Question

The following selected transactions were completed during August between Summit Company and Beartooth Co. Both companies use the net method under a perpetual inventory system.

Aug.	1	Summit Company sold merchandise on account to Beartooth Co., $49,050, terms FOB destination, 2/15, n/eom. The cost of the goods sold was $28,370.
	2	Summit Company paid freight of $1,160 for delivery of merchandise sold to Beartooth Co. on August 1.
	5	Summit Company sold merchandise on account to Beartooth Co., $68,590, terms FOB shipping point, n/eom. The cost of the goods sold was $43,250.
	9	Beartooth Co. paid freight of $2,440 on August 5 purchase from Summit Company.
	15	Summit Company sold merchandise on account to Beartooth Co., $59,500, terms FOB shipping point, n/45. Summit paid freight of $1,755, which was added to the invoice. The cost of the goods sold was $31,720.
	16	Beartooth Co. paid Summit Company for purchase of August 1.
	20	Summit Company paid Beartooth Co. a cash refund of $1,100 for defective merchandise purchased on August 1. Beartooth Co. kept the merchandise.
	31	Beartooth Co. paid Summit Company on account for purchase of August 5.
	31	Summit Company issued Beartooth Co. a credit memo for merchandise with an invoice amount of $3,500 that was returned from the August 15 sale. The cost of the merchandise returned was $2,500.

Journalize the August transactions for (1) Summit Company and (2) Beartooth Co. Refer to the Chart of Accounts of the appropriate company for exact wording of account titles.

CHART OF ACCOUNTS
Summit Company
General Ledger
ASSETS 110 Cash 121 Accounts Receivable-Beartooth Co. 125 Notes Receivable 130 Inventory 131 Estimated Returns Inventory 140 Office Supplies 141 Store Supplies 142 Prepaid Insurance 180 Land 192 Store Equipment 193 Accumulated Depreciation-Store Equipment 194 Office Equipment 195 Accumulated Depreciation-Office Equipment LIABILITIES 210 Accounts Payable 216 Salaries Payable 218 Sales Tax Payable 219 Customer Refunds Payable 221 Notes Payable EQUITY 310 Common Stock 311 Retained Earnings 312 Dividends	REVENUE 410 Sales 610 Interest Revenue EXPENSES 510 Cost of Goods Sold 521 Delivery Expense 522 Advertising Expense 524 Depreciation Expense-Store Equipment 525 Depreciation Expense-Office Equipment 526 Salaries Expense 531 Rent Expense 533 Insurance Expense 534 Store Supplies Expense 535 Office Supplies Expense 536 Credit Card Expense 539 Miscellaneous Expense 710 Interest Expense

CHART OF ACCOUNTS
Beartooth Co.
General Ledger
ASSETS 110 Cash 120 Accounts Receivable 125 Notes Receivable 130 Inventory 131 Estimated Returns Inventory 140 Office Supplies 141 Store Supplies 142 Prepaid Insurance 180 Land 192 Store Equipment 193 Accumulated Depreciation-Store Equipment 194 Office Equipment 195 Accumulated Depreciation-Office Equipment LIABILITIES 211 Accounts Payable-Summit Company 216 Salaries Payable 218 Sales Tax Payable 219 Customer Refunds Payable 221 Notes Payable EQUITY 310 Common Stock 311 Retained Earnings 312 Dividends	REVENUE 410 Sales 610 Interest Revenue EXPENSES 510 Cost of Goods Sold 521 Delivery Expense 522 Advertising Expense 524 Depreciation Expense-Store Equipment 525 Depreciation Expense-Office Equipment 526 Salaries Expense 531 Rent Expense 533 Insurance Expense 534 Store Supplies Expense 535 Office Supplies Expense 536 Credit Card Expense 539 Miscellaneous Expense 710 Interest Expense

Answer 1

1. In the books of Summit Co. :

Date	Account Titles	Debit	Credit
		$	$
Aug 1	Accounts Receivable: Beartooth Co.	48,069
	Sales		48,069
Aug 1	Cost of Goods Sold	28,370
	Inventory		28,370
Aug 2	Delivery Expense	1,160
	Cash		1,160
Aug 5	Accounts Receivable: Beartooth Co.	68,590
	Sales		68,590
Aug 5	Cost of Goods Sold	43,250
	Inventory		43,250
Aug 9	No journal entry required	0	0
Aug 15	Accounts Receivable: Beartooth Co.	61,255
	Sales		59,500
	Cash		1,755
Aug 15	Cost of Goods Sold	31,720
	Inventory		31,720
Aug 16	Cash	48,069
	Accounts Receivable: Beartooth Co.		48,069
Aug 20	Customer Refunds Payable	1,100
	Cash		1,100
Aug 31	Cash	68,590
	Accounts Receivable: Beartooth Co.		68,590
Aug 31	Estimated Returns Inventory	3,500
	Accounts Receivable: Beartooth Co.		3,500
Aug 31	Inventory	2,500
	Cost of Goods Sold		2,500

2. In the books of Beartooth Co. :

Date	Account Titles	Debit	Credit
		$	$
Aug 1	Inventory	48,069
	Accounts Payable: Summit Co.		48,069
Aug 2	No journal entry required	0	0
Aug 5	Inventory	68,590
	Accounts Payable: Summit Co.		68,590
Aug 9	Inventory	2,440
	Cash		2,440
Aug 15	Inventory	61,255
	Accounts Payable: Summit Co.		61,255
Aug 16	Accounts Payable: Summit Co.	48,069
	Cash		48,069
Aug 20	Cash	1,100
	Inventory		1,100
Aug 31	Accounts Payable: Summit Co.	68,590
	Cash		68,590
Aug 31	Accounts Payable: Summit Co.	3,500
	Estimated Returns Inventory		3,500