Question

GL0402 - Based on Problem 4-2A LO P1, P2 Prepare journal entries to record the following merchandising transactions of Griffin's, which uses the perpetual inventory system. (Hint: It will help to identify each receivable and payable; for example, record the purchase on August 1 in Accounts Payable--Brown) Aug. 1 Purchased merchandise from Brown Company for $10,500 under credit terms of 1/10, 1/30, POB destination, invoice dated August 1. Aug. 5 Sold merchandise to Perez Corp. for $6,700 under credit terms of 2/10, n/60, FOB destination, invoice dated August 5. The merchandise had cost $4,000. Aug. 8 Purchased merchandise from Garcia Corporation for $6,000 under credit terms of 1/10, n/45, FOB shipping point, invoice dated August 8. Aug. 9 Paid $725 cash for shipping charges related to the August 5 sale to Perez Corp. Aug. 10 Perez returned merchandise from the August 5 sale that had cost Griffin's $200 and was sold for $400. The merchandise was restored to inventory. Aug. 12 After negotiations with Garcia Corporation concerning problems with the purchases on August 8, Griffin's received a credit memorandum from Garcia granting a price reduction of $800 off the $6,000 of goods purchased. Aug. 14 At Brown's request, Griffin's paid $700 cash for freight charges on the August 1 purchase, reducing the amount owed to Brown. Aug. 15 Received balance due from Perez Corp. for the August 5 sale less the return on August 10. Aug. 18 Paid the amount due Garcia Corporation for the August 8 purchase less the price allowance from August 12. Aug. 19 Sold merchandise to Clark Co. for $4,100 under credit terms of n/10, TOB shipping point, invoice dated August 19. The merchandise had cost $2,050. Aug. 22 Clark requested a price reduction on the August 19 sale because the merchandise did not meet specifications. Griffin's sent Clark a $500 credit memorandum toward the $4,100 invoice to resolve the issue. Aug. 29 Received Clark's cash payment for the amount due from the August 19 sale less the price allowance from August 22. Aug. 30 Paid Brown Company the amount due from the August 1 purchase. Requirement General Journal General Ledger Trial Balance Schedule of Receivables Schedule of Payables Income Statement Impact on Income Journalize the merchandising transactions. The General Ledger, trial balance, and schedules of accounts receivable and accounts payable will be updated based on your entries.

Answer 1

Date	Account Titles	Debit	Credit
		$	$
Aug 1	Merchandise Inventory	10,500
	AccountsPayable: Brown		10,500
Aug 5	Accounts Receivable: Perez Corp.	6,700
	Sales		6,700
Aug 5	Cost of Goods Sold	4,000
	Merchandise Inventory		4,000
Aug 8	Merchandise Inventory	6,000
	Accounts Payable: Garcia Corporation		6,000
Aug 9	Delivery Expense	725
	Cash		725
Aug 10	Sales Returns and Allowances	400
	Accounts Receivable: Perez Corp.		400
Aug 10	Merchandise Inventory	200
	Cost of Goods Sold		200
Aug 12	Accounts Payable: Garcia Corporation	800
	Merchandise Inventory		800
Aug 14	Accounts Payable: Brown	700
	Cash		700
Aug 15	Cash	6,174
	Sales Discount	126
	Accounts Receivable: Perez Corp.		6,300
Aug 18	Accounts Payable: Garcia Corporation	5,200
	Merchandise Inventory		52
	Cash		5,148
Aug 19	Accounts Receivable: Clark Co.	4,100
	Sales		4,100
Aug 19	Cost of Goods Sold	2,050
	Merchandise Inventory		2,050
Aug 22	Sales Returns and Allowances	500
	Accounts Receivable: Clark Co.		500
Aug 29	Cash	3,600
	Accounts Receivable: Clak Co.		3,600
Aug 30	Accounts Payable: Brown	9,800
	Cash		9,800

Griffin's Company Income Statement For the month ended August 31, 2019
Sales	$ 10,800
Less: Sales Returns and Allowances	900
Less: Sales Discounts	126
Net Sales		$ 9,774
Cost of Goods Sold		5,850
Gross Profit		3,924
Operating Expenses
Delivery Expense		725
Net Income		$ 3,199

Date	Impact on Income	Increase ( decrease) to income
Aug 1	No	$ 0
Aug 5	Yes	6,700
Aug 5	Yes	(4,000)
Aug 8	No	0
Aug 9	Yes	(725)
Aug 10	Yes	(400)
Aug 10	Yes	200
Aug 12	No	0
Aug 14	No	0
Aug 15	Yes	(126)
Aug 18	No	0
Aug 19	Yes	4,100
Aug 19	Yes	(2,050)
Aug 22	Yes	(500)
Aug 29	No	0
Aug 30	No	0
Total		$ 3,199