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Q6SE

Expert-verified
Horngren'S Financial And Managerial Accounting
Found in: Page 296

Short Answer

Suppose Piranha.com sells 3,500 books on account for $17 each (cost of these books is $35,700) on October 10, 2018 to The Textbook Store. One hundred of these books (cost $1,020) were damaged in shipment, so Piranha.com later received the damaged goods from The Textbook Store as sales returns on October 13, 2018.

Requirements

1. Journalize The Textbook Store’s October 2018 transactions.

2. Journalize Piranha.com’s October 2018 transactions. The company estimates sales returns at the end of each month.

Answer

The total of debits and credits for the Textbook Store is $61,200.

The total of debits and credits for Piranha.com is $97,920.

See the step by step solution

Step by Step Solution

Step 1: Meaning of Journal Entries

The recording of business transactions in the tabular format is called journal entries. It follows the dual aspect concept of accounting and simultaneously reflects the transaction's debit and credit effect and chronologically records financial information.

Step 2: Journal entries for The Textbook Store’s transactions

Date

Accounts and Explanation

Debit ($)

Credit ($)

2018

Oct 10

Merchandise inventory (3,500*$17)

59,500

Accounts payable

59,500

(To record the purchases)

Oct 13

Accounts payable (100*$17)

1,700

Merchandise inventory

1,700

(To record the return of damaged goods)

Step 3: Journal entries for Piranha.com’s transactions

Date

Accounts and Explanation

Debit ($)

Credit ($)

2018

Oct 10

Accounts receivable

59,500

Sales revenue

59,500

(To record the sales)

Oct 10

Cost of goods sold

35,700

Merchandise inventory

35,700

(To record the cost of goods sold)

Oct 13

Sales revenue

1,700

Accounts receivable

1,700

(To record the sales returns)

Oct 13

Merchandise inventory

1,020

Cost of goods sold

1,020

(To record the cost of goods returned)

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.

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.

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