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Assignment # 12

Q 1:

Prepare journal entries to record the following merchandising transactions of Blink Company, which applies the perpetual inventory system. (Hint: It will help to identify each receivable and payable; for example, record the purchase on July 1 in Accounts Payable—Boden.)

July 1 Purchased merchandise from Boden Company for $6,000 under credit terms of 1/15, n/30, FOB shipping point, invoice dated July 1.

2 Sold merchandise to Creek Co. for $900 under credit terms of 2/10, n/60, FOB shipping point, invoice dated July 2. The merchandise had cost $500.

3 Paid $125 cash for freight charges on the purchase of July 1.

8 Sold merchandise that had cost $1,300 for $1,700 cash.

9 Purchased merchandise from Leight Co. for $2,200 under credit terms of 2/15, n/60, FOB destination, invoice dated July 9.

11 Received a $200 credit memorandum from Leight Co. for the return of part of the merchandise purchased on July 9.

12 Received the balance due from Creek Co. for the invoice dated July 2, net of the discount.

16 Paid the balance due to Boden Company within the discount period.

19 Sold merchandise that cost $800 to Art Co. for $1,200 under credit terms of 2/15, n/60, FOB shipping point, invoice dated July 19.

21 Issued a $200 credit memorandum to Art Co. for an allowance on goods sold on July 19.

24 Paid Leight Co. the balance due after deducting the discount.

30 Received the balance due from Art Co. for the invoice dated July 19, net of discount.

31 Sold merchandise that cost $4,800 to Creek Co. for $7,000 under credit terms of 2/10, n/60, FOB shipping point, invoice dated July 31.

Q2:

Prepare journal entries to record the following merchandising transactions of Sheng Company, which applies the perpetual inventory system. (Hint: It will help to identify each receivable and payable; for example, record the purchase on August 1 in Accounts Payable—Arotek.) Also make Single and Multistep Income Statement.

Aug. 1 Purchased merchandise from Arotek Company for $7,500 under credit terms of 1/10, n/30, FOB destination, invoice dated August 1.

5 Sold merchandise to Laird Corp. for $5,200 under credit terms of 2/10, n/60, FOB destination, invoice dated August 5. The merchandise had cost $4,000.

8 Purchased merchandise from Waters Corporation for $5,400 under credit terms of 1/10, n/45, FOB shipping point, invoice dated August 8. The invoice showed that at Sheng’s request, Waters paid the $140 shipping charges and added that amount to the bill. (Hint: Discounts are not applied to freight and shipping charges.)

9 Paid $125 cash for shipping charges related to the August 5 sale to Laird Corp.

10 Laird returned merchandise from the August 5 sale that had cost Sheng $400 and been sold for $600. The merchandise was restored to inventory.

12 After negotiations with Waters Corporation concerning problems with the merchandise purchased on August 8, Sheng received a credit memorandum from Waters granting a price reduction of $700.

14 At Arotek’s request, Sheng paid $200 cash for freight charges on the August 1 purchase, reducing the amount owed to Arotek.

15 Received balance due from Laird Corp. for the August 5 sale less the return on August 10.

18 Paid the amount due Waters Corporation for the August 8 purchase less the price reduction granted.

19 Sold merchandise to Tux Co. for $4,800 under credit terms of 1/10, n/30, FOB shipping point, invoice dated August 19. The merchandise had cost $2,400.

22 Tux requested a price reduction on the August 19 sale because the merchandise did not meet specifications. Sheng sent Tux a $500 credit memorandum to resolve the issue.

29 Received Tux’s cash payment for the amount due from the August 19 sale.

30 Paid Arotek Company the amount due from the August 1 purchase.

Q3:

Prepare journal entries to record the following merchandising transactions of Mason Company, which applies the perpetual inventory system. (Hint: It will help to identify each receivable and payable; for example, record the purchase on July 3 in Accounts Payable—OLB.) Also make Single and Multistep Income Statement.

July 3 Purchased merchandise from OLB Corp. for $15,000 under credit terms of 1/10, n/30, FOB destination, invoice dated July 3.

7 Sold merchandise to Brill Co. for $11,500 under credit terms of 2/10, n/60, FOB destination, invoice dated July 7. The merchandise had cost $7,750.

10 Purchased merchandise from Rupert Corporation for $14,200 under credit terms of 1/10, n/45, FOB shipping point, invoice dated July 10. The invoice showed that at Mason’s request, Rupert paid the $500 shipping charges and added that amount to the bill. (Hint: Discounts are not applied to freight and shipping charges.)

11 Paid $300 cash for shipping charges related to the July 7 sale to Brill Co.

12 Brill returned merchandise from the July 7 sale that had cost Mason $1,450 and been sold for $1,850. The merchandise was restored to inventory.

14 After negotiations with Rupert Corporation concerning problems with the merchandise purchased on July 10, Mason received a credit memorandum from Rupert granting a price reduction of $2,000.

15 At OLB’s request, Mason paid $150 cash for freight charges on the July 3 purchase, reducing the amount owed to OLB.

17 Received balance due from Brill Co. for the July 7 sale less the return on July 12.

20 Paid the amount due Rupert Corporation for the July 10 purchase less the price reduction granted.

21 Sold merchandise to Brown for $11,000 under credit terms of 1/10, n/30, FOB shipping point,

invoice dated July 21. The merchandise had cost $7,000.

24 Brown requested a price reduction on the July 21 sale because the merchandise did not meet specifications. Mason sent Brown a credit memorandum for $1,300 to resolve the issue.

30 Received Brown’s cash payment for the amount due from the July 21 sale.

31 Paid OLB Corp. the amount due from the July 3 purchase.

Q 4:

Church Company completes these transactions and events during March of the current year (terms for all its credit sales are 2/10, n/30).

Mar. 1 Purchased $43,600 of merchandise from Van Industries, invoice dated March 1, terms 2/15, n/30.

2. Sold merchandise on credit to Min Cho, Invoice No. 854, for $16,800 (cost is $8,400).
3. Purchased $1,230 of office supplies on credit from Gabel Company, invoice dated March 3, terms n/10 EOM.
4. Sold merchandise on credit to Linda Witt, Invoice No. 855, for $10,200 (cost is $5,800).
5. Borrowed $82,000 cash from Federal Bank by signing a long-term note payable.
6. Purchased $21,850 of office equipment on credit from Spell Supply, invoice dated March 9, terms ny10 EOM.
7. Sold merchandise on credit to Jovita Albany, Invoice No. 856, for $5,600 (cost is $2,900).
8. Received payment from Min Cho for the March 2 sale less the discount.
9. Sent Van Industries Check No. 416 in payment of the March 1 invoice less the discount.
10. Received payment from Linda Witt for the March 3 sale less the discount.
11. Purchased $32,625 of merchandise from the CD Company, invoice dated March 13, terms 2/10, n/30.
12. Issued Check No. 417, payable to Payroll, in payment of sales salaries expense for the first half of the month, $18,300. Cashed the check and paid the employees.
13. Cash sales for the first half of the month are $34,680 (cost is $20,210). (Cash sales are recorded daily but are recorded only twice here to reduce repetitive entries.)
14. Purchased $1,770 of store supplies on credit from Gabel Company, invoice dated March 16, terms ny10 EOM.
15. Received a $2,425 credit memorandum from CD Company for the return of unsatisfactory merchandise purchased on March 14.
16. Received a $630 credit memorandum from Spell Supply for office equipment received on March 9 and returned for credit.
17. Received payment from Jovita Albany for the sale of March 10 less the discount.
18. Issued Check No. 418 to CD Company in payment of the invoice of March 13 less the March 17 return and the discount.
19. Sold merchandise on credit to Jovita Albany, Invoice No. 857, for $14,910 (cost is $7,220).
20. Sold merchandise on credit to Linda Witt, Invoice No. 858, for $4,315 (cost is $3,280).
21. Issued Check No. 419, payable to Payroll, in payment of sales salaries expense for the last half of the month, $18,300. Cashed the check and paid the employees.
22. Cash sales for the last half of the month are $30,180 (cost is $16,820).
23. Verify that amounts impacting customer and creditor accounts were posted and that any amounts that should have been posted as individual amounts to the general ledger accounts were posted. Foot and cross foot the journals and make the month-end postings.

Required:

1. Enter these transactions in a sales journal, a purchases journal, a cash receipts journal, a cash disbursements journal, or a general journal.

Answer 1

Dear student, we cannot able to post solution more than one question as per our policy.

Blink Company
Journal entries
Date	General Journal	Debit	Credit
July 01	Merchandise inventory	$        6,000
	Accounts payable - Boden Company		$        6,000
	(To record purchase of inventory on account.)
July 02	Accounts receivable - Creek Company	$           900
	Sales revenue		$           900
	(To record sales revenue on account.)
July 02	Cost of goods sold	$           500
	Merchandise inventory		$           500
	(To record cost of goods sold.)
July 03	Merchandise inventory	$           125
	Cash		$           125
	(To record Freight charges on the purchase.)
July 08	Cash	$        1,700
	Sales revenue		$        1,700
	(To record sales revenue on cash.)
July 08	Cost of goods sold	$        1,300
	Merchandise inventory		$        1,300
	(To record cost of goods sold.)
July 09	Merchandise inventory	$        2,200
	Accounts payable - Leight Company		$        2,200
	(To record purchase of inventory on account.)
July 11	Accounts payable - Leight Company	$           200
	Merchandise inventory		$           200
	(To record received credit memorandum from Leight Company)
July 12	Cash (900-20)	$           880
	Sales discounts (900*2%)	$              18
	Accounts receivable - Creek Company		$        1,000
	(To record Received the balance due from Creek Company)
July 16	Accounts payable - Boden Company	$        6,000
	Merchandise inventory (6000*1%)		$              60
	Cash (6000-60)		$        5,940
	(To record Paid the balance due to Boden Company within the discount period.)
July 19	Accounts receivable - Art Company	$        1,200
	Sales revenue		$        1,200
	(To record sales revenue on account.)
July 19	Cost of goods sold	$           800
	Merchandise inventory		$           800
	(To record cost of goods sold.)
July 21	Sales returns and allowances	$           200
	Accounts receivable - Art Company		$           200
	(To record issued a $200 credit memorandum to Art Co. for an allowance on goods sold.)
July 24	Accounts payable - Leight Company	$        2,000
	Merchandise inventory (2000*2%)		$              40
	Cash (2000-40)		$        1,960
	(To record Paid the balance due to Leight Company within the discount period.) (Net purchase = 2000-200=2000)
July 30	Cash (1000-20)	$           980
	Sales discounts (1000*2%)		$              20
	Accounts receivable - Art Company		$        1,000
	(To record Received the balance due from Art Co., net of the discount.) (Net sales = 1200-200=1000)
July 31	Accounts receivable - Creek Company	$        7,000
	Sales revenue		$        7,000
	(To record sales revenue on account.)
July 31	Cost of goods sold	$        4,800
	Merchandise inventory		$        4,800
	(To record cost of goods sold.)