Question

The following merchandise transactions occurred in December. Both companies use a perpetual inventory system.

Dec.	3		Novak Ltd. sold goods to Flounder Corp. for $72,400, terms 2/10, n/30, FOB shipping point. The inventory had cost Novak $37,700.
	7		Shipping costs of $980 were paid by the appropriate company.
	8		Flounder returned unwanted merchandise to Novak. The returned merchandise has a sales price of $2,200, and a cost of $1,120. It was restored to inventory.
	11		Novak received the balance due from Flounder.

A) Record the above transactions in the books of Novak. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round answers to the nearest whole dollar, e.g. 5,275.)

)

B) The following selected accounts from Okanagan Corporation’s general ledger are presented below for the year ended December 31, 2018:

Accounts receivable $249,000 Accumulated depreciation—equipment 745,000 Advertising expense 50,000 Common shares 254,000 Cost of goods sold 1,085,000 Depreciation expense 131,000 Dividends declared 154,000 Equipment 1,461,000 Freight out 24,000 Income tax expense 73,000 Insurance expense 23,000 Interest expense 60,000 Interest revenue 31,000 Inventory 103,000 Prepaid expenses 31,000 Rent revenue 24,000 Retained earnings 506,000 Salaries expense 772,000 Sales 2,646,000 Sales discounts 22,000 Sales returns and allowances 43,000 Unearned revenue 16,000

Prepare a single-step income statement. Okanagan Corporation Income Statement (Single-step)

Answer 1

Journal Entry - Novak- Prepetual
Date	Account title	Debit	Credit
3-Dec	Accounts Recievable	$72,400.00
	Sales		$72,400.00
	To Record sales made on Credit
	Cost of goods sold	$37,700.00
	Inventory		$37,700.00
	To Record COGS
7-Dec	No Entry required
8-Dec	Sales Return	$2,200.00
	Account Receivable		$2,200.00
	TO Record Sales Return
	Inventory	$1,120.00
	Cost of goods sold		$1,120.00
	To Record COGS Reversed
11-Dec	Cash (BF)	$68,796.00
	Sales Discount (70200*2%)	$1,404.00
	Account Receivable (72400-2200)		$70,200.00
	TO Record Payment made

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