70.2K

Verified Solution

Link Copied!

Lucy Company (Lucy) is engaged in purchases and sales of plastic folders. The company adopts perpetual inventory system, closes its accounts annually and has gross profit rate of 40% in general. The following information was extracted from the adjusted trial balance on 30 November 2018:

Lucy Company ("Lucy) is engaged in purchases and sales of plastic folders. The company adopts perpetual inventory system closes its accounts annually and has gross profit rate of 40% in general. The following information was extracted from the adjusted trial balance on 30 November 2018: Debit Credit 3.850,000 Sales Sales returns and allowances Cost of goods sold Inventory 15,000 2,650,000 450,000 The following transactions occurred in December 2018: Dec 3 Lucy purchased $150,000 inventory from its supplier on account. Dec 5 Lucy sold goods to Kenny Company at $80,000 on account. Dec 8 Dec 10 Lucy retumed $20,000 inventory of the purchase on Dec 3 to its supplier due to incorrect colour of folders. Kenny Company retumed $10,000 goods to Lucy due to incorrect size of folders. Lucy received check from Kenny Company for full settlement regarding to sales in December Lucy paid to supplier in full regarding to the purchase in December. Dec 15 Dec 23 Dec 31 Lucy conducted physical count of inventory and revealed $520,000 inventory was on hand. Required: (a) Prepare journal entries for Lucy Company regarding to the above transactions in December 2018 (12 marks) (b) Calculate (1) net sales and (ii) cost of goods sold shown in the Income Statement for the year ended 31 December 2018

Answer & Explanation Solved by verified expert

See Answer