Question

4. Stratege Consulting LLC is a Retailer and it uses the Perpetual Inventory System to account for its inventories, please prepare the lournal entries for the transactions below: May 1. Purchased merchandise from Estridge on account for $50,000 and Freight is FOB Destination was paid $1,000 cash. The credit terms is 2/10, N/30. May 5 Stratege Consulting LLC Returned $10,000 of the merchandise to Estridge & received a credit. May 9 Stratege Consulting LLC Paid Estridge. May 15 Stratege Consulting LLC Sold merchandise on account to Sean LLC for $100,000 based Credit terms 2/10, N/30. The goods cost $25,000. May 18 Sean LLC returned $10,000 of merchandise that had a cost of $3,000. May 25 Stratege Consulting LLC received the payment from Sean LLC. C. The Post-Closing Trial Balance.

Answer 1

Journal entries in the books of Strategic Consulting LLC:

MAY 1 :

Goods Account Debit $50,000

Freight Account Debit $1,000

To Estridge account $50,000

To Cash Account $1,000

(Being Goods purchased from Estridge)

May 5

Estridge Account debit $10,000

To Goods Account $10,000

(Being Goods Returned)

May 9

Estridge Account debit $40,000

T0 Cash account 39,200

to discount received 800

(discount 2/10 0f 40000=800{pymnt done within 10 days})

May 15

Sean LLC debit 100000

to Goods / Sales account 100000

(Being sales made)

May 18

Goods account debit $ 10,000

To Sean LLC 10,000

(Sales returns)

May 25

Bank account debit 88,200

discount (2% on 90K) 1800

To Sean LLC 90,000

(Payment received and discount allowed since received in 10 days time)

Part B : Trial balance as at May 31

Particulars Debit Credit

Purchases 50000

freight 1000

Purchases Returns 10000

Sales 100000

sales returns 10000

discount received 800

discount given 1800

Bank 48000

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TOTAL 110800 110800

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