Newman Hardware Store completed the following transactions in December 2019. It usesperpetual inventory system. It records both purchase and sales at gross amount.Purchased goods from Jerry Wholesale for $4,200 with the terms of 2/15,1 Decn/30.Sold goods on account to Mack Ltd at $2,100, terms 1/20, n/30. The costof goods sold was $1,300.Returned the defective goods costing $300 purchased on 1 December toJerry Wholesale.Paid the outstanding amount owed to Jerry Wholesale in full.Mack Ltd returned the unsatisfactory goods from the 2 December sales.The selling price was $400 and the cost of the goods was $180.Paid $200 for transportation fee, of which half is for 2 December sale andthe remaining for 1 December purchase.Received collections in full, from the customers billed on 2 December.14151621Purchased goods from Jerry Wholesale for $8,400 with the terms of 2/15,n/30, FOB Destination Point, with goods shipped on the same day andreceived on 3 January 2020.Found inventory shortfall of $200 in the month-end physical count.3031Requireda) Prepare the journal entries to record the above transactions.Will your journal entries on 30 December be different if the purchase made on 31 Decemberb)had FOB Shipping point terms? Explain. If yes, show the entries.

Question
Asked Dec 19, 2019
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Newman Hardware Store completed the following transactions in December 2019. It uses
perpetual inventory system. It records both purchase and sales at gross amount.
Purchased goods from Jerry Wholesale for $4,200 with the terms of 2/15,
1 Dec
n/30.
Sold goods on account to Mack Ltd at $2,100, terms 1/20, n/30. The cost
of goods sold was $1,300.
Returned the defective goods costing $300 purchased on 1 December to
Jerry Wholesale.
Paid the outstanding amount owed to Jerry Wholesale in full.
Mack Ltd returned the unsatisfactory goods from the 2 December sales.
The selling price was $400 and the cost of the goods was $180.
Paid $200 for transportation fee, of which half is for 2 December sale and
the remaining for 1 December purchase.
Received collections in full, from the customers billed on 2 December.
14
15
16
21
Purchased goods from Jerry Wholesale for $8,400 with the terms of 2/15,
n/30, FOB Destination Point, with goods shipped on the same day and
received on 3 January 2020.
Found inventory shortfall of $200 in the month-end physical count.
30
31
Required
a) Prepare the journal entries to record the above transactions.
Will your journal entries on 30 December be different if the purchase made on 31 December
b)
had FOB Shipping point terms? Explain. If yes, show the entries.
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Newman Hardware Store completed the following transactions in December 2019. It uses perpetual inventory system. It records both purchase and sales at gross amount. Purchased goods from Jerry Wholesale for $4,200 with the terms of 2/15, 1 Dec n/30. Sold goods on account to Mack Ltd at $2,100, terms 1/20, n/30. The cost of goods sold was $1,300. Returned the defective goods costing $300 purchased on 1 December to Jerry Wholesale. Paid the outstanding amount owed to Jerry Wholesale in full. Mack Ltd returned the unsatisfactory goods from the 2 December sales. The selling price was $400 and the cost of the goods was $180. Paid $200 for transportation fee, of which half is for 2 December sale and the remaining for 1 December purchase. Received collections in full, from the customers billed on 2 December. 14 15 16 21 Purchased goods from Jerry Wholesale for $8,400 with the terms of 2/15, n/30, FOB Destination Point, with goods shipped on the same day and received on 3 January 2020. Found inventory shortfall of $200 in the month-end physical count. 30 31 Required a) Prepare the journal entries to record the above transactions. Will your journal entries on 30 December be different if the purchase made on 31 December b) had FOB Shipping point terms? Explain. If yes, show the entries.

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Expert Answer

Step 1

a) Required journal entries:

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Post Debit Credit Description Date Ref. (S) (S) Merchandise Inventory Accounts Payable |(To record the purchase on account) 4,200 Dec. 1 4,200 Dec. 2 Accounts Receivable 2,100 2,100 Sales |(To record the credit sale) Cost of goods sold Merchandise Inventory |(To record the cost of merchandise sold) Accounts Payable Merchandise Inventory |(To record purchase return) Dec. 2 1,300 1,300 300 Dec. 5 300

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Step 2

Required journal entries:

 

Note: December 30 transaction will...

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Post Debit Credit Description Date Ref. (S) 3,900 (S) Dec. 14 Accounts Payable (4,200-300) Discount received (3900*2%) Cash (3900-78) |(To record the cash paid in full, less |discount) 78 3,822 Dec. 15 Sales return 400 Accounts Receivable |(To record the sales return) |Merchandise Inventory Cost of goods sold |(To record the cost of merchandise returned) 400 180 180 Dec. 16 Freight -in 100 Cash 100 |(To record freight-in) Dec. 16 Freight-out Cash |(To record freight-out) Dec. 21 Cash (1700-17) 100 100 1683 Discount allowed (1700*1%) Accounts Receivable (2100-400) (To record the payment received) Dec. 31 Inventory shortage expense 17 1700 200 200 Inventory |(to record inventory shortage)

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