Danny Company has inventory of $14,000 at 30 November 2022 and is engaged in the...
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Accounting
Danny Company has inventory of $14,000 at 30 November 2022 and is engaged in the following transactions during December 2022.
2 Purchased 1,000 boxes of candles for resale for $120 per box from Boeing Company on account. 5 Returned 10 boxes of defective candles to Boeing Company. 8 Sold 200 boxes of candles to a customer for cash at a gross profit rate of 20%. 22 Paid half of the amount owed to Boeing Company for the candles purchased on 2 December. 26 The customer returned 10 boxes of candles purchased on 8 December to Danny Company for a cash refund because they are in the wrong color.
Required:Assuming periodic inventory system is used (a) Prepare the journal entries for the above transactions in December 2022. (10 marks) (b) Prepare two closing entries at 31 December 2022 to create the Cost of Goods Sold account and update the Inventory account if a physical inventory taken as at 31 December 2022 indicates goods costing $110,000 remains in stock
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