accounting 218

Carmen’s Household Appliances

carries an inventory of clocks and other household items. The business began the second quarter of 2013 with 15 clocks (Lomani Quartz Brand) at a total cost of $36,000. The following transactions, relating to the clocks (Lomani Quartz Brand), took place during the quarter: April 5

Purchased 30 clocks at a cost of $2,490 each.

April 30

The sales for April were 18 clocks which yielded

total sales revenue of $81,000.

May 1

A new batch of 15 clocks was purchased

on account at a cost of $2,250 each. These units attracted an additional shipping cost of $350 on each clock. It is customary for Carmen’s Household Appliances to include freight-in as part of the cost of the units in their inventory record.

May 16

Upon inspection, five (5) of the clocks purchased on May 1 were found to be badly soiled and were returned to the supplier.

May 30

During the month 20 clocks were sold at a price of $5,000 each.

June 2

Ariana Stone, a customer to whom 5 clocks were sold at the

close of business on May 30th, returned 2 of the clocks, as she had purchased an incorrect quantity.

June 12

To meet the increased demand for the commodity, a further 14 clocks were purchased at a cost of $3,000 each, however a

trade discount of 5% was received on each clock.

June 30

22 clocks were sold during June at a unit selling price of $5,300.

June 30

A physical count of inventory was carried out at the close of business, which revealed that there were only 8 clocks on hand.