Purchased 240 units for $220 each on credit.

Here are the journal entries for Fitzroy Ltd using the perpetual inventory system. GST does not apply.

1. Purchased 240 units for $220 each on credit.

• Cost: 240 \text{ units} \times \220/unit = $52,800$

$$\begin{array}{|l|l|r|r|} \hline \textbf{Date} & \textbf{Account} & \textbf{Debit (\$)} & \textbf{Credit (\$)} \\ \hline & \text{Inventory} & 52,800 & \\ & \quad \text{Accounts Payable} & & 52,800 \\ & \quad \text{(To record purchase of inventory on credit)} & & \\ \hline \end{array}$$

2. Returned 12 units to the supplier.

• Cost: 12 \text{ units} \times \220/unit = $2,640$

$$\begin{array}{|l|l|r|r|} \hline \textbf{Date} & \textbf{Account} & \textbf{Debit (\$)} & \textbf{Credit (\$)} \\ \hline & \text{Accounts Payable} & 2,640 & \\ & \quad \text{Inventory} & & 2,640 \\ & \quad \text{(To record return of inventory to supplier)} & & \\ \hline \end{array}$$

3. Sold 48 units for $380 each on credit.

• Sales Revenue: 48 \text{ units} \times \380/unit = $18,240$
• Cost of Goods Sold: 48 \text{ units} \times \220/unit = $10,560$

$$\begin{array}{|l|l|r|r|} \hline \textbf{Date} & \textbf{Account} & \textbf{Debit (\$)} & \textbf{Credit (\$)} \\ \hline & \text{Accounts Receivable} & 18,240 & \\ & \quad \text{Sales Revenue} & & 18,240 \\ & \quad \text{(To record sales on credit)} & & \\ \hline & \text{Cost of Goods Sold} & 10,560 & \\ & \quad \text{Inventory} & & 10,560 \\ & \quad \text{(To record cost of goods sold)} & & \\ \hline \end{array}$$

4. Purchased office supplies for $360 cash.

$$\begin{array}{|l|l|r|r|} \hline \textbf{Date} & \textbf{Account} & \textbf{Debit (\$)} & \textbf{Credit (\$)} \\ \hline & \text{Office Supplies} & 360 & \\ & \quad \text{Cash} & & 360 \\ & \quad \text{(To record purchase of office supplies for cash)} & & \\ \hline \end{array}$$

5. Customer returned 6 of the units sold in (3).

• Sales Return: 6 \text{ units} \times \380/unit = $2,280$
• Cost of Goods Returned: 6 \text{ units} \times \220/unit = $1,320$

$$\begin{array}{|l|l|r|r|} \hline \textbf{Date} & \textbf{Account} & \textbf{Debit (\$)} & \textbf{Credit (\$)} \\ \hline & \text{Sales Returns and Allowances} & 2,280 & \\ & \quad \text{Accounts Receivable} & & 2,280 \\ & \quad \text{(To record customer return)} & & \\ \hline & \text{Inventory} & 1,320 & \\ & \quad \text{Cost of Goods Sold} & & 1,320 \\ & \quad \text{(To record return of inventory to stock)} & & \\ \hline \end{array}$$

6. Sold 42 units for $390 each on credit.

• Sales Revenue: 42 \text{ units} \times \390/unit = $16,380$
• Cost of Goods Sold: 42 \text{ units} \times \220/unit = $9,240$

$$\begin{array}{|l|l|r|r|} \hline \textbf{Date} & \textbf{Account} & \textbf{Debit (\$)} & \textbf{Credit (\$)} \\ \hline & \text{Accounts Receivable} & 16,380 & \\ & \quad \text{Sales Revenue} & & 16,380 \\ & \quad \text{(To record sales on credit)} & & \\ \hline & \text{Cost of Goods Sold} & 9,240 & \\ & \quad \text{Inventory} & & 9,240 \\ & \quad \text{(To record cost of goods sold)} & & \\ \hline \end{array}$$

7. The physical inventory count at the end of the period consisted of 140 units of inventory.

• Perpetual Inventory Balance Calculation:
  • Initial: 0 units
  • Purchased (1): +240 units
  • Returned to supplier (2): -12 units
  • Sold (3): -48 units
  • Customer returned (5): +6 units
  • Sold (6): -42 units
  • Perpetual Balance = $240 - 12 - 48 + 6 - 42 = 144$ units
• Inventory Shortage: $144 \text{ units (perpetual)} - 140 \text{ units (physical)} = 4 \text{ units}$
• Cost of Shortage: 4 \text{ units} \times \220/unit = $880$

$$\begin{array}{|l|l|r|r|} \hline \textbf{Date} & \textbf{Account} & \textbf{Debit (\$)} & \textbf{Credit (\$)} \\ \hline & \text{Cost of Goods Sold} & 880 & \\ & \quad \text{Inventory} & & 880 \\ & \quad \text{(To record inventory shortage based on physical count)} & & \\ \hline \end{array}$$