The following transactions for Goodmonth Tire Company occurred during the month of March 2003:
a. Purchased 500 automobile tires on account at a cost of $40 each for a total of $20,000.
b. Purchased 300 truck tires on account at a cost of $80 each for a total of $24,000.
c. Paid cash of $1,300 for separate shipping costs on the automobile tires purchased in (a). The supplier of the truck tires included the shipping costs in the $80 price.
d. Returned 12 automobile tires to the supplier because they were defective.
e. Paid for the automobile tires. A 1% discount was given on the amount owed. (HINT: Remember that some of the automobile tires were returned.) Payment terms were 1/20, n/30.
f. Paid for half the truck tires, receiving a discount of 2%. Terms were 2/10, n/30.
g. Paid the remaining balance owed on the truck tires. No discount was received because payment was made after the discount period.
h. Sold on account 400 automobile tires at a price of $90 each for a total of $36,000.
i. Sold on account 200 truck tires at a price of $150 each for a total of $30,000.
j. Accepted return of 7 automobile tires from dissatisfied customers.
1. Prepare journal entries to account for the above transactions assuming a periodic inventory system.
2. Prepare journal entries to account for the above transactions assuming a perpetual inventory system.
3. Assume that inventory levels at the beginning of March (before these transactions) were 100 automobile tires that cost $40 each and 70 truck tires that cost $80 each. Also, assume that a physical count of inventory at the end of March revealed that 184 automobile tires and 164 truck tires were on hand. Given these inventory amounts, prepare the closing entries to account for inventory and related accounts as of the end of March.