Question

You are now hired by the Stan Sporting Goods store as an accountant. You are asked to enter the following transactions in to the journals:

Transaction #1:

December 17: Borrowed $60,000 from First American Bank and Trust by issuing a two-year note payable with a stated annual interest rate of 5%. The check was received from the bank and deposited.

Transaction #2:

December 19: Received customer purchase order in the mail from the University of Southern Iowa (USI) for 100 shoulder pad sets at the price of $75 and 100 knee pads at the price of $30, approved their credit and shipped the goods. All goods ordered were shipped, except only 56 shoulder pad sets were available for shipment. Customer paid for the shipping cost. Invoice was also sent to the customer.

Transaction #3:

December 22: Received merchandise and invoice from Velocity Sporting Goods as listed on the purchase order we sent to them. The invoiced total is $2845. All merchandise listed on PO was delivered in good condition and in the quantities ordered. The goods were immediately placed in the inventory warehouse.

Transaction #4:

December 26: Received the 56 shoulder pads returned from USI (the return has been authorized by your company) for credit against their account balance. The check of payment for the remaining amount (after sales return) was received. The check was deposited.

Is this correct?

Journal #	Transaction #	Account #	Account Title	Debit	Credit
1	1		Cash	60000
			Notes Payable		60000
2	2		Accounts Receivable	9180
			Sales		9180
3	3		Purchases	2845
			Accounts Payable		2845
4	4		Sales Returns and Allowances	1680
			Cash	7500
			Accounts Receivable		9180

Answer 1

solution:

		Stan Sporting Goods
		Journal Entries
Txn	Date	Account titles	Debit	Credit
1	Dec-17	Bank A/c Dr.	60,000
		To Notes Payable A/c		60,000
		(Borrowed 60,000 against 2 year notes payable)
2	Dec-19	Accounts Receivable Dr.	7200
		To Sales Revenue A/c		7,200
		( Goods Sold and shipped 56 sets of shoulder pads @ $75 each and 100 knee pads @ $30 each )
3	Dec-22	Purchases A/c Dr.	2,845
		To Accounts payable		2,845
		( goods purchased on Account )
4	Dec-26	Sales Returns A/c Dr. ( 56 sets x $ 75 )	4,200
		Bank A/c Dr. ($ 7,200 - $ 4,200 )	3,000
		To Account Receivables		7,200
		( 56 sets of shoulder pads returned and balance amount of account receivables received )

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