Reference no: EM132948998

Presented below are selected transactions for Pina Colada Company during September and October of the current year. Pina Colada uses a periodic inventory system.

Sept.

1 Purchased merchandise on account from Hillary Company at a cost of $50,000, FOB destination, terms 1/15, n/30.
2 The correct company paid $2,000 of freight charges to Trucking Company on the September 1 merchandise purchase.
5 Returned for credit $2,200 of damaged goods purchased from Hillary Company on September 1.
15 Sold the remaining merchandise purchased from Hillary Company to Irvine Company for $119,500, terms 2/10, n/30, FOB destination.
16 The correct company paid $2,300 of freight charges on the September 15 sale of merchandise.
17 Issued Irvine Company a credit of $5,500 for returned goods. These goods had cost Pina Colada Company $3,000 and were returned to inventory.
25 Received the balance owing from Irvine Company for the September 15 sale.
30 Paid Hillary Company the balance owing for the September 1 purchase.

Oct.

1 Purchased merchandise on account from Kimmel Company at a cost of $58,000, terms 2/10, n/30, FOB shipping point.
2 The correct company paid freight costs of $1,100 on the October 1 purchase.
3 Obtained a purchase allowance of $2,300 from Kimmel Company to compensate for some minor damage to goods purchased on October 1.
10 Paid Kimmel Company the amount owing on the October 1 purchase.
11 Sold all of the merchandise purchased from Kimmel Company to Kieso Company for $139,500, terms 2/10, n/30, FOB shipping point.
12 The correct company paid $800 freight costs on the October 11 sale.
17 Issued Kieso Company a sales allowance of $1,500 because some of the goods did not meet Kieso's exact specifications.
31 Received a cheque from Kieso Company for the balance owing on the October 11 sale.

Problem 1: Record the September and October transactions for Pina Colada Company. Assume that Norlan uses the earnings approach.