Suppose Muddyriver.com sells 2,000 books on account for $19 each (cost of these books is $22,800), credit terms 1/20, n/45 on October 10, to The Salem Store. The Salem Store paid the balance to Muddyriver.com on October 22.
1. Journalize the Salem Store’s October transactions.
2. Journalize Muddyriver.com’s October transactions. Assume Muddyriver.com uses the gross method to record sales revenue.
The total of debits and credits for Salem Store is $76,000.
The total of debits and credits for Muddyriver is $98,800.
In accounting, journal entries are one of the processes of recording and maintaining the financial transactions of a business entity. It records the business transactions chronologically and helps the business to prepare ledgers and trial balances.
Accounts and Explanation
(To record the purchase)
(To record the payment)
Accounts and Explanation
(To record the sales)
Cost of goods sold
(To record the cost of goods sold)
Sales discount (38000*1%)
(To record the receipt of payment)
Emerson St. Book Shop’s unadjusted Merchandise Inventory at June 30, 2018 was $5,200. The cost associated with the physical count of inventory on hand on June 30, 2018, was $4,900. In addition, Emerson St. Book Shop estimated approximately $1,000 of merchandise sold will be returned with a cost of $400.
1. Journalize the adjustment for inventory shrinkage.
2. Journalize the adjustment for estimated sales returns.
Journalize the following transactions that occurred in January 2018 for Mike’s Amusements. Assume Mike’s uses the gross method to record sales revenue. No explanations are needed. Identify each accounts payable and accounts receivable with the vendor or customer name.
Jan. 4 Purchased merchandise inventory on account from Vanderbilt Company, $5,000. Terms 1/10, n/EOM, FOB shipping point.
6 Paid freight bill of $150 on January 4 purchase.
8 Returned half the inventory purchased on January 4 from Vanderbilt Company.
10 Sold merchandise inventory for cash, $1,100. Cost of goods, $440. FOB destination.
11 Sold merchandise inventory to Gilmore Corporation, $10,100, on account, terms of 3/10, n/EOM. Cost of goods, $5,555. FOB shipping point.
12 Paid freight bill of $30 on January 10 sale.
13 Sold merchandise inventory to Cadet Company, $8,800, on account, terms of 3/10, n/45. Cost of goods, $4,400. FOB shipping point.
14 Paid the amount owed on account from January 4, less return and discount.
18 Purchased inventory of $4,600 on account from Roberts Corporation. Payment terms were 1/10, n/30, FOB destination.
20 Received cash from Gilmore Corporation, less discount.
26 Paid amount owed on account from January 18, less discount.
28 Received cash from Cadet Company.
29 Purchased inventory from Silk Corporation for cash, $12,000, FOB shipping point. Freight in paid to shipping company, $240.
Journalize the following transactions that occurred in February 2018 for Oceanic. No explanations are needed. Identify each accounts payable and accounts receivable with the vendor or customer name. Oceanic estimates sales returns at the end of each month.
Feb. 3 Purchased merchandise inventory on account from Silton Wholesalers, $5,200. Terms 2/15, n/EOM, FOB shipping point.
4 Paid freight bill of $70 on February 3 purchase.
4 Purchased merchandise inventory for cash of $1,500.
6 Returned $900 of inventory from February 3 purchase.
8 Sold merchandise inventory to Herenda Company, $5,600, on account. Terms 3/15, n/35. Cost of goods, $2,352.
9 Purchased merchandise inventory on account from Teddy Wholesalers, $7,000. Terms 1/10, n/30, FOB destination.
10 Made payment to Silton Wholesalers for goods purchased on February 3, less return and discount.
12 Received payment from Herenda Company, less discount.
13 After negotiations, received a $500 allowance from Teddy Wholesalers.
15 Sold merchandise inventory to Jordon Company, $3,400, on account. Terms n/EOM. Cost of goods, $1,496.
22 Made payment, less allowance, to Teddy Wholesalers for goods purchased on February 9.
23 Jordon Company returned $1,000 of the merchandise sold on February 15. Cost of goods, $440.
25 Sold merchandise inventory to Smith for $1,700 on account that cost $663. Terms of 2/10, n/30 were offered, FOB shipping point. As a courtesy to Smith, $70 of freight was added to the invoice for which cash was paid by Oceanic.
27 Received payment from Smith, less discount.
28 Received payment from Jordon Company, less return.
D & T Printing Supplies’ accounting records include the following accounts at December 31, 2018.
Purchases $ 185,200 Accumulated Depreciation—Building $ 21,000
Accounts Payable 7,700 Cash 18,100
Rent Expense 8,600 Sales Revenue 257,800
Building 42,800 Depreciation Expense—Building 4,700
Common Stock 55,000 Dividends 26,500
Retained Earnings 30,400 Interest Expense 1,900
Beginning 119,000 Merchandise Inventory,
Notes Payable 11,300 Purchase Returns and Allowances 20,700
Purchase Discounts 2,900
1. Journalize the required closing entries for D & T Printing Supplies assuming that D & T uses the periodic inventory system.
2. Determine the ending balance in the Retained Earnings account.
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