Phantom Book Warehouse Ltd. distributes hardcover books to retail stores. At the end of May, Phantom’s inventory consists of 155 books purchased at $17 each. Phantom uses a perpetual inventory system.
During the month of June, the following merchandise transactions occurred:
June 1 Purchased 166 books on account for $17 each from Reader’s World Publishers, terms n/30.
3 Sold 126 books on account to The Book Nook for $26 each, with a cost of $17, terms 2/10, n/30.
5 Received a $187 credit for 11 books returned to Reader’s World Publishers.
8 Sold 129 books on account to Read-A-Lot Bookstore for $26 each, with a cost of $17, terms 2/10, n/30.
9 Issued a $208 credit memorandum to Read-A-Lot Bookstore for the return of 8 damaged books. The books were determined to be no longer saleable and were destroyed.
11 Purchased 127 books on account for $16 each from Read More Publishers, terms n/30.
12 Received payment in full from The Book Nook.
17 Received payment in full from Read-A-Lot Bookstore.
22 Sold 120 books on account to Reader’s Bookstore for $24 each, with an average cost of $16.30, terms 2/10, n/30.
25 Granted Reader’s Bookstore a $330 credit for 19 returned books. These books were restored to inventory.
29 Paid Reader’s World Publishers in full.
(a) Is the Phantom Book Warehouse a retailer or a wholesaler?
(b) Record the June transactions for Phantom.
(c) Create a T account for the Merchandise Inventory account. Post the opening balance and June transactions, and calculate the June 30 balance in the account.
(d) Determine the number of books Phantom has on hand on June 30. What is the average cost of these books on June 30?