Question

The following selected transactions were completed during August between Summit Co. and Beartooth Co. Aug. 1 Summit Co. sold merchandise on account to Beartooth Co., $52,150, terms FOB destination, 2/15, n/eom. The cost of the merchandise sold was $25,940. 2 Summit Co. paid freight of $1,235 for delivery of merchandise sold to Beartooth Co. on August 1. 5 15 16 20 Summit Co. sold merchandise on account to Beartooth Co., $60,090, terms FOB shipping point, n/eom. The cost of the merchandise sold was $36,900. Beartooth Co. paid freight of $2,140 on August 5 purchase from Summit Company Summit Co. sold merchandise on account to Beartooth Co., $62,600, terms FOB shipping point, 1/10, n/30. Summit Company paid freight of $1,515, which was added to the invoice. The cost of the merchandise sold was $32,600. Beartooth Co. paid Summit Company for purchase of August 1. Summit Company paid Beartooth Co, a refund of $1,800 for defective merchandise in the August 1 purchase. Beartooth Co. agreed to keep the merchandise Beartooth Co. paid Summit Company on account for purchase of August 15. Summit Company granted a customer allowanco (credit memo) to Beartooth Co. for $6,000 (invoiced amount) for merchandise that was returned from the August 1 purchase. The cost of the merchandise returned was $3,200. 25 Required: Journalize the August transactions for (1) Summit Co. and (2) Beartooth Co. Refer to the Chart of Accounts of the appropriate company for exact wording of account titles.

Answer 1

1	Summit Co.
	Journal								Accounting equation
	Date	Description					Debit	Credit	Assets	Liabilities	Equity
	Aug 1.	Accounts receivable-Beartooth Co.					52150		↑
		Sales						52150			↑
		(Goods sold on account)
		Cost of merchandise sold					25940				↓
		Merchandise inventory						25940	↓
		(Cost of goods sold recorded)
	Aug 2.	Delivery expense					1235				↓
		Cash						1235	↓
		(Fright charges paid)
	Aug 5.	Accounts receivable-Beartooth Co.					60090		↑
		Sales						60090			↑
		(Goods sold on account)
		Cost of merchandise sold					36900				↓
		Merchandise inventory						36900	↓
		(Cost of goods sold recorded)
	Aug 9.	No entry
		(FOB shipping point-Freight is the responsibility of
		buyer)
	Aug 15.	Accounts receivable-Beartooth Co.			(62600+1515)		64115		↑
		Sales						64115			↑
		(Goods sold on account)
		Cost of merchandise sold					32600				↓
		Merchandise inventory						32600	↓
		(Cost of goods sold recorded)
		Delivery expense					1515				↓
		Cash						1515	↓
		(Fright charges paid)
	Aug 16.	Cash			(52150-1043)		51107		↑
		Sales	(Discount)		(52150*2%)		1043				↓
		Accounts receivable-Beartooth Co.						52150	↑
		(Cash received from customer)
	Aug 20.	Sales					1800				↓
		Cash						1800	↓
		(Refund given for the defective merchandise)
	Aug 25.	Cash			(64115-641)		63474		↑
		Sales			(64115*1%)		641				↓
		Accounts receivable-Beartooth Co.						64115	↓
		(Cash received from customer)
	Aug 31.	Sales					6000				↓
		Accounts receivable-Beartooth Co.						6000	↓
		(Customer allowance provided)
		Merchandise inventory					3200		↑
		Cost of merchandise sold						3200			↑
		(Cost of goods returned recorded)