Answer:
Journal entries to record the transactions of DS Unlimited:
August 6:
Debit Purchases Account with $25,520
Credit Accounts Payable (GameGirl Inc.) with $25,520
Being purchase of 88 handheld game devices on account for $290 each.
August 7:
Debit Freight Charges with $490
Credit Cash Account with $490
Being payment of freight charges to Sure Shipping for August 6 purchase.
August 10:
Debit Accounts Payable (GameGirl) with $2,320
Credit Purchases Returns with $2,320
Being return of 8 defective game devices
August 14:
Debit Accounts Payable (GameGirl) with $23,200
Credit Cash Account with $22,968
Credit Purchases Discount with $232
Being payment on account and 1% cash discount received.
August 23:
Debit Accounts Receivable with $21,080
Credit Sales Account with $21,080
Being sale of 68 game devices at $310 each.
August 23:
No journal is required to record the cost ($19,939.30) of the 68 game devices sold.
Step-by-step explanation:
A periodic inventory system calculates the cost of inventory at the end of a period, say, a month. Therefore, physical count of inventory is undertaken periodically in order to value the inventory for financial reporting purpose. This means that the cost of goods sold is valued periodically unlike a perpetual inventory system.
A periodic inventory system is unlike a perpetual inventory system that tracks inventory individually and is able to calculate the cost of goods sold after each transaction.
The Purchases Discount is calculated as 1% of the balance after returning 8 game devices to GameGirl Inc. And this discount is received because payment was made within the stipulated 10 days.