Question

Exercise 5-05 a-b Presented below are transactions related to Kingbird, Inc.. 1. 2. 3. On December 3, Kingbird, Inc. sold $622,200 of merchandise on account to Ayayai Co., terms 4/10, n/30, FOB shipping point. The cost of the merchandise sold was $372,100. On December 8, Ayayal Co. was granted an allowance of $20,300 for merchandise purchased on December 3. On December 13, Kingbird, Inc. received the balance due from Ayayai Co. Your answer is partially correct. Try again. Prepare the journal entries to record these transactions on the books of Kingbird, Inc. using a perpetual inventory system. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry for the account titles and enter o for the amounts.) Debit Credit No. 1. Date Dec. 3 Account Titles and Explanation Accounts Receivable 6222001 622200 Sales Revenue (To record credit sale) cost of Goods Sold Dec. 3 T 372100T 372100 Inventory (To record cost of merchandise sold) 2. 203001 Dec. 8 al Sales Returns and Allowances Accounts Receivable Dec. 13 BER T 3. cash Sales Discounts 24076 | Accounts Receivable | 601900

Answer 1

Solution:

Date	Particulars	Debit	Credit
Dec-03	Accounts Receivable - Ayayal Co.	622,200
	Sales		622,200
	Cost Of Goods Sold Expense	372,100
	Merchandise Inventory		372,100
Dec-08	Sales Returns And Allowances	20,300
	Accounts Receivable - Ayayal Co.		20,300
Dec-13	Cash	577,824
	Sales Discounts	24,076
	Accounts Receivable - Ayayal Co.		601,900

Working:

Cash = Sales - Sales return - Sales Discount = 622,200 - 20300 - [2%*(622,200 - 20300)] = 577,824

Account receivable = Sales - Sales return = 622,200 - 20300 = 601,900

Sales Discount = 2%*(622,200 - 20300) = 24,076