Question

John’s Specialty Store uses a perpetual inventory system. The following are some inventory transactions for the month of May 2018:

1. John’s purchased merchandise on account for $6,300. Freight charges of $950 were paid in cash.
2. John’s returned some of the merchandise purchased in (1). The cost of the merchandise was $1,250 and John’s account was credited by the supplier.
3. Merchandise costing $3,450 was sold for $6,500 in cash.

Required:
Prepare the necessary journal entries to record these transactions. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Answer 1

Solution:

Journal Entries - John's Specialty Store
Event	Particulars	Debit	Credit
1	Inventory Dr	$7,250.00
	To Accounts Payable		$6,300.00
	To Cash		$950.00
	(To record purchase of merchandise)
2	Accounts payable Dr	$1,250.00
	To Inventory		$1,250.00
	(To record merchandise returned)
3	Cash Dr	$6,500.00
	To Sales revenue		$6,500.00
	(To record sales of merchandise for cash)
4	Cost of goods sold Dr	$3,450.00
	To Inventory		$3,450.00
	(To record cost of goods sold)