Question

The Sport Store uses a perpetual inventory system. The following transactions occurred during April 2022 April 2 Purchased merchandise from Rough Co. for $5,600 under credit terms of 1/15, n/30, FOB factory 3 Paid $285 for shipping charges on the April 2nd purchase. 5 Sold merchandise to Fit Co. for $3,900 under credit terms of 2/10, n/30, FOB shipping point. The cost of the merchandise was $1,400. 6 Received a $800 credit memorandum acknowledging the return of merchandise purchased on April 2. 7 Fit Co. requested a price reduction on the April 5 sale because the merchandise did not meet specifications. Sent Fit Co. a credit memorandum for $700 to resolve the issue. 8 Received Fit Co.'s payment of the amount due from the April 5 sale. 13 Paid the balance due to Rough Co. 18 Sold merchandise to Raptor Co. for $9,500. Raptor paid immediately. The merchandise cost $5,550. 20 Paid $389 April telephone bill. Instructions: Record the above transactions in the General Journal data entry form provided in the Learn Assessment Dropbox.

Answer 1

Following are the possible journal entries

Journal Entries (Ctrl) Date Particular Debit $ Credit $ Inventory A/C....... Dr 5600 To Rough co A/C (Being purchase made) 5544 To Discount received 56 Freight charges A/C ......Dr 285 To bank 285 Fit Co. A/C.. Dr 3822 Discounts on sale A/C 78 To sales (Being sales made to the fit Co.) 3900 Freight charges A/C... Dr 1400 To bank A/C (Being payment made to transporter) 1400

Rough Co A/C Dr 800 To purchase return A/C (Being Return to the supplier) 800 Sales return A/C....... Dr 700 To Fit co A/C (Being sales return from the client) 700 Bank A/C...... Dr 3822 To Fit Co A/C (Being payment Received from Fit Co.) 3822

Rough co A/C... Dr (5544-800) 4744 To Bank A/C Being payment made to Rough Co.) 4744 Raptor co A/C....... Dr 9310 Discount A/C Dr 190 To Sales A/C (Being sales made to raptor Co.) 9500 Bank A/C.......... Dr 9310 To Raptor A/C (Being payment received from raptor co.) 9310 Freight charges A/C... Dr 5550 To bank A/C (Being payment made to transporter) 5550

Telephone Expenses A/C....... Dr 389 To bank A/C (Being amount paid for telephone expenses) 389

Working note: Terms of purchase are 1/15, n/30. It means 1% discount will be allowed by the seller if payment is made within 15 days and no discount will be allowed if payment is made after 15 days. Assumed that all the transaction was made with in the credit period Hence, discount amount = 5600 x 1% = $56 Hence, net cash paid = 5600 - 56 = $5544