Question

Following are the merchandising transactions for Dollar Store.

Nov.		1		Dollar Store purchases merchandise for $1,200 on terms of 2/5, n/30, FOB shipping point, invoice dated November 1.
		5		Dollar Store pays cash for the November 1 purchase.
		7		Dollar Store discovers and returns $150 of defective merchandise purchased on November 1, and paid for on November 5, for a cash refund.
		10		Dollar Store pays $60 cash for transportation costs for the November 1 purchase.
		13		Dollar Store sells merchandise for $1,296 with terms n/30. The cost of the merchandise is $648.
		16		Merchandise is returned to the Dollar Store from the November 13 transaction. The returned items are priced at $285 and cost $143; the items were not damaged and were returned to inventory.

Journalize the above merchandising transactions for the Dollar Store assuming it uses a perpetual inventory system and the gross method.

The returned items cost $143; the items were not damaged and were returned to inventory.

Journalize

Answer 1

SOLUTION

Date	Accounts titles and Explanation	Debit ($)	Credit ($)
Nov.1	Merchandise inventory	1,200
	Accounts payable		1,200
	(Being merchandise purchased on credit)
Nov.5	Accounts payable	1,200
	Merchandise inventory (1,200*2%)		24
	Cash		1,176
	(Being cash paid for the purchase of merchandise)
Nov.7	Cash	147
	Merchandise inventory (150*98%)		147
	(Being cash received for the purchase return)
Nov. 10	Merchandise inventory	60
	Cash		60
	(Being transportation costs paid)
Nov.13	Accounts receivable	1,296
	Sales		1,296
	(Being goods sold)
	Cost of goods sold	648
	Merchandise inventory		648
	(Being the cost of goods sold is recorded)
Nov.16	Sales return	285
	Accounts receivable		285
	(Being goods returned by the way of sales return)
	Merchandise inventory	143
	Cost of goods sold		143
	(Being cost of goods sold is adjusted)