Question

Problem 2. Merchandising General Journal Entries (30 points) epare general journal entries to record the following merchandising transactions of Margin Company, which applies the perpetual inventory system and the gross method of recording invoices. Margin Company offers all of its credit customers credit terms of 2/10, n/30. May 2] Purchased May 1 P urchased merchandise from Craft Company for $7,800 under credit terms of 1/10, n/30, FOB shipping point, invoice dated May 1. Purchased merchandise from Bow Company for $10,600 under credit terms 2/05, n 20, FOB destination. May 32 Sold merchandise to Sting Company for $5,600, FOB shipping point, invoice dated May 4. The merchandise had cost $3,000. May 4 Paid $300 cash for the freight charges on the May I purchase of merchandise. May 5 May 5 part of the merch the balance due wat $3,300, FOB May 6 May 8 May 11 May 13 May 14 Received an $800 credit memorandum from Craft Company for the return of part of the merchandise purchased on May 1. Paid Bow Company the balance due within the discount period. Sold merchandise to Skeet Company for $3,300, FOB shipping point, invoice dated May 8. The merchandise had a cost of $1,500. Paid Craft Company the balance due within the discount period. Received the balance due from Sting Company within the discount period. Issued a credit $300 credit memorandum to Skeet Company for an allowance on defective merchandise. Received the balance due from Skeet Company within the discount period. May 17 Date Account Titles and Explanation P.R. Debit Credit

Answer 1

PR Debit 7800 Date Account titles and explanation May-01 Inventory Accounts Payable (Purchased merchandise from craft company) 7800 10600 May-01 Inventory Accounts Payable (Purchased merchandise from Bow company) 10600 5600 5600 May-03 Accounts receivable Sales (Sold merchandise to Sting company) Cost of goods sold Inventory (cost of goods sold recognized) 3000 3000 300 May-04 Freight charges Cash (Freight charges paid) 300 800 May-05 Accounts payable Inventory (Merchandise returned to Craft company) 800 10600 May-06 Accounts payable Inventory Cash (Paid to Bow company with 2% discount) 212 10388 3300 3300 May-08 Accounts receivable Sales (Sold merchandise to Skeet company) Cost of goods sold Inventory (cost of goods sold recognized) 1500 1500 7000 70 May-11 Accounts payable Inventory Cash (Paid to Craft company with 1% discount) 6930 5488 112 May-13 Cash Sales Discount Accounts receivable (Amount collected from Sting company with 2% sales discount) 5600 300 May-14 Sales Accounts receivable (Sales return from Skeet company) 300 2940 60 May-17 Cash Sales Discount Accounts receivable (Amount collected from Skeet company with 2% sales discount) 3000