Question

8. PR 5-4B Sales and purchase-related transactions for seller and buyer using Obj. 2 perpetual inventory system The following selected transactions were completed during April between Swan Company and Bird Company: Apr. 2. Swan Company sold merchandise on account to Bird Company, $32,000, terms FOB shipping point, 2/10, n/30. Swan paid freight of $330, which was added to the invoice. The cost of the goods sold was $19,200. 8. Swan Company sold merchandise on account to Bird Company, $49,500, terms FOB destination, 1/15, n/eom. The cost of the goods sold was $29,700. Swan Company paid freight of $710 for delivery of merchandise sold to Bird Company on April 8. 12. Bird Company paid Swan Company for purchase of April 2. 23. Bird Company paid Swan Company for purchase of April 8. 24. Swan Company sold merchandise on account to Bird Company, 567,350, terms FOB shipping point, n/eom. The cost of the goods sold was $40,400. 25. Swan Company paid Bird Company a cash refund of $1,200 for damaged merchandise in the April 8 sale. Bird Company kept the merchandise. 26. Bird Company paid freight of $875 on April 24 purchase from Swan Company. 30. Bird Company paid Swan Company on account for purchase of April 24. Instructions Journalize the April transactions for (1) Swan Company and (2) Bird Company.

Answer 1

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Credit Credit Debit $ Debit $32,330 32,330 Journal Entries in books of Swan Company Date Account Titles and Explanations Apr-02 Accounts Receivable - Bird Company Sales Cash (To record sales on account and freight paid in cash) Journal Entries in books of Bird Company Date Account Titles and Explanations Apr-02 Merchandise Inventory Accounts Payable - Swan Company (To record purchases on account and including freight) $32,330 $ $ 32,000 330 $ 49,500 $ 19,200 Apr-08 Merchandise Inventory Accounts Payable - Swan Company record purchases on account) Apr-02 Cost of Goods Sold Merchandise Inventory (To record cost of goods sold) $ 49,500 $ 19,200 Apr-08 No entry $ 49,500 Apr-08 Accounts Receivable - Bird Company Sales (To record sales on account) $ 49,500 $32,330 Apr-12 Accounts Payable - Swan Company Cash Merchandise Inventory [32,000 x 2%] (To record cash paid and 2% discount availed) $31,690 $ $ 29,700 640 Cost of Goods Sold Merchandise Inventory (To record cost of goods sold) $ 29,700 $49,500 $ 710 Apr-08 Freight-out Cash (To record payment of freight) Apr-23 Accounts Payable - Swan Company Cash Merchandise Inventory (49,500 x 1%) (To record cash paid and 1% discount availed) $ 49,005 $ 495 $ 710 $67,350 $ $ 31,690 640 Apr-12 Cash Sales discount (32,000 x 2%] Accounts Receivable - Bird Company (To record collections from customers) Apr-24 Merchandise Inventory Accounts Payable - Swan Company (To record purchases on account) $67,350 $ 32,330 $ 1,200 $ $ 49,005 495 Apr-25 Cash Merchandise Inventory (To record cash received for defective inventory) $ 1,200 Apr-23 Cash Sales discount [49,500 x 1%] Accounts Receivable - Bird Company (To record collections from customers) $ 49,500 $ 875 Apr-26 Merchandise Inventory Cash (To record freight paid) $ 875 $ 67,350 Apr-24 Accounts Receivable - Bird Company Sales (To record sales on account) $ 67,350 $67,350 Apr-30 Accounts Payable - Swan Company Cash (To record cash paid) $ 67,350 $ 40,400 Cost of Goods Sold Merchandise Inventory (To record cost of goods sold) $ 40,400 $ 1,200 Apr-25 Sales Returns and allowances Cash (To record cash paid for defectives) $ 1,200 $ 67,350 Apr-30 Cash Accounts Receivable - Bird Company (To record collections from customers) $ 67,350