Question

The following selected transactions were completed during August between Summit Company and Beartooth Co.:

Aug.	1	Summit Company sold merchandise on account to Beartooth Co., $43,500, terms FOB destination, 2/15, n/eom. The cost of the goods sold was $29,330.
	2	Summit Company paid freight of $1,110 for delivery of merchandise sold to Beartooth Co. on August 1.
	5	Summit Company sold merchandise on account to Beartooth Co., $69,400, terms FOB shipping point, n/eom. The cost of the goods sold was $42,440.
	9	Beartooth Co. paid freight of $2,310 on August 5 purchase from Summit Company.
	15	Summit Company sold merchandise on account to Beartooth Co., $61,000, terms FOB shipping point, 1/10, n/30. Summit Company paid freight of $1,555, which was added to the invoice. The cost of the goods sold was $37,780.
	16	Beartooth Co. paid Summit Company for purchase of August 1.
	25	Beartooth Co. paid Summit Company on account for purchase of August 15.
	31	Beartooth Co. paid Summit Company on account for purchase of August 5.

Journalize the August transactions for (1) Summit Company and (2) Beartooth Co. Refer to the Chart of Accounts of the appropriate company for exact wording of account titles.

Answer 1

In books of summit company

Date	Account title	Debit	credit
Aug 1	Accounts receivable	43500
	sales revenue		43500
b	cost of goods sold	29330
	merchandise inventory		29330
Aug 2	Freight outward /Delivery expense	1110
	cash		1110
Aug 5	Accounts receivable	69400
	sales revenue		69400
	cost of goods sold	42440
	Merchandise inventory		42440
Aug 9	No entry
Aug 15	Accounts receivable [61000+1555]	62555
	sales revenue		61000
	cash		1555
	cost of goods sold	37780
	Merchandise inventory		37780

Aug 16	Cash	43500
	Accounts receivable		43500
Aug 25	cash	61945
	sales discount [61000*.01]	610
	Accounts receivable		62555
Aug 31	cash	69400
	Accounts receivable		69400

In books of Beartooth co,.:

Date	Account title	Debit	credit
Aug 1	Merchandise inventory	43500
	Accounts payable		43500
Aug 2	no entry
Aug 5	Merchandise inventory	69400
	Accounts payable		69400
Aug 9	Merchandise inventory	2310
	cash		2310
Aug 15	Merchandise inventory	62555
	Accounts payable		62555
Aug 16	Accounts payable	43500
	cash		43500
	[No discount is available since paid after 15 days]
Aug 25	Accounts payable	62555
	Merchandise inventory [61000*.01]		610
	cash		61945
	[Discount is available on purchase amount and not freight amount]
Aug 31	Accounts payable	69400
	cash		69400