Question

Problem 5-1A Powell's Book Warehouse distributes hardcover books to retail stores and extends credit terms of 2/10, n/30 to all of its customers. At the end of May, Powell's inventory consisted of books purchased for $1,800. During June, the following merchandising transactions occurred. June 1 3 6 9 15 17 20 24 26 28 30 Purchased books on account for $1,600 from Kline Publishers, FOB destination, terms 2/10, n/30. The appropriate party also made a cash payment of $50 for the freight on this date. Sold books on account to Reading Rainbow for $2,500. The cost of the books sold was $1,440. Received $100 credit for books returned to Kline Publishers. Paid Kline Publishers in full, less discount. Received payment in full from Reading Rainbow. Sold books on account to Blanco Books for $1,800. The cost of the books sold was $1,080. Purchased books on account for $1,500 from Dietz Publishers, FOB destination, terms 2/15, n/30. The appropriate party also made a cash payment of $50 for the freight on this date. Received payment in full, less discount from Blanco Books. Paid Dietz Publishers in full, less discount. Sold books on account to Reddy Bookstore for $1,400. The cost of the books sold was $850. Granted Reddy Bookstore $120 credit for books returned costing $72. Powell's Book Warehouse's chart of accounts includes the following: No. 101 Cash, No. 112 Accounts Receivable, No. 120 Inventory, No. 201 Accounts Payable, No. 401 Sales Revenue, No. 412 Sales Returns and Allowances, No. 414 Sales Discounts, and No. 505 Cost of Goods Sold. Journalize the transactions for the month of June for Powell's Book Warehouse 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. Record journal entries in the order presented in the problem.)

Answer 1

Answer:

Date	Account title and Explanation	Debit	Credit
June 1	Inventory	$1,600
	Accounts payable		$1,600
	[To record purchase of inventory on account]
June 3	Accounts receivable	$2,500
	Sales revenue		$2,500
	[To record credit sales]
	Cost of goods sold	$1,440
	Inventory		$1,440
	[To record cost of goods sold]
June 6	Accounts payable	$100
	Inventory		$100
	[To record purchase returns]
June 9	Accounts payable [1600-100]	$1,500
	Inventory [1500 x 2%]		$30
	Cash		$1,470
	[To record cash paid to creditors]
June 15	Cash	$2,500
	Accounts receivable		$2,500
	[To record collections from customers]
June 17	Accounts receivable	$1,800
	Sales revenue		$1,800
	[To record credit sales]
	Cost of goods sold	$1,080
	Inventory		$1,080
	[To record cost of goods sold]
June 20	Inventory	$1,500
	Accounts payable		$1,500
	[To record purchase of inventory on account]
June 24	Cash	$1,764
	Sales discount [1800 x 2%]	$36
	Accounts receivable		$1,800
	[To record collections from customers]
June 26	Accounts payable	$1,500
	Inventory [1500 x 2%]		$30
	Cash		$1,470
	[To record cash paid to creditors]
June 28	Accounts receivable	$1,400
	Sales revenue		$14,000
	[To record credit sales]
	Cost of goods sold	$850
	Inventory		$850
	[To record cost of goods sold]
June 30	Sales returns and allowance	$120
	Accounts receivable		$120
	[To record sales returns]
	Inventory	$72
	Cost of goods sold		$72
	[To record cost of sales returns]

June 1 & June 20 purchased inventory with FOB destination.

So, No freight paid by Powell because freight should be paid by seller.