Question

DS Unlimited has the following transactions during August.

August 6 Purchases 78 handheld game devices on account from GameGirl, Inc., for exist240 each, terms 1/10, n/60.
August 7 Pays exist440 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 58 game devices purchased on August 6 for exist260 each to customers on account. The total cost of the 58 game devices sold is exist14, 145.37.
Required: Record the transactions of DS Unlimited, assuming the company uses a perpetual inventory system.

Answer 1

The student question involves the recording of transactions for DS Unlimited under a perpetual inventory system, including purchases, sales, returns, and payment of freight charges. The transactions range from August 6 to August 23, tracking the flow of inventory and associated costs.

Step-by-step explanation:

The question pertains to accounting entries for a series of transactions conducted by DS Unlimited during August, assuming the use of a perpetual inventory system. Below are the journal entries that reflect the activity described.

• August 6: DS Unlimited purchases 78 handheld game devices on account from GameGirl, Inc., at $240 each, with payment terms of 1/10, n/60.
• August 7: The company pays $440 to Sure Shipping for freight charges on the purchase made on August 6.
• August 10: DS Unlimited returns 8 defective game devices to GameGirl.
• August 14: The company pays the full amount due to GameGirl, within the discount period.
• August 23: DS Unlimited sells 58 game devices to customers on account at $260 each; the total cost of goods sold is $14,145.37.

This exercise not only helps in understanding the recording of transactions but also illustrates the flow of inventory tracking under a perpetual system.