Question

Sales and purchase-related transactions for seller and buyer using perpetual inventory system Journal-Summit Company Journal-Beartooth Co. Instruction Chart of Account Summit Company Chart of Accounts-Bertooth Co. company and Boario Com companies use there method under a perpetua inventory system The towing secrecions were completed during August be A : Sur Company said werchandise on account to Benton Co. 345.000, 00 de 2115, veom. The the good was 120.000 2 Sura Companyart of $1,150 vey of merchandise sold to Betooth Co. on August 1 $ Corpory od marchandise Beartooth Co., 60.000, F e ng neon. The cost of the goods sold was 140,000 B on Copoldo 12.00 on Aug. them on Sun Company 15 Sur Company old marthands c ount to Bertoo Co.156.700 FOS Noong point 45. Sura di o 1,875, which was added to the invoice. The cost of the cold was $35.000 Detooth Capald o nary for purchase of August 1 20 Sum Corpade a s ound of $1.000 for defective merchandise purchased on August 1. Co kept the merchandise 31 Beton Co. pald o nary on court to purchase of August 31 Sur Company Beach Co. a credit for merchandise with a ccount of 11.00h do the Aqust 15 . The cost of the merchandise umed was $2.500 e Auto S company and Deroon Canton Chart Accounts of the po

Answer 1

Perpetual Inventory Method:

Journal Entries:

1) In the books of Beartooth Co. (buyer)
Date	General Journal	Debit	Credit
Aug. 1	Merchandise Inventory	$48,000
	Accounts Payable - Summit Company		$48,000
	(To record the purchase of merchandise inventory on account)
Aug. 5	Merchandise Inventory	$68,000
	Accounts Payable - Summit Company		$68,000
	(To record the purchase of merchandise on account)
Aug. 9	Merchandise Inventory	$2,300
	Cash		$2,300
	(To record the payment of freight charges)
Aug. 15	Merchandise Inventory ($58,700 + $1,875)	$60,575
	Accounts Payable - Summit Company		$60,575
	(To record the purchase of merchandise on account)
Aug. 16	Accounts Payable - Summit Company	$48,000
	Cash		$48,000
	(To record the payment made for credit purchases)
Aug. 20	Cash	$1,000
	Merchandise Inventory		$1,000
	(To record the cash collected from the merchandise that was returned)
Aug. 31	Accounts Payable - Summit Company	$68,000
	Cash		$68,000
	(To record the payment made for credit purchases)
Aug. 31	Accounts Payable - Summit Company	$4,000
	Merchandise Inventory		$4,000
	(To record the merchandise returned due to defects)
1) In the books of Summit Co. (seller)
Date	General Journal	Debit	Credit
Aug. 1	Accounts Receivable - Beartooth Co.	$48,000
	Sales Revenue		$48,000
	(To record the sales made on account)
Aug. 1	Cost of Goods Sold	$26,800
	Merchandise Inventory		$26,800
	(To record the cost of goods sold)
Aug. 2	Freight Expenses	$1,150
	Cash		$1,150
	(To record the payment of freight charges)
Aug. 5	Accounts Receivable - Beartooth Co.	$68,000
	Sales Revenue		$68,000
	(To record the sales made on account)
Aug. 5	Cost of Goods Sold	$40,000
	Merchandise Inventory		$40,000
	(To record the cost of goods sold)
Aug. 15	Accounts Receivable - Beartooth Co.	$58,700
	Sales Revenue		$58,700
	(To record the sales made on account)
Aug. 15	Cost of Goods Sold	$36,000
	Merchandise Inventory		$36,000
	(To record the cost of goods sold)
Aug. 15	Freight Expenses	$1,875
	Cash		$1,875
	(To record the payment of freight charges)
Aug. 16	Cash	$48,000
	Accounts Receivable - Beartooth Co.		$48,000
	(To record the collection of amount from credit sales made)
Aug. 20	Sales Returns and Allowances	$1,000
	Cash		$1,000
	(To record the payment for defective merchandise sold)
Aug. 31	Cash	$68,000
	Accounts Receivable - Beartooth Co.		$68,000
	(To record the collection of amount from credit sales made)
Aug. 31	Sales Returns and Allowances	$4,000
	Accounts Receivable - Beartooth Co.		$4,000
	(To record the sales returns for the merchandise has defects)
Aug. 31	Merchandise Inventory	$2,500
	Cost of Goods Sold		$2,500
	(To record the cost of goods that was returned)