Question

Sales-Related and Purchase-Related Transactions for Seller and Buyer Using Perpetual Inventory System

The following selected transactions were completed during April between Swan Company and Bird Company:

Apr.2.	Swan Company sold merchandise on account to Bird Company, $32,000, terms FOB shipping point, 2/10, n/30. Swan Company paid freight of $330, which was added to the invoice. The cost of the merchandise sold was $19,200.
8.	Swan Company sold merchandise on account to Bird Company, $49,500, terms FOB destination, 1/15, n/30. The cost of the merchandise sold was $29,700.
8.	Swan Company paid freight of $710 for delivery of merchandise sold to Bird Company on April 8.
12.	Bird Company paid Swan Company for purchase of April 2.
18.	Swan Company paid Bird Company a refund of $2,000 for defective merchandise in the April 2 purchase. Bird Company agreed to keep the merchandise.
23.	Bird Company paid Swan Company for purchase of April 8.
24.	Swan Company sold merchandise on account to Bird Company, $67,350, terms FOB shipping point, n/45. The cost of the merchandise sold was $40,400.
26.	Bird Company paid freight of $875 on April 24 purchase from Swan Company.
30.	Swan Company granted a customer allowance (credit memo) to Bird Company for $11,300 for merchandise that was returned from the August 24 purchase. The cost of the merchandise returned was $6,500.

Required:

1. Journalize the April transactions for Bird Company (the buyer).

Date	Account	Debit	Credit
Apr. 2	Merchandise Inventory
	Accounts Payable-Swan Company

Date	Account	Debit	Credit
Apr. 8

Date	Account	Debit	Credit
Apr. 12

Date	Account	Debit	Credit
Apr. 18

Date	Account	Debit	Credit
Apr. 23

Date	Account	Debit	Credit
Apr. 24

Date	Account	Debit	Credit
Apr. 26

Date	Account	Debit	Credit
Apr. 30

2. Journalize the April transactions for Swan Company (the seller).

Date	Account	Debit	Credit
Apr. 2-sale

Date	Account	Debit	Credit
Apr. 2-freight

Date	Account	Debit	Credit
Apr. 2-cost

Date	Account	Debit	Credit
Apr. 8-sale

Date	Account	Debit	Credit
Apr. 8-cost

Date	Account	Debit	Credit
Apr. 8-freight

Date	Account	Debit	Credit
Apr. 12

Date	Account	Debit	Credit
Apr. 18

Date	Account	Debit	Credit
Apr. 23

Date	Account	Debit	Credit
Apr. 24-sale

Date	Account	Debit	Credit
Apr. 24-cost

Date	Account	Debit	Credit
Apr. 30

Date	Account	Debit	Credit
Apr. 30

Answer 1

1. Journal Entries in the books of Bird Company - Buyer

Date	Account	Debit	Credit
2-Apr	Merchandise Inventory A/c	$32,330
	Accounts Payable-Swan Company A/c ($32,000+$330)		$32,330
	[To record purchase of Inventory from Swan Company]
8-Apr	Merchandise Inventory A/c	$49,500
	Accounts Payable-Swan Company A/c		$49,500
	[To record purchase of Inventory from Swan Company]
12-Apr	Accounts Payable-Swan Company A/c ($32,000+$330)	$32,330
	Cash A/c		$31,690
	Merchandise Inventory A/c		$640
	[To record cash paid to the supplier]
18-Apr	Cash A/c	$2,000
	Discount A/c		$2,000
	[To record discount received from supplier]
23-Apr	Accounts Payable-Swan Company A/c	$49,500
	Cash A/c		$49,005
	Merchandise Inventory A/c		$495
	[To record cash paid to the supplier]
24-Apr	Merchandise Inventory A/c	$67,350
	Accounts Payable-Swan Company A/c		$67,350
	[To record purchase of Inventory from Swan Company]
28-Apr	Merchandise Inventory A/c	$875
	Cash A/c		$875
	[To record frieght in paid]
30-Apr	Accounts Payable-Swan Company A/c	$11,300
	Merchandise Inventory A/c		$11,300
	[To record credit memo received from Supplier]

2. Journal Entries in the books of Swan Company - Seller

Date	Account	Debit	Credit
2-Apr	Accounts Receivable - Bird Company A/c	$32,000
	Sales A/c		$32,000
	[To record Sale of Inventory to Bird Company]
2-Apr	Accounts Receivable - Bird Company A/c	$330
	Cash A/c		$330
2-Apr	COGS A/c ($19,200+$330)	$19,530
	Merchandise Inventory A/c		$19,530
	[To record COGS]
8-Apr	Accounts Receivable - Bird Company A/c	$49,500
	Sales A/c		$49,500
	[To record Sale of Inventory to Bird Company]
8-Apr	COGS A/c	$29,700
	Merchandise Inventory A/c		$29,700
	[To record COGS]
8-Apr	Freight Expense A/c	$710
	Cash A/c		$710
	[To record freight out expense]
12-Apr	Cash A/c ($32,000 -($32,000*2%))	$31,690
	Sales Discount A/c ($32,000*2%)	$640
	Accounts Receivable - Bird Company A/c		$32,300
	[To record Cash received from Bird company]
18-Apr	Customer Refunds Payable A/c	$2,000
	Cash A/c		$2,000
	[To record refund made to Bird Company]
23-Apr	Cash A/c ($49,500-($49,500*1%)	$49,005
	Sales Discount A/c ($49,500*1%)	$495
	Accounts Receivable - Bird Company A/c		$49,500
	[To record Cash received from Bird company]
24-Apr	Accounts Receivable - Bird Company A/c	$67,350
	Sales A/c		$67,350
	[To record Sale of Inventory to Bird Company]
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