Answer 1

To journalize the transactions, we will record each transaction in the general journal using the date, account titles, and amounts. The journal entries for the given transactions are as follows:

 

**May 14: Purchased merchandise from Valley Bicycles on account**

```

Account Title      Debit       Credit

Merchandise                    $495.00

Accounts Payable             $495.00

```

*Explanation:* We purchased merchandise on account from Valley Bicycles for $495.00. The debit is recorded for Merchandise, representing the inventory purchased, and the credit is recorded for Accounts Payable, representing the liability created to Valley Bicycles for the amount owed.

 

**May 14: Sales Tax on merchandise purchased**

```

Account Title      Debit       Credit

Merchandise                    $40.79

Sales Tax Payable               $40.79

```

*Explanation:* The sales tax on the merchandise purchase is calculated as 8.25% of $495.00, which is $40.79. The debit is recorded for Merchandise to reduce its value, and the credit is recorded for Sales Tax Payable to indicate the sales tax liability.

 

**May 15: Received credit memo from Valley Bicycles**

```

Account Title      Debit       Credit

Accounts Payable              $89.00

Merchandise Returns        $89.00

```

*Explanation:* We received a credit memo from Valley Bicycles for merchandise returned worth $89.00. The debit is recorded for Accounts Payable to reduce the amount owed to Valley Bicycles, and the credit is recorded for Merchandise Returns to reduce the value of merchandise purchased.

 

**May 23: Issued a Check to Valley Bicycles for merchandise purchased**

```

Account Title      Debit       Credit

Accounts Payable              $406.79

Cash                                      $406.79

```

*Explanation:* We issued a check, Check No. 897, to Valley Bicycles for the net amount owed after deducting the merchandise return and the sales tax. The debit is recorded for Accounts Payable to clear the liability, and the credit is recorded for Cash as payment made to Valley Bicycles.

 

Note: The terms "2/10, n/30" indicate that a 2% discount can be taken if payment is made within 10 days, otherwise, the full amount is due within 30 days. However, there was no mention of whether the discount was taken, so we have considered the full amount due on May 23.