Answer to Question #213157 in Accounting for zuby

Question

ConnecTech bought 400 computers in December 20X2 for $300 each. It paid $260 to have them delivered to its store. In January 20X3, ConnecTech sold 220 of the computers for $550 each. ConnecTech uses a perpetual inventory system.

8.6 End-of-Chapter Exercises 220

1.

Prepare the journal entry(ies) to record ConnecTech’s purchase of the computers.

2.

Determine the balance in ConnecTech’s ending inventory on December 31, 20X2.

3.

Prepare the journal entry(ies) to record the sale of the computers.

4.

Determine the balance in ConnecTech’s ending inventory on January 31, 20X3.

Answer 1

Solution:

1.). The journal entry(ies) to record ConnecTech’s purchase of the computers:

Dr. Inventory                                           120,000

               Cr. Cash                                                                   120,000

 

Dr. Transport expense                                    260

                Cr. Cash                                                                         260

 

2.). Ending inventory on December 31, 20X2 = 400 Units

Total inventory purchased = 400

The inventory purchased were never sold for the year

 

3.). Dr. Cash                                          121,000

               Cr.  Sales                                                                 121,000

 

4.). ConnecTech’s ending inventory on January 31, 20X3 = 180 units

Total inventory purchased = 400

Less inventories sold =    220

Balance of inventory as at January 31, 20X3 = 400 – 220 = 180 units