Question

Sheffield Corp.completed the following merchandising transactions in the month of May. At the beginning of May, the ledger of Sheffield Corp.showed Cash of $7,600 and Common Stock of $8,800. May 1 2 5 9 10 11 12 15 17 19 24 25 27 29 31 Purchased merchandise on account from Black Wholesale Supply for $8,000, terms 1/10, n/30. Sold merchandise on account $4,800, terms 2/10,n/30. The cost of the merchandise sold was $3,300. Received credit from Black Wholesale Supply for merchandise returned $300. Received collections in full, less discounts, from customers billed on May 2. Paid Black Wholesale Supply in full. less discount. Purchased supplies for cash $1,000. Purchased merchandise for cash $3,400. Received $230 refund for return of poor quality merchandise from supplier on cash purchase. Purchased merchandise on account from Wilhelm Distributors for $2,300, terms 2/10, 1/30. Paid freight on May 17 purchase $250. Sold merchandise for cash $6,000. The merchandise sold had a cost of $4,400. Purchased merchandise on account from Clasps, Inc. For $800, terms 3/10, 1/30. Paid Wilhelm Distributors in full, less discount Made refunds to cash customers for returned merchandise $134. The returned merchandise cost $9. Sold merchandise on account for $1.280 terms n/30. The cost of the merchandise sold was $810. Sheffield Corp's chart of accounts includes the following: No. 101 Cash, No. 112 Accounts Receivable, No. 120 Inventory, No. 126 Supplies, No. 201 Accounts Payable, No. 311 Common Stock, No. 401 Sales Revenue, No. 412 Sales Returns and Allowances, No. 414 Sales Discounts, and No. 505 Cost of Goods Sold

Answer 1

JOURNAL ENTRIES IN THE BOOKS OF SHEFFIELD CORP. FOR MONTH OF MAY

DATE	PARTICULARS	DEBIT($)	CREDIT($)
May 1	Inventory a/c Dr To Accounts Payable a/c	8,000	8,000
	Being Merchandise purchased from Black Wholesale Supply for 8000 on terms 2/10,n30
May 2	Accounts Receiable a/c Dr To Inventory a/c   To Sales Revenue a/c	4800	3300 1500
	Being Merchandise of cost 3300 sold on account for 4800 terms 2/10,n30
May 5	Accounts Payable a/c Dr To Inventory a/c	300	300
	Being Credit received from Black Wholesale Supply for merchandise returned
May 9	Cash a/c Dr Sales Discount a/c Dr To Accounts receivable a/c	4704 96	4800
	Being Collection received from customers in full less discount of 2% since paid within 10 days as per terms
May 10	Acconuts payable a/c Dr To Cash a/c To Discount a/c	8000	7623 77
	Being Paid Black Wholesale Supply in full less returns(300) and discount 1% (8000-300=7700*1%=77)since paid within 10 days from purchase date as per terms
May 11	Supplies a/c Dr To Cash a/c	1000	1000
	Being Supplies Purchased for Cash
May 12	Inventory a/c Dr To Cash a/c	3400	3400
	Being Merchandise purchased for cash
May 15	Cash a/c Dr To Inventory a/c	230	230
	Being cash received for returns of poor quality merchandise
May 17	Inventory a/c Dr To Accounts Payable a/c	2300	2300
	Being Merchandise purchased on account from wilhelm Distributors for terms 2/10,n30
May 19	Freight a/c Dr TO Cash a/c	250	250
	Paid Freight charges on purchases of merchandise
May 24	Cash a/c Dr To Inventory a/c To Sales Revenue a/c	6000	4400 1600
	Being Merchandise of cost 4400 sold for 6000
May 25	Inventory a/c Dr TO Accounts Payable a/c	800	800
	Purchased merchandise on account from clasps Inc. for 800 terms 3/10,n30
May 27	Accounts Payable a/c Dr TO Cash a/c To Discount a/c	2300	2254 46
	Piad wilhelm Distributors for merchandise purchased on account in full less discount 2%(2300*2%) since paid in 10days
May 29	Inventory a/c Dr Sales Revenue a/c To Cash a/c	9 125	134
	Being refund made to customers sold for cash for return of goods value 9 sold for 134
May 31	Accounts Receivable a/c Dr To Inventory a/c To Sales Revenue a/c	1280	810 470
	Being sold merchandise of value 810 on account for 1280 terms n30

CASH LEDGER

DATE	EXPLANATION	DEBIT($)	CREDIT($)	BALANCE($)
	Opening Balance	-	-	7,600
May 9	To Accounts Receivable a/c (Sales Collections less discount)	4,704	-	12,304
May 10	By Accounts Payable a/c (Paid for suppliers less discount)	-	7,623	4,681
May 11	By Supplies a/c (Supplies bought for Cash)	-	1,000	3,681
May 12	By Inventory a/c (Bought Merchandise for Cash)	-	3,400	281
May 15	To Inventory a/c (Refund for the returns)	230	-	511
May 19	By freight a/c (Freight Expenses)	-	250	261
May 24	To Inventory a/c (Merchandise sold for cash)	6000	-	6,261
May 27	By Accounts Payable a/c (Cash paid for merchandise bought less discount)	-	2,254	4,007
May 29	By Sales Revenue a/c (Refund made to customers for sales returns)	-	125	3,882
May 29	By Inventory a/c (Refund made to customers for sales return)	-	9	3,873

ACCOUNTS RECEIVABLE

DATE	EXPLANATION	DEBIT($)	CREDIT($)	BALANCE($)
May 2	To Inventory a/c (Merchandise sold on account)	3,300	-	3,300
May 2	To Sales Revenue a/c	1,500	-	4,800
May 9	By Sales Discount a/c (Being Discount given)	-	96	4,704
May 9	By Cash a/c (Being Cash Received)	-	4,704	0
May 31	To Inventory a/c (Merchandise sold on account)	810	-	810
May 31	To Sales Revenue a/c (Profit on sales made)	470	-	1,280

INVENTORY LEDGER

DATE	EXPLANATION	DEBIT($)	CREDIT($)	BALANCE($)
May 1	To Accounts Payable a/c (Merchandise Purchase on account)	8000	-	8000
May 2	By Accounts Receivable a/c (Sales on account)	-	3300	4700
May 5	By Accounts Payable a/c (Purchase Returns made on account)	-	300	4400
May 12	To Cash a/c (Merchandise Purchase for cash)	3400	-	7800
May 15	By Cash a/c ( Cash paid for Purchase Returns)	-	230	7570
May 17	To Accounts Payable a/c (Merchandise Purchase on account)	2300	-	9870
May 24	BY Cash a/c (Cash Sales)	-	4400	5470
May 25	To Accounts Payable a/c (Purchases on account)	800	-	6270
May 29	To Cash a/c (Cash sales Returns)	9	-	6279
May 31	By Accounts Receivablea/c (Sales on Account)	-	810	5469

SUPPLIES LEDGER

DATE	EXPLANATION	DEBIT($)	CREDIT($)	BALANCE($)
May 11	To Cash a/c (Being Supplies bought for Cash)	1,000	-	1,000

ACCOUNTS PAYABLE

DATE

EXPLANATION

DEBIT($)

CREDIT($)

BALANCE($)

May 1	By Inventory a/c (Merchandise Purchased on account)	-	800	8000
May 5	To Inventory a/c (Being Merchandise Returned)	300	-	7700
May 10	TO Cash a/c (Cash Paid for purchases made on account)	7623	-	77
May 10	To Discount a/c	77	-	0
May 17	By Inventoryu a/c (Mercahndise Purchased)	-	2,300	2,300
May 25	By Inventory a/c (Mercahndise Purchased)	-	800	3,100
May 27	To Discount a/c	46	-	2254
May 27	To Cash a/c (Cash Paid)	2254	-	0

SALES REVENUE

DATE	EXPLANATION	DEBIT($)	CREDIT($)	BALANCE($)
May 2	By Accounts Receivable a/c (Profit on account Sales)	-	1500	1500
May 24	By Cash (Profit on Cash Sales)	-	1600	3100
May 29	To Cash a/c (Reversal of profit on sales return)	125	-	2975
May 31	To Accounts Receivable a/c (Profit on account Sales)	-	470	3,445

SALES DISCOUNT

DATE	EXPLANATION	DEBIT($)	CREDIT($)	BALANCE($)
May 9	By Accounts Receivable a/c (On account Sales)	96	-	96

COMMON STOCK

DATE	EXPLANATION	DEBIT($)	CREDIT($)	BALANCE($)
	Opening Balance		8,800	8,800

COST OF GOODS SOLD( It is prepared only for question purpose. in my solution of jounrla entries it is shown under inventory account )

DATE	EXPLANATION	DEBIT($)	CREDIT($)	BALANCE($)
May 2	Account Sales	3300	-	3300
May 24	Cash Sales	4400	-	7700
May 29	Cash Sales Returns	-	9	7691
May 31	Account Sales	810	-	8501

Note:

1.In the given solution I have considered the sales revenue as the gross profit i.e ( Total Sale Value - Cost of Goods sold) instead of taking the Total Sales Value as Sales Revenue. Hence Sales Revenue in my solution indicates the Gross Profit. If You want Sales Revenue as total Sales Made then Add Sales Revenue and Inventory values in respective Sales transactions

2. Cost of Goods sold is also accounted under head Inventory. Inventory account is represnting all the purachases and sasles of Merchandise at cost values. But for question purpose i have shown seperately the cost of goods sold account irrespective of the account not taken in Journal Entries.