Question

John's Specialty Store uses a periodic Inventory system. The following are some Inventory transactions for the month of May: 2.5 points L 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 (). 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. eBook Required: Prepare the necessary joumal entries to record these transactions. (If no entry is required for a transaction/event, select "No journal entry required in the first account field.) Hint View transaction list Print Reference Journal entry worksheet 1 2 3 4 5 Record the merchandise purchased on account for $6,300. Note: Enter debits before credits Transaction General Journal ebit 3.300 Credit Accounts payable Record entry View general Journal Clear entry

Answer 1

1. Dr. Inventory A/c $6,300

Cr. Accounts Payable $6,300

Explanation: Inventory is an asset, when inventory(asset) increases, debit $6,300 in journal entry. Accounts payable is a liability, when Accounts payable (liability) increases, credit $6,300 in journal entry. inventory purchased on account means it is purchased on credit.

2. Dr. Accounts Payable $1,250

Cr. Inventory $1,250

Explanation: When inventory is returned, inventory is reduced (asset decreased).when asset decreases, credit $1,250 in the journal entry. when inventory is returned, Accounts payable is also reduced (liability decreased). when liability decreases, debit $1,250 in the journal entry.

3. Dr. Cash A/c $6,500

Cr. Profit & Loss A/c   $3,050

Cr. Inventory A/c   $3,450

Explanation: when merchandise (inventory) is sold for cash, Cash is increased, when cash (asset) increases debit $6,500 in journal entry. when sale is made, inventory is reduced. the cost of inventory amounting $3,450 is credited in the journal entry. The difference between sales price ($6,500) and cost of inventory ($3,450) is the profit earned ($3,050). when profit is earned (increased) credit $3,050 in journal entry named profit & loss A/c