Question

Sales-Related and Purchase-Related Transactions for Seller and Buyer Using Perpetual Inventory System

The following selected transactions were completed during April between Swan Company and Bird Company:

Apr.2.	Swan Company sold merchandise on account to Bird Company, $17,700, terms FOB shipping point, 2/10, n/30. Swan Company paid freight of $420, which was added to the invoice. The cost of the merchandise sold was $11,200.
8.	Swan Company sold merchandise on account to Bird Company, $27,000, terms FOB destination, 1/15, n/30. The cost of the merchandise sold was $16,200.
8.	Swan Company paid freight of $840 for delivery of merchandise sold to Bird Company on April 8.
12.	Bird Company paid Swan Company for purchase of April 2.
18.	Swan Company paid Bird Company a refund of $2,000 for defective merchandise in the April 2 purchase. Bird Company agreed to keep the merchandise.
23.	Bird Company paid Swan Company for purchase of April 8.
24.	Swan Company sold merchandise on account to Bird Company, $8,900, terms FOB shipping point, n/45. The cost of the merchandise sold was $5,300.
26.	Bird Company paid freight of $370 on April 24 purchase from Swan Company.
30.	Swan Company granted a customer allowance (credit memo) to Bird Company for $11,300 for merchandise that was returned from the August 24 purchase. The cost of the merchandise returned was $6,500.

1. Journalize the April transactions for Bird Company (the buyer).

Date	Account	Debit	Credit
Apr. 2	Merchandise Inventory
	Accounts Payable-Swan Company

Date	Account	Debit	Credit
Apr. 8

Date	Account	Debit	Credit
Apr. 12

Date	Account	Debit	Credit
Apr. 18

Date	Account	Debit	Credit
Apr. 23

Date	Account	Debit	Credit
Apr. 24

Date	Account	Debit	Credit
Apr. 26

Date	Account	Debit	Credit
Apr. 30

2. Journalize the April transactions for Swan Company (the seller).

Date	Account	Debit	Credit
Apr. 2-sale

Date	Account	Debit	Credit
Apr. 2-freight

Date	Account	Debit	Credit
Apr. 2-cost

Date	Account	Debit	Credit
Apr. 8-sale

Date	Account	Debit	Credit
Apr. 8-cost

Date	Account	Debit	Credit
Apr. 8-freight

Date	Account	Debit	Credit
Apr. 12

Date	Account	Debit	Credit
Apr. 18

Date	Account	Debit	Credit
Apr. 23

Date	Account	Debit	Credit
Apr. 24-sale

Date	Account	Debit	Credit
Apr. 24-cost

Date	Account	Debit	Credit
Apr. 30

Date	Account	Debit	Credit
Apr. 30

Answer 1

1.In the books of Bird Company (the buyer):

Date	Account title and Explanation	Debit	Credit
Apr.2	Inventory	$17,700
	Accounts payable		$17,700
	[To record purchase of merchandise on account]
2	Inventory	$420
	Cash		$420
	[To record payment of freight]
8	Inventory	$27,000
	Accounts payable		$27,000
	[To record purchase of merchandise on account]
12	Accounts payable	$17,700
	Inventory [17,700 x 2%]		$354
	Cash		$17,346
	[To record payment for accounts payable]
18	Cash	$2,000
	Inventory		$2,000
	[To record refund from supplier]
23	Accounts payable	$27,000
	Inventory [27,000 x 1%]		$270
	Cash		$26,730
	[To record payment for accounts payable]
24	Inventory	$8,900
	Accounts payable		$8,900
	[To record purchase of merchandise on account]
26	Inventory	$370
	Cash		$370
	[To record payment of freight]
30	Accounts payable	$11,300
	Inventory		$11,300
	[To record purchase returns]

2. In the books of Swan Company (the seller):

Date	Account title and Explanation	Debit	Credit
Apr.2	Accounts receivable	$17,700
	Sales revenue		$17,700
	[To record sales on account]
	Cost of goods sold	$11,200
	Inventory		$11,200
	[To record cost of goods sold]
8	Accounts receivable	$27,000
	Sales revenue		$27,000
	[To record sales on account]
	Cost of goods sold	$16,200
	Inventory		$16,200
	[To record cost of goods sold]
8	Freight-out	$840
	Cash		$840
	[To record payment of freight]
12	Cash	$17,346
	Sales discount [17,700 x 2%]	$354
	Accounts receivable		$17,700
	[To record collections from customers]
18	Sales returns and allowance	$2,000
	Cash		$2,000
	[To record cash paid for defectives]
23	Cash	$26,730
	Sales discount [27,000 x 1%]	$270
	Accounts receivable		$27,000
	[To record collections form customers]
24	Accounts receivable	$8,900
	Sales revenue		$8,900
	[To record sales on account]
	Cost of goods sold	$5,300
	Inventory		$5,300
	[To record cost of goods sold]
30	Sales returns and allowance	$11,300
	Accounts receivable		$11,300
	[To record sales returns]
	Inventory	$6,500
	Cost of goods sold		$6,500
	[To record cost of sales returns]