Question

What is the correct journal entry? What is the income statement?

Prepare journal entries to record the following merchandising transactions of Griffin's, which uses the perpetual inventory system and the gross method. (Hint: It will help to identify each receivable and payable; for example, record the purchase on July 1 in Accounts Payable-Garcia.) Jul. 1 Purchased merchandise from Garcia Company for $9,000 under credit terms of 1/15, n/30, FOB shipping point, invoice dated July 1. Jul. 2 Sold merchandise to Thompson Co. for $2,400 under credit terms of 2/10, n/60, FOB shipping point, invoice dated July 2. The merchandise had cost $1,440. Jul. 3 Paid $725 cash for freight charges on the purchase of July 1. Jul. 8 Sold merchandise that had cost $2,800 for $4,700 cash. Jul. 9 Purchased merchandise from Perry Co. for $3,700 under credit terms of 2/15, n/60, FOB destination, invoice dated July 9. Jul. 11 Returned $700 of merchandise purchased on July 9 from Perry Co. and debited its account payable for that amount. Jul. 12 Received the balance due from Thompson Co. for the invoice dated July 2, net of the discount. Jul. 16 Paid the balance due to Garcia Company within the discount period. Jul. 19 Sold merchandise that cost $2,900 to Brown Co. for $4,200 under credit terms of 2/15, n/60, FOB shipping point, invoice dated July 19. Jul. 21 Gave a price reduction (allowance) of $800 to Brown Co. for merchandise sold on July 19 and credited Brown's accounts receivable for that amount. Jul. 24 Paid Perry Co. the balance due, net of discount. Jul. 30 Received the balance due from Brown Co. for the invoice dated July 19, net of discount. Jul. 31 Sold merchandise that cost $6,000 to Thompson Co. for $10,000 under credit terms of 2/10, n/60, FOB shipping point, invoice dated July 31.

Answer 1

Answer :-

Jul 1	Merchandise Inventory	$     9,000
		Accounts Payable—Gracis Co		$     9,000
	Purchased goods, terms 1/15, n/30.
2	Accounts Receivable—Thompson	$     2,400
		Sales		$     2,400
		Sold goods, terms 2/10, n/60.
2	Cost of Goods Sold	$     1,440
		Merchandise Inventory		$     1,440
	Record cost of sale.
3	Merchandise Inventory	$         725
		Cash		$ 725
	Paid frieght on purchases
8	Cash		$     4,700
		Sales		$     4,700
8	Cost of Goods Sold	$     2,800
		Merchandise Inventory		$     2,800
9	Merchandise Inventory	$     3,700
		Accounts Payable—Perry co.		$     3,700
	Purchased goods, terms 2/15, n/45.
11	Accounts Payable—Perry co.	$ 700
		Merchandise Inventory		$ 700
	Received credit memo for purchase
12	Cash		$     2,352
	Sales Discounts$2,400 x 2%	$           48
		Accounts Receivable—Thompson		$     2,400
	Received payment within discount period.
16	Accounts Payable—Garsia	$     9,000
		Merchandise Inventory $9,000*1%		$           90
		Cash		$     8,910
19	Accounts Receivable—Brown	$     4,200
		Sales		$     4,200
	Sold goods, terms 2/15.
19	Cost of Goods Sold	$     2,900
		Merchandise Inventory		$     2,900
	Record cost of sale
21	Sales Returns and Allowances	$ 800
		Accounts Receivable—Brown		$ 800
	Issued credit memorandum.
24	Accounts Payable-Perry ($3,700-$700)	$     3,000
		Merchandise Inventory ($3,000*2%)		$           60
		Cash		$     2,940
30	Cash		$     3,332
	Sales Discount ($4,200-$800)*2%	$           68
		Accounts Receivable—Brown		$     3,400
	Received payment.
31	Accounts Receivable—Thampson	$   10,000
		Sales		$   10,000
		Sold goods, terms 2/10, n/60.
	Cost of Goods Sold	$     6,000
		Merchandise Inventory		$     6,000
	Record cost of sale.