Final answer:
DS Unlimited made several transactions within August, including purchasing and selling handheld game devices, paying freight charges, returning defective devices, and availing of a cash discount. These transactions must be recorded promptly in a perpetual inventory system to reflect the cost of inventory, sales revenue, and expenses accurately.
Step-by-step explanation:
The student is inquiring about recording multiple transactions for DS Unlimited, which includes purchases, sales, returns, and the associated freight charges. Working within a perpetual inventory system, each transaction must be recorded in the accounting records when they occur.
August 6: DS Unlimited purchases 78 handheld game devices for $240 each on account from GameGirl, Inc., with terms 1/10, n/60. This results in a purchase of $18,720 (78 devices x $240 each) and a potential discount if paid within 10 days.
August 7: DS Unlimited pays $440 to Sure Shipping for freight charges, which is added to the cost of inventory.
August 10: DS Unlimited returns 8 defective game devices, which reduces the inventory by the cost of the 8 devices ($1,920).
August 14: DS Unlimited pays the remaining amount after returning defective products and deducting the cash discount offered. Since they are paying within the discount period, they will pay $18,720 - $1,920 (returns) - $168 (1% cash discount on $16,800). The total payment is $16,632.
August 23: DS Unlimited sells 58 game devices for $260 each to customers on account. The sales revenue generated is $15,080 (58 devices x $260 each), and the cost of the goods sold is $14,145.37, which will be recorded separately.