Question

The following were selected from among the transactions completed by Babcock Company during November of the current year:

Nov.	3	Purchased merchandise on account from Moonlight Co., list price $85,000, trade discount 25%, terms FOB destination, 2/10, n/30.
	4	Sold merchandise for cash, $37,680. The cost of the merchandise sold was $22,600.
	5	Purchased merchandise on account from Papoose Creek Co., $47,500, terms FOB shipping point, 2/10, n/30, with prepaid freight of $810 added to the invoice.
	6	Returned $13,500 ($18,000 list price less trade discount of 25%) of merchandise purchased on November 3 from Moonlight Co.
	8	Sold merchandise on account to Quinn Co., $15,600 with terms n/15. The cost of the merchandise sold was $9,400.
	13	Paid Moonlight Co. on account for purchase of November 3, less return of November 6.
	14	Sold merchandise on VISA, $236,000. The cost of the merchandise sold was $140,000.
	15	Paid Papoose Creek Co. on account for purchase of November 5.
	23	Received cash on account from sale of November 8 to Quinn Co..
	24	Sold merchandise on account to Rabel Co., $56,900, terms 1/10, n/30. The cost of the merchandise sold was $34,000.
	28	Paid VISA service fee of $3,540.
	30	Paid Quinn Co. a cash refund of $6,000 for returned merchandise from sale of November 8. The cost of the returned merchandise was $3,300.

Journalize the entries to record the transactions of Babcock Company for November using the periodic inventory system. Refer to the Chart of Accounts for exact wording of account titles.

(27 lines)

Answer 1

   IN THE BOOKS OF BABCOCK COMPANY

JOURNAL ENTRY   

Dr. Cr.

(Amount in $)    (Amount in $)

Nov 3. Merchandise Inventory A/c    62475

Moonlight Co. A/c (REFER W.N.1.)    62475

Nov 4. Cash A/c   37680

Sales A/c     37680

Nov 4. Cost of Goods Sold A/c 22600

Merchandise Inventory A/c 22600

Nov 5. Merchandise Inventory A/c 47360

  Papoose Creek Co. A/c (REFER W.N.2.)   47360

Nov 6.   Moonlight Co. A/c    13230

  Merchandise Inventory A/c (REFER W.N.3.)    13230

Nov 8. Quinn Co. A/c     15600

Sales A/c 15600

Nov 8.  Cost of Goods Sold A/c 9400

   Merchandise Inventory A/c 9400

Nov 13.  Moonlight Co. A/c 49245

Cash A/c (REFER W.N.4.) 49245

Nov 14.   Cash A/c   236000

Sales  A/c 236000

Nov 14. Cost of Goods Sold A/c 140000

Merchandise Inventory A/c 140000

Nov 15. Papoose Creek Co. A/c    47360

Cash A/c 47360

Nov 23. Cash A/c 15600

Quinn Co. A/c 15600

Nov 24.  Rabel Co. A/c 56331

Sales A/c 56331

Nov 24. Cost of Goods Sold A/c 34000

Merchandise Inventory A/c (REFER W.N.5) 34000

Nov 28. Credit Card Expenses A/c 3540

Cash A/c 3540

Nov 30. Quinn Co. A/c (Refund) 6000

Cash A/c 6000

Nov 30. Merchandise Inventory A/c 3300

Estimated Return Inventory A/c 3300

WORKING NOTES:

1. Nov3.

$85000-($85000*25%)= $63750

$63750-($63750*2%) = $62475

2. Nov 5.

$47500-($47500*2%) +$810 = $47360

3. Nov 6.

$13500-($13500*2%) = $13230

4. Nov 13.

$62475-$13230 = $49245

5. Nov 24.

$56900-($56900*1%) =$56331

  

Answer 2

Credit Date Account title Nov 3. Inventory Accounts payable - Moonlight Co. 85000*(1-0.25)*(1-0.02) Debit Credit 62475 62475 Date Account title Nov 14. cash sales revenue Debit 236000 236000 140000 37680 cost of goods sold Inventory 140000 Nov 4. cash sales revenue 37680 47360 Nov 15. Accounts payable - Papoose Creek Co., cash 47360 cost of goods sold Inventory 22600 226001 15600 Nov 23. cash Accounts Receivable-Quinn Co. 47360 15600 Nov 5. Inventory Accounts payable - Papoose Creek Co., 47500*(1-0.02)+810 47360 56331 Nov 24. Accounts Receivable-Rabel Co. sales revenue 56900*(1-0.01) 56331 13230 Nov 6. Accounts payable - Moonlight Co. Inventory 13500*(1-0.02) 13230 34000 cost of goods sold Inventory 34000 15600 Nov 8. Accounts Receivable-Quinn Co. sales revenue 15600 3540 Nov 28. credit card expense cash 3540 9400 cost of goods sold Inventory 9400 6000 Nov 30. Customer Refunds Payable cash 6000 49245 Nov 13. Accounts payable - Moonlight Co. cash (62475-13230) 49245 3300 Inventory Estimated Returns Inventory 3300 Sheet363 Sheet364 Sheet365 Sheet366 Sheet367 Sheet368 Sheet369 Sheet370 Sheet371 Sheet30 III