On June 1, Taylor Merchandising Purchases Inventory for $150,000

question 40

Essay

On June 1, Taylor Merchandising purchases inventory for $150,000. The company has sales of $300,000 during the month of June and estimates that 7% of its product sales will require warranty repairs. All purchases and sales are subject to 13% HST. Journalize the following:
Inventory purchase (100% on account).
Sales for June (60% on account, 40% in cash).
Estimated dollars for warranties.
Paid cash claims of $11,300 out of cash on July 31.

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Definitions:

Incremental Overhead

The additional overhead costs incurred as a result of a specific business activity or decision.

Salary Expense

The total amount paid to employees for services rendered during a specific period, usually shown in the income statement.

Opportunity Cost

The value of the best alternative forgone when a choice is made between different options.

Tax Rate

The percentage at which an individual or corporation is taxed by the government on income or profits.