Problem 1. Sales returns and discounts: Kitco Inc. is in the wholesale business that buys linseed oil which is used in the paint manufacturing business to add gloss to the paint. The company does not sell any products to the final customer and does not collect sales tax. The company buys linseed oil from many crushing plants throughout the United States and stores it in a tank farm with a total capacity of 1.5 million gallons at their headquarters. It sells linseed oil to paint manufactures and also to big-box hardware stores. Kitco Inc. offers a cash discount off of their list price of $8.50 per gallon with terms of 2/10 net 30 and with some large orders a quantity discount. Kitco does not have an account for quantity discounts and just records the sale and accounts receivable net of the discount. At the beginning of October, the company had in storage 600,000 gallons of linseed oil in its storage tanks with an average cost of five dollars per gallon. During the month of October, the company had the following transactions: 10/1 Kitco Inc. sold 50,000 gallons to a small wholesale paint distributor with a sales price of $8.50 per gallon with terms of 2/10n30. 10/3. Kitco Inc. sold 475,000 gallons to a paint manufacturing company with a sales price of $8.50 per gallon with terms of 2/10n30. 10/5. Purchased 700,000 gallons of linseed oil with terms of net 1/10n30 for $3,500,000. 10/8. Kitco Inc. had 10,000 gallons of linseed oil returned to it from the sale made on 10/3 for not meeting the specifications. The company issued a credit memo for the amount owed. The linseed oil was scraped and not put back into inventory. 10/11. Purchased 300,000 gallons of linseed oil with terms of net 2/10n30 for $1,500,000. 10/13 Received payment less the discount from the 10/3 sale. 10/15. Return 5,000 gallons of tainted linseed oil to the crushing plant it purchased the linseed oil from on 10/11 for $5.00 a gallon. They received a Credit Memo from the company they purchased linseed oil from for the full amount on the same date. 10/16. Kitco Inc. sold 500,000 gallons to a paint manufacturing company. Kitco Inc. gave the paint company a quantity discount of $.25 (cent) per gallon off the list price per gallon with terms of 2/10n30. 10/29. Sold 20,000 gallons of linseed oil to a big-box chain hardware store at the list price per gallon with terms of 2/10n30. 10/31. Received payment from the 10/1 sale. 10/31. Took a reading of the storage tank farms linseed oil tanks and found that there is 1,000 gallons of linseed oil that had been inadvertently spilled while filling paint cans. Required:Assume Kitco Inc. uses the gross method to record all sales and purchase transactions and the periodic inventory method. Make all of the required journal entries to record the sales and purchase transactions above including sales and purchase returns.
Problem 1. Sales returns and discounts:
Kitco Inc. is in the wholesale business that buys linseed oil which is used in the paint manufacturing business to add gloss to the paint. The company does not sell any products to the final customer and does not collect sales tax. The company buys linseed oil from many crushing plants throughout the United States and stores it in a tank farm with a total capacity of 1.5 million gallons at their headquarters. It sells linseed oil to paint manufactures and also to big-box hardware stores. Kitco Inc. offers a cash discount off of their list price of $8.50 per gallon with terms of 2/10 net 30 and with some large orders a quantity discount. Kitco does not have an account for quantity discounts and just records the sale and
10/1 Kitco Inc. sold 50,000 gallons to a small wholesale paint distributor with a sales price of $8.50 per gallon with terms of 2/10n30.
10/3. Kitco Inc. sold 475,000 gallons to a paint manufacturing company with a sales price of $8.50 per gallon with terms of 2/10n30.
10/5. Purchased 700,000 gallons of linseed oil with terms of net 1/10n30 for $3,500,000.
10/8. Kitco Inc. had 10,000 gallons of linseed oil returned to it from the sale made on 10/3 for not meeting the specifications. The company issued a credit memo for the amount owed. The linseed oil was scraped and not put back into inventory.
10/11. Purchased 300,000 gallons of linseed oil with terms of net 2/10n30 for $1,500,000.
10/13 Received payment less the discount from the 10/3 sale.
10/15. Return 5,000 gallons of tainted linseed oil to the crushing plant it purchased the linseed oil from on 10/11 for $5.00 a gallon. They received a Credit Memo from the company they purchased linseed oil from for the full amount on the same date.
10/16. Kitco Inc. sold 500,000 gallons to a paint manufacturing company. Kitco Inc. gave the paint company a quantity discount of $.25 (cent) per gallon off the list price per gallon with terms of 2/10n30.
10/29. Sold 20,000 gallons of linseed oil to a big-box chain hardware store at the list price per gallon with terms of 2/10n30.
10/31. Received payment from the 10/1 sale.
10/31. Took a reading of the storage tank farms linseed oil tanks and found that there is 1,000 gallons of linseed oil that had been inadvertently spilled while filling paint cans.
- Required:Assume Kitco Inc. uses the gross method to record all sales and purchase transactions and the periodic inventory method. Make all of the required
journal entries to record the sales and purchase transactions above including sales and purchase returns.
the table are given like these I wonder what need to be done for this problem part a , b please
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