DS Unlimited has the following transactions during August. August 6 Purchases 88 handheld game devices on account from GameGirl, Inc., for $290 each, terms 1/10, n/60. August 7 Pays $490 to Sure Shipping for freight charges associated with the August 6 purchase. August 10 Returns to GameGirl eight game devices that were defective. August 14 Pays the full amount due to GameGirl. August 23 Sells 68 game devices purchased on August 6 for $310 each to customers on account. The total cost of the 68 game devices sold is $19,939.30. rev: 11_10_2016_QC_CS-64951 Required: 1. Record the transactions of DS Unlimited, assuming the company uses a periodic inventory system. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Question

Chasity Vargas

Business

30 May, 00:29

DS Unlimited has the following transactions during August. August 6 Purchases 88 handheld game devices on account from GameGirl, Inc., for $290 each, terms 1/10, n/60. August 7 Pays $490 to Sure Shipping for freight charges associated with the August 6 purchase. August 10 Returns to GameGirl eight game devices that were defective. August 14 Pays the full amount due to GameGirl. August 23 Sells 68 game devices purchased on August 6 for $310 each to customers on account. The total cost of the 68 game devices sold is $19,939.30. rev: 11_10_2016_QC_CS-64951 Required: 1. Record the transactions of DS Unlimited, assuming the company uses a periodic inventory system. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

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Charisma · Answer 1

Journal entries to record the transactions of DS Unlimited:

August 6:

Debit Purchases Account with $25,520

Credit Accounts Payable (GameGirl Inc.) with $25,520

Being purchase of 88 handheld game devices on account for $290 each.

August 7:

Debit Freight Charges with $490

Credit Cash Account with $490

Being payment of freight charges to Sure Shipping for August 6 purchase.

August 10:

Debit Accounts Payable (GameGirl) with $2,320

Credit Purchases Returns with $2,320

Being return of 8 defective game devices

August 14:

Debit Accounts Payable (GameGirl) with $23,200

Credit Cash Account with $22,968

Credit Purchases Discount with $232

Being payment on account and 1% cash discount received.

August 23:

Debit Accounts Receivable with $21,080

Credit Sales Account with $21,080

Being sale of 68 game devices at $310 each.

August 23:

No journal is required to record the cost ($19,939.30) of the 68 game devices sold.

Explanation:

A periodic inventory system calculates the cost of inventory at the end of a period, say, a month. Therefore, physical count of inventory is undertaken periodically in order to value the inventory for financial reporting purpose. This means that the cost of goods sold is valued periodically unlike a perpetual inventory system.

A periodic inventory system is unlike a perpetual inventory system that tracks inventory individually and is able to calculate the cost of goods sold after each transaction.

The Purchases Discount is calculated as 1% of the balance after returning 8 game devices to GameGirl Inc. And this discount is received because payment was made within the stipulated 10 days.