Question

The following is a series of related transactions between Siogo Shoes, a shoe wholesaler, and Sole Mates, a chain of retail shoe stores. Feb. 9 Siogo Shoes sold Sole Mates 195 pairs of hiking boots on account, terms 2/10, n/30. The cost of these boots to Siogo Shoes was $120 per pair, and the sales price was $150 per pair. Feb. 12 United Express charged $90 for delivering this merchandise to Sole Mates. These charges were split evenly between the buyer and seller and were paid immediately in cash. Feb. 13 Sole Mates returned 10 pairs of boots to Siogo Shoes because they were the wrong size. Siogo Shoes allowed Sole Mates full credit for this return. Feb. 19 Sole Mates paid the remaining balance due to Siogo Shoes within the discount period. Both companies use a perpetual inventory system. Required: a. Record this series of transactions in the general journal of Siogo Shoes. (The company records sales at gross sales price.) b. Record this series of transactions in the general journal of Sole Mates. (The company records purchases of merchandise at net cost and uses a Transportation-in account to record transportation charges on inbound shipments.)

Answer 1

a. General Journal of Siogo Shoes

Date	General Journal	Debit	Credit
Feb. 9	Accounts receivable (Sole Mates)	29250
	Sales (195 x $150)		29250
	(To record sales on account)
Feb. 9	Cost of goods sold	23400
	Inventory (195 x $120)		23400
	(To record cost of merchandise sold)
Feb. 12	Delivery expense	45
	Cash		45
	(To record delivery charges paid)
Feb. 13	Sales returns and allowances (10 x $150)	1500
	Accounts receivable (Sole Mates)		1500
	(To record merchandise returned by customer)
Feb. 13	Inventory (10 x $120)	1200
	Cost of goods sold		1200
	(To record cost of merchandise returned)
Feb. 19	Cash ($27750 - $555)	27195
	Sales discount (2% x $27750)	555
	Accounts receivable (Sole Mates)		27750
	(To record collection on account)

b. General Journal of Sole Mates

Date	General Journal	Debit	Credit
Feb. 9	Inventory [195 x ($150 x 98%)]	28665
	Accounts Payable (Siogo Shoes)		28665
	(To record merchandise purchased on account)
Feb. 12	Transportation-in	45
	Cash		45
	(To record transportation charges paid)
Feb. 13	Accounts Payable (Siogo Shoes)	1470
	Inventory (10 x $147)		1470
	(To record merchandise returned)
Feb. 19	Accounts Payable (Siogo Shoes)	27195
	Cash		27195
	(To record payment on account)