Cash 19,365 credit

--to record payment to GameGirl--

accounts receivables 17,360 debit

sales revenues 17,360 credit

COGS 8,406 debit

8,406 credit

--to record sale and subsequent cost of the sale--

total amount of the purchase in dollars:

82 game devices x 260 dollars each = 21,320

six returned devices:

6 x 260 = 1,560

invoice balance: 21,320 - 1,560 = 19,760

discount because payment within the first ten days:

19,760 x 2% = 395

final value: 19,760 - 395 = 19,365

sale of 62 devices at 280 = 17,360