Question

Prepare the journal entries to record the following transactions on Oriole Company’s books using a perpetual inventory system. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.)

(a)		On March 2, Sage Hill Company sold $878,600 of merchandise to Oriole Company on account, terms 3/10, n/30. The cost of the merchandise sold was $562,200.
(b)		On March 6, Oriole Company returned $118,800 of the merchandise purchased on March 2. The cost of the merchandise returned was $61,000.
(c)		On March 12, Sage Hill Company received the balance due from Oriole Company.

Answer 1

Journal EntryGross Method- Perpetual
Date	Accounts Title and Explanation	Debit	Credit
2-Mar	Account Receivable	$878,600.00
	Sales		$878,600.00
	To Record Sales made
	Cost of Goods Sold	$562,200.00
	Merchandise Inventory		$562,200.00
	TO Record cost of Goods Sold
6-Mar	Sales Return	$118,800.00
	Account Receivable		$118,800.00
	Merchandise Inventory	$61,000.00
	Cost of Goods Sold		$61,000.00
	TO Record Reversal of cost of Goods Sold
12-Mar	Cash	$737,006.00
	Discount	$22,794.00
	Account Receivable (878600-118800)		$759,800.00

Answer 2

Journal entry

Date	Account title and explanation	Debit	Credit
Mar 2	Merchandise inventory	878600
	Account payable		878600
Mar 6	Account payable	118800
	Merchandise inventory		118800
Mar 12	Account payable (878600-118800)	759800
	Cash (759800*97%)		737006
	Merchandise inventory		22794