Question

E4-19A (similar to) Question Help Joumalize the following transactions for Beautiful Decor, Inc., that occurred during the month of November assuming the "net" method is used. Beautiful Decor's cost of Inventory is 45 percent of the sales price. (Record debits first, then credits. Exclude explanations from any journal entries.) (Click the icon to view the transactions.) Nov 3: Sold $1.600 of merchandise on account, torms 215, 45, FOB shipping point. Beautiful Decor, Inc., prepaid $45 of shipping costs and added the amount to the customer's invoice Begin by recording the sale portion of the entry. (Do not yet record the cost related to the sale. We will do this in the next journal entry. Prepare a compound entry accounting for the sales revenue as well as the cash paid for shipping.) Journal Entry Date Accounts Debit Credit NON Choose from any list or enter any number in the input fields and then click Check Answer 4 parts + remaining Clear All Check Answer

Answer 1

Solution

Beautiful Décor Inc

Journal entries (net method):

Date	Account Titles and Explanation	Ref.No.	Debit	Credit
Nov-03	Accounts Receivable		$1,613
	Sales			$1,613
	(To record sales at net method including prepaid shipping costs)
Nov-03	Cost of Goods Sold		$720
	Merchandise Inventory			$720
	(To record cost of goods sold; 1,600 x 45% = $720)
Nov-07	Sales		$100
	Accounts Receivable			$100
	(To record sales return)
Nov-07	Merchandise Inventory		$45
	Cost of Goods Sold			$45
	(To record cost of goods returned; $100 x 45% = $45)
Nov-16	Cash		$1,515
	Accounts Receivable			$1,515
	(To record receipt of full payment)

Computations:

Nov 3 – net sales = 1,600 – 2% x 1,600 = 1,568

Add: prepaid shipping costs = $45

Net sales (after cash discount and prepaid shipping costs) = $1,613

Nov 16 – cash received in full

Accounts receivable = 1,600 – 100 = 1,500

Less: cash discount = 1500 x 2% = $30

= $1,470

Add: prepaid shipping costs = $45

Total cash received = $1,515