Question

The following selected transactions were completed during August between Summit Co. and Beartooth Co.: Aug. 1...

The following selected transactions were completed during August between Summit Co. and Beartooth Co.:

Aug. 1 Summit Co. sold merchandise on account to Beartooth Co., $47,600, terms FOB destination, 2/15, n/eom. The cost of the merchandise sold was $27,760.
2 Summit Co. paid freight of $1,265 for delivery of merchandise sold to Beartooth Co. on August 1.
5 Summit Co. sold merchandise on account to Beartooth Co., $63,980, terms FOB shipping point, n/eom. The cost of the merchandise sold was $43,180.
9 Beartooth Co. paid freight of $2,450 on August 5 purchase from Summit Company.
15 Summit Co. sold merchandise on account to Beartooth Co., $60,300, terms FOB shipping point, 1/10, n/30. Summit Company paid freight of $1,725, which was added to the invoice. The cost of the merchandise sold was $34,360.
16 Beartooth Co. paid Summit Company for purchase of August 1.
20 Summit Company paid Beartooth Co. a refund of $1,800 for defective merchandise in the August 1 purchase. Beartooth Co. agreed to keep the merchandise.
25 Beartooth Co. paid Summit Company on account for purchase of August 15.
31 Summit Company granted a customer allowance (credit memo) to Beartooth Co. for $6,000 (invoiced amount) for merchandise that was returned from the August 1 purchase. The cost of the merchandise returned was $3,200.

Required:

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

JOURNAL

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

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

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Answer #1

Summit Co.

Date Account title and Explanation Debit Credit
Aug.1 Accounts receivable-Beartooth Co. $47,600
Sales revenue $47,600
[To record credit sales]
Cost of goods sold $27,760
Inventory $27,760
[To record cost of goods sold]
Aug.2 Delivery expense $1,265
Cash $1,265
[To record payment of freight]
Aug.5 Accounts receivable-Beartooth Co. $63,980
Sales revenue $63,980
[To record credit sales]
Cost of goods sold $43,180
Inventory $43,180
[To record cost of goods sold]
Aug.9 No entry
Aug.15 Accounts receivable-Beartooth Co. [60300+1725 freight] $62,025
Sales revenue $60,300
Cash $1,725
[To record credit sales and payment of freight on behalf of Beartooth]]
Cost of goods sold $34,360
Inventory $34,360
[To record cost of goods sold]
Aug.16 Cash $46,648
Sales discount [47600 x 2%] $952
Accounts receivable-Beartooth Co. $47,600
[To record collections from customers]
Aug.20 Sales returns and allowance $1,800
Cash $1,800
[To record refund given for defective merchandise]
Aug.25 Cash $61,422
Sales discount [60300 x 1%] $603
Accounts receivable-Beartooth Co. $62,025
[To record collections from customers]
Aug.31 Sales returns and allowance $6,000
Accounts receivable-Beartooth Co. $6,000
[To record sales returns]

Beartooth Co.

Date Account title and Explanation Debit Credit
Aug.1 Inventory $47,600
Accounts payable-Summit Co. $47,600
[To record purchase of inventory on account]
Aug.2 No Entry
Aug.5 Inventory $63,980
Accounts payable-Summit Co. $63,980
[To record purchase of inventory on account]
Aug.9 Inventory $2,450
Cash $2,450
[To record payment of freight]
Aug.15 Inventory [60300+1725] $62,025
Accounts payable-Summit Co. $62,025
[To record purchase of inventory on account]
Aug.16 Accounts payable-Summit Co. $47,600
Inventory [47600 x 2%] $952
Cash $46,648
[To record cash paid for accounts payable]
Aug.20 Cash $1,800
Inventory $1,800
[To record refund from seller for defective merchandise]
Aug.25 Accounts payable-Summit Co. [60300+1725] $62,025
Inventory [60,300 x 1%] $603
Cash $61,422
[To record cash paid for accounts payable]
Aug.31 Accounts payable-Summit Co. $6,000
Inventory $6,000
[To record purchase returns]
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