Question - JP Company (JP) is engaged in the purchases and sales of dashboard cameras. The company adopts perpetual inventory system and records purchases of goods at gross invoice price. The company closes its account annually on 31 December. The following information was extracted from the unadjusted trial balance dated on 30 November 2016:
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Debit $
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Credit $
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Sales
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4.250.000
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Sales returns and allowances
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120.000
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Cost of goods sold
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2.800.000
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Sales discounts
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16.000
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Inventory
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740.000
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Purchase discounts taken
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32,000
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The following transactions occurred in December 2016:
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1 Dec
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JP purchased $180.000 inventory from Rachel Company with credit term of 1/15 n/30.
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3 Dec
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JP sold goods to Chris Company at S80.000. offering credit term of 1/10, n/40, Gross profit rate is 30%.
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7 Dec
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JP sold goods to Martina Company at S150.000. offering credit term of 3115. n/30. Gross profit rate is 40%.
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11 Dec
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JP returned $20.000 inventory to Rachel Company due to incorrect model.
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12 Dec
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Martina returned S30.000 cameras to JP due to incorrect brand.
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13 Dec
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JP paid to Rachel Company in full regarding to purchase in December.
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18 Dec
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JP received check from Martina Company for full settlement regarding to sales in December.
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31 Dec
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JP conducted physical count of inventory and revealed 8748.000 inventory was on hand.
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Required:
a) Prepare journal entries for JP Company for the above transactions in December 2016.
b) Prepare partial Income Statement of JP Company for the year ended 31 December 2016 to show gross profit of the year.