Question

Sales-Related and Purchase-Related Transactions Using Perpetual Inventory System

The following were selected from among the transactions completed by Babcock Company during November of the current year:

Nov. 3.	Purchased merchandise on account from Moonlight Co., list price $82,000, trade discount 25%, terms FOB destination, 2/10, n/30.
4.	Sold merchandise for cash, $40,180. The cost of the goods sold was $22,910.
5.	Purchased merchandise on account from Papoose Creek Co., $50,750, terms FOB shipping point, 2/10, n/30, with prepaid freight of $800 added to the invoice.
6.	Returned $15,000 ($20,000 list price less trade discount of 25%) of merchandise purchased on November 3 from Moonlight Co.
8.	Sold merchandise on account to Quinn Co., $16,430 with terms n/15. The cost of the merchandise sold was $9,180.
13.	Paid Moonlight Co. on account for purchase of November 3, less return of November 6.
14.	Sold merchandise on VISA, $248,350. The cost of the goods sold was $143,390.
15.	Paid Papoose Creek Co. on account for purchase of November 5.
23.	Received cash on account from sale of November 8 to Quinn Co.
24.	Sold merchandise on account to Rabel Co., $55,300, terms 1/10, n/30. The cost of the goods sold was $30,870.
28.	Paid VISA service fee of $3,260.
30.	Paid Quinn Co. a cash refund of $5,750 for returned merchandise from sale of November 8. The cost of the returned merchandise was $3,000.

Required:

Journalize the transactions.

Nov. 3
Nov. 4-sale
Nov. 4-cost
Nov. 5
Nov. 6
Nov. 8
Nov. 8
Nov. 13
Nov. 14-sale
Nov. 14-cost
Nov. 15
Nov. 23
Nov. 24-sale
Nov. 24-cost
Nov. 28
Nov. 30-refund
Nov. 30-cost

Answer 1

Journal Entries

Date	Particulars	Debit ($)	credit ($)
Nov. 3	Inventory	60,270
	To Moonlight Co		60,270
	Purchase from Moonlight Co at a discount of 25% with 2/10(82,000*75%*98%)
Nov. 4	Cash	40,180
	To Sales		40,180
	Cost of goods sold	22,910
	To Inventory		22,910
Nov 5	Inventory	50,535
	Papoose Creek Co		50535
	Purchased merchandise from Papoose Creek Co with 2/10,n/30 (50750*98%)+800
Nov 6	Moonlight Co	14,700
	To Inventory		14,700
	Returned $15,000 of merchandise purchased on November 3 from Moonlight Co with 2/10, n/30. (15000*98%)
Nov 8	Quinn Co a/c	16,430
	To Inventory		16,430
	Sales to Quinn Co with terms n/15
	Cost of goods sold	9,180
	To Inventory		9,180
Nov 13	Moonlight Co	45,570
	To cash		45,570
	Paid to Moonlight Co. on account for purchase (60,270 - 14,700)
Nov 14	Cash	248,350
	To Sales		248,350
	Sales merchandise
	Cost of goods sold	143,390
	To Inventory		143,390
Nov 15	Papoose Creek Co	50,535
	To Cash		50,535
	Paid to Papoose Creek Co
Nov 23	Cash	16,430
	To Quinn Co a/c		16,430
	Received cash from sale to Quinn Co on November 8
Nov 24	Rabel Co	54,747
	To Sales		54,747
	Sold merchandise to Rabel Co., terms 1/10, n/30 (55,300*99%)
	Cost of goods sold	30,870
	To Inventory		30,870
Nov 28	Credit card expense a/c	3,260
	To Cash		3,260
	Paid VISA service fee
Nov 30	Quinn Co refund a/c	5,750
	To cash		5,750
	Inventory a/c	3,000
	To estimated returned inventory cost		3,000