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Q31E

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Horngren'S Financial And Managerial Accounting
Found in: Page 304

Short Answer

Journalize the following transactions for Master Bicycles using the periodic inventory system. Explanations are not required.

Nov. 2 Purchased $3,400 of merchandise inventory under terms 2/10, n/EOM, and FOB shipping point.

6 Returned $800 of defective merchandise purchased on November 2.

8 Paid freight bill of $100 on November 2 purchase.

10 Sold merchandise inventory on account for $6,100. Payment terms were 3/15, n/45.

11 Paid amount owed on credit purchase of November 2, less the return and the discount.

22 Received cash from November 10 customer in full settlement of their debt, less the discount.

The total of debits and credits is $19,100.

See the step by step solution

Step by Step Solution

Step 1: Meaning of Merchandise Inventory

In accounting, merchandise inventory indicates the goods or products stocked/held by a business concern to resale and generate revenues. An inventory consists of various stages such as raw material, work-in-progress, and finished goods.

Step 2: Preparation of journal entries

Date

Accounts and Explanation

Debit ($)

Credit ($)

Nov 2

Purchases

3,400

Accounts payable

3,400

Nov 6

Accounts payable

800

Purchase returns

800

Nov 8

Freight-in

100

Cash

100

Nov 10

Accounts receivable

6,100

Sales

6,100

Nov 11

Accounts payable (3400-800)

2,600

Purchase discount (2600*2%)

52

Cash

2,548

Nov 22

Cash

5,917

Sales discount (6100*3%)

183

Accounts receivable

6,100

Most popular questions for Business-studies Textbooks

Journalize the following transactions that occurred in September 2018 for Aquamarines. No explanations are needed. Identify each accounts payable and accounts receivable with the vendor or customer name. Aquamarines estimates sales returns at the end of each month.

Sep. 3 Purchased merchandise inventory on account from Sharpner Wholesalers, $5,500. Terms 2/15, n/EOM, FOB shipping point.

4 Paid freight bill of $85 on September 3 purchase.

4 Purchased merchandise inventory for cash of $1,600.

6 Returned $1,300 of inventory from the September 3 purchase.

8 Sold merchandise inventory to Herman Company, $5,700, on account. Terms 2/15, n/35. Cost of goods, $2,565.

9 Purchased merchandise inventory on account from Tucker Wholesalers, $6,000. Terms 3/10, n/30, FOB destination.

10 Made payment to Sharpner Wholesalers for goods purchased on September 3, less return and discount.

12 Received payment from Herman Company, less discount.

13 After negotiations, I received a $500 allowance from Tucker Wholesalers.

15 Sold merchandise inventory to Jerome Company, $2,800, on account. Terms n/EOM. Cost of goods, $1,200.

22 Made payment, less allowance, to Tucker Wholesalers for goods purchased on September 9.

23 Jerome Company returned $200 of the merchandise sold on September 15. Cost of goods, $80.

25 Sold merchandise inventory to Small for $1,800 on account that cost $738. Terms of 3/10, n/30 was offered, FOB shipping point. As a courtesy to Small, $40 of freight was added to the invoice, for which Aquamarines paid cash.

29 Received payment from Small, less discount.

30 Received payment from Jerome Company, less return.

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