Question

ID: A Name: 4. Bill Blumberg owns an auto parts business called Bill's Auto Parts. The following transactions took place during July of the current year. July 5 Purchased merchandise on account from Wheeler Warehouse, $4,300. 8 Paid freight charge on merchandise purchased, $230. 12 Sold merchandise on account to Big Time Spoiler, $3,500. The merchandise cost $2,500. 15 Received a credit memo from Wheeler Warehouse for merchandise, $670. 22 Issued a credit memo to Big Time Spoiler for merchandise returned, $820. The cost of the merchandise is $550. Required: Journalize the above transactions in a general journal using the periodic inventory 1. method. Journalize the above transactions in a general journal using the perpetual inventory 2. method.

Answer 1

4.

1. Periodic inventory method:

Credit Date July 05 Account titles Purchase Accounts payable Debit $4,300 $4,300 July 08 $230 Freight-In Cash $230 July 12 $3,500 Accounts receivable Sales $3,500 July 15 S670 Accounts payable Purchase returns and allowances $670 July 22 5820 Sales returns and allowances Accounts receivable $820

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2. Perpetual inventory method:

Credit | Date July 05 Account titles Merchandise inventory Accounts payable Debit $4,300 $4,300 July 08 $230 Merchandise inventory Cash $230 July 12 $3,500 Accounts receivables Sales $3,500 July 12 $2.500 Cost of goods sold Merchandise inventory $2,500 July 15 $670 Accounts payable Purchase returns and allowances $670 July 22 $820 Sales returns and allowances Accounts receivable S820 July 22 Merchandise inventory Cost of goods sold $550 $550