Question

Nicole's Getaway Spa (NGS) has been so successful that Nicole has decided to expand her spa by selling merchandise. She sells things such as nail polish, at-home spa kits, cosmetics, and Palacetherapy items. Nicole uses a perpetual inventory system and is starting to realize all of the work that is created when inventory is involved in a business. The following transactions were selected from among those completed by NGS in August. Aug. 2 NGS sold 10 items of merchandise to Salon World on account at a selling price of $1,000 (total): terms 1/10, n/30. The goods cost NGS $580. 3 NGS sold 5 identical items of merchandise to Cosmetics 4 You on account at a selling price of $790 (total): terms 1/10, n/30. The goods cost NGS $365. 6 Cosmetics 4 You returned one of the items purchased on August 3. The item could still be sold by NGS in the future, and credit was given to the customer. 10 Collected payment from Salon World, fully paying off the account balance. 20 Sold two at-home spa kits to Meghan Witzel for $265 cash. The goods cost NGS $79. 22 Cosmetics 4 You paid its remaining account balance in full. Required: 1. Prepare journal entries for each transaction. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

Please note that there are ten transactions in part one. Please label all the ten transactions in the journal entry worksheets respectively. Thank you.

Answer 1

1. Journal Entries

			$	$
1.	2/8	Salon Word a/c Dr	1000
		To Sales a/c		1000
		(sales made)
2.	2/8	Cost of Goods Sold Dr	580
		To Inventory a/c		580
		(Goods sold)
3.	3/8	Cosmetics 4 You a/c Dr	790
		To Sales a/c		790
		(sales made)
4.	3/8	Cost of Goods Sold Dr	365
		To Inventory a/c		365
		(Goods sold)
5.	6/8	Sales (Returns) a/c Dr (790/5)	158
		To Cosmetics 4 You		158
		(Goods returned)
6.	6/8	Inventory a/c Dr(365/5)	73
		To Cost of goods sold a/c		73
		(Goods returned to Inventory)
7.	10/8	Cash a/c Dr	990
		Sales Discount a/c Dr (1000*1%)	10
		To Salon World a/c		1000
		(Cash received within the discount period)
8.	20/8	Meghan Witzel a/c Dr	265
		To Sales a/c		265
		(sales made)
9.	20/8	Cost of Goods Sold a/c Dr	79
		To Inventory a/c		79
		(goods sold)
10.	22/8	Cash a/c Dr (790*4/5)	632
		To Cosmetics 4 You		632
		(Cash received after discount period)

2.based on above jounral entries we get,

• Net Sales: (1000+790-158 (returns) +265) =1897
• Cost of Goods sold:(580+365-73(returns)+79) = 951
• Gross Profit (%): (Sales-COGS)/Sales*100 ie., (1897-951)/1897*100 = 49.86%