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College Accounting (Book Only): A ...

13th Edition
Scott + 1 other
ISBN: 9781337280570

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BuyFindarrow_forward

College Accounting (Book Only): A ...

13th Edition
Scott + 1 other
ISBN: 9781337280570
Textbook Problem

The following transactions relate to Khan, Inc., a sporting goods wholesaler, during November of this year. Terms of sale are 2/10, n/30. The company is located in Denver, Colorado.

Nov. 3    Sold merchandise on account to Spence Tennis Shop, invoice no. 5420, $2,482.51. The cost of the merchandise was $1,961.18.

5    Issued credit memo no. 38 to Spence Tennis Shop for merchandise returned, $287.45. The cost of the merchandise was $227.09.

7    Bought merchandise on account from Maldonado Manufacturing, Inc., invoice no. 1548, $3,854.16; terms n/45; dated November 4; FOB Memphis, freight prepaid and added to the invoice, $135 (total $3,989.16).

9    Bought merchandise on account from Lozano, Inc., invoice no. 8755, $426.65; terms 1/15, n/30; dated November 5; FOB New York City, freight prepaid and added to the invoice, $67 (total $493.65).

12    Received credit memo no. 542 to Lozano, Inc., for merchandise returned, $102.20.

17    Sold merchandise on account to Jack’s Golfing Shop, invoice no. 5421, $486.35. The cost of the merchandise was $432.85.

23    Sold merchandise on account to Yates Sporting Goods, invoice no. 5422, $2,465.99. The cost of the merchandise was $1,972.79.

28    Bought merchandise on account from Fields, Inc., invoice no. 4599, $441.29; terms 2/10, n/30; dated November 25; FOB Austin, freight prepaid and added to the invoice, $102 (total $543.29).

Required

Record the transaction in the general journal using the perpetual inventory system. If using Working Papers, use pages 84 and 85.

To determine

Prepare journal entry to record the given transaction using perpetual inventory system.

Explanation

Merchandise Inventory:

Merchandise is the stock of goods bought by a wholesaler, or a retailer, or a trader, to be sold within a year. Merchandise Inventory is a current asset account which includes all the costs incurred to acquire merchandise, and process it further for sale.

Date Account Titles and explanation Post.Ref Debit ($) Credit ($)
November3 Accounts receivable   2,482.51  
      Sales     2,482.51
  (To record the sale of merchandise to Company S, invoice no:5420)      
         
  Cost of goods sold   1,961.18  
      Merchandise inventory     1,961.18
  (To record the cost of  merchandise sold to Company S)      
         
November5 Sales return and allowance   287.45  
       Accounts receivable, Company S     287.45
  (To record the issuance of credit memo no.38)      
         
  Merchandise inventory   227.09  
      Cost of goods sold     227.09
  (To record the cost of merchandise returned, credit memo no:38)      
         
November7 Merchandise inventory   3,989.16  
      Accounts payable     3,989.16
  (To record the purchase of  merchandise from Company M, invoice no:1548)      
         
November 9 Merchandise inventory   493.65  
      Accounts payable     493...

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