Question

1. On November 1 Chilton Systems purchases merchandise for $1,500 on credit with terms of 2/5 n/30, FOB shipping point invoice dated November 1 2. On November 5, Chilton Systems pays cash for the November 1 purchase 3. On November 7, Chilton Systems discovers and returns $200 of defective merchandise purchased on November 1 for a cash refund 4. On November 10. Chilton Systems pays $90 cash for transportation costs with the November 1 purchase. 5. On November 13, Chilton Systems sells merchandise for $1600 on credit. The cost of the merchandise is $800. 6. On November 16, the customer returns merchandise from the November 13 transaction. The returned items sell for $300 and cost $130. The merchandise is returned to inventory Prepare journal entries to record each of the merchandising transactions assuming that the periodic inventory system is used if no entry is required for a particular transaction, select "No journal entry required in the first account field.)

Answer 1

Solution:

Journal Entries - Chilton Systems
Date	Particulars	Debit	Credit
1-Nov	Purchases Dr	$1,500.00
	To Accounts Payable		$1,500.00
	(To record purchases)
5-Nov	Accounts payable Dr	$1,500.00
	To Cash		$1,470.00
	To Purchase discount		$30.00
	(To record payments to supplier)
7-Nov	Cash Dr	$196.00
	Purchase discount Dr	$4.00
	To Purchase returns and allowances		$200.00
	(To record merchandise returns)
10-Nov	Freight-In Dr	$90.00
	To Cash		$90.00
	(To record freight payment)
13-Nov	Accounts receivables Dr	$1,600.00
	To Sales revenue		$1,600.00
	(To record sales on account)
16-Nov	Sales returns and allowances Dr	$300.00
	To Accounts receivables		$300.00
	(To record sales returns)