Question

Exercise 3. Serene Spa Sales uses the perpetual inventory system and the gross method of accounting for purchases and sales and had the following transactions during August Aug 1 Sold merchandise on credit for $5,000, terms 3/10, n/30. The items sold had a cost of $3,500. Purchased merchandise for cash, $2,720. Purchased merchandise on credit for $2,600, terms 1/20, n/30. Customer returns $3,000 of merchandise purchased July 20. The returned items had a cost of $2,010. The returned items are restored to inventory and the customer's Accounts Receivable is credited. Received payment for merchandise sold August 1. Granted an allowance from the seller for the return of defective merchandise purchased on August 4 for $600. Paid freight charges of $200 for merchandise ordered last month. (FOB shipping point) Paid for the merchandise purchased August 4 less the portion that was returned. 24 Sold merchandise on credit for $7,000, terms 2/10, n/30. The items had a cost of $4,900. 31 Received payment for merchandise sold on August 24. Required: Prepare the general journal entries to record these transactions.

Answer 1

Answer: Credit Date Aug 1 Debit 5,000 5,000 Aug 1 3,500 3,500 Aug 3 2,720 2,720 Aug 4 2,600 2,600 Aug 5 3,000 3,000 Aug 5 2,010 2,010 Aug 10 4,850 150 Accounts Titles & Explanation Accounts Receivable Sales Cost of Goods Sold Merchandise Inventory Merchandise Inventory Cash Merchandise Inventory Accounts Payable Sales Returns and Allowances Accounts Receivable Merchandise Inventory Cost of Goods Sold Cash Sales Discount ($5,000*3%) Accounts Receivable Accounts Payable Merchandise Inventory Merchandise Inventory Cash Accounts Payable ($2,600 - $600) Merchandise Inventory ($2,000*1%) Cash Accounts Receivable Sales Cost of Goods Sold Merchandise Inventory Cash ($7,000 - $140) Sales Discount ($7,000 *2%) Accounts Receivable 5,000 Aug 15 600 600 Aug 18 200 200 Aug 23 2,000 20 1,980 Aug 24 7,000 7,000 Aug 24 4,900 4,900 Aug 31 6,860 140 7,000