Question

Prepare journal entries to record the following merchandising transactions of Wright's, which uses the perpetual inventory system and the gross method. (Hint: It will help to identify each receivable and payable; for example, record the purchase on July 1 in Accounts Payable-Martin.) Jul. 1 Purchased merchandise from Martin Company for $9,600 under credit terms of 1/15, n/30, FOB shipping point, invoice dated July 1. Jul. 2 Sold merchandise to Clark Co. for $2,700 under credit terms of 2/10, n/60, FOB shipping point, invoice dated July 2. The merchandise had cost $1,620. Jul. 3 Paid $845 cash for freight charges on the purchase of July 1. Jul. 8 Sold merchandise that had cost $3,200 for $5,300 cash. Jul. 9 Purchased merchandise from Mitchell Co. for $4,000 under credit terms of 2/15, n/60, FOB destination, invoice dated July 9. Jul. 11 Returned $800 of merchandise purchased on July 9 from Mitchell Co. and debited its account payable for that amount. Jul. 12 Received the balance due from Clark Co. for the invoice dated July 2, net of the discount. Jul. 16 Paid the balance due to Martin Company within the discount period. Jul. 19 Sold merchandise that cost $3,400 to Gonzalez Co. for $4,800 under credit terms of 2/15, n/60, FOB shipping point, invoice dated July 19. Jul. 21 Gave a price reduction (allowance) of $1,000 to Gonzalez Co. for merchandise sold on July 19 and credited Gonzalez's accounts receivable for that amount. Jul. 24 Paid Mitchell Co, the balance due, net of discount. Jul. 30 Received the balance due from Gonzalez Co. for the invoice dated July 19, net of discount. Jul. 31 Sold merchandise that cost $6,400 to Clark Co. for $10,600 under credit terms of 2/10, n/60, FOB shipping point, invoice dated July 31.

Answer 1

	JOURNAL ENTRY
	DATE	ACCOUNT TITLE	DEBIT	CREDIT
	July,1	Inventory	$9,600
		Accounts Payable		$9,600
	July,2	Accounts Receivable	$2,700
		Sales Revenue		$2,700
		Cost of goods sold	$1,620
		Inventory		$1,620
	July,3	Freight Inward	$845
		Cash		$845
	July,8	Cash	$5,300
		Sales Revenue		$5,300
		Cost of goods sold	$3,200
		Inventory		$3,200
	July,9	Inventory	$4,000
		Accounts Payable		$4,000
	July,11	Accounts Payable	$800
		Purchase Returns		$800
	July,12	Cash	$2,646		(2700-2646)
		Sales discount	$54		(2700*2%)
		Accounts Receivable		$2,700
	July,16	Accounts Payable	$9,600
		Purchase discount		$96	(9600*1%)
		Cash		$9,504	(9600-96)
	July,19	Accounts Receivable	$4,800
		Sales Revenue		$4,800
		Cost of goods sold	$3,400
		Inventory		$3,400
	July,21	Sales allowance	$1,000
		Accounts Receivable		$1,000
	July,24	Accounts Payable	$4,000
		Purchase discount		$80	(4000*2%)
		Cash		$3,920	(4000-80)
	July,30	Cash	$4,704		(4800-96)
		Sales Discount	$96		(4800*2%)
		Accounts Receivablre		$4,800
	July,31	Accounts Receivable	$10,600
		Sales Revenue		$10,600
		Cost of goods sold	$6,400
		Inventory		$6,400