Question

Tara Kelly Inc. has the following Business Transactions relating to her INVENTORY ACCOUNT

Tara Kelly purchased Merchandise Inventory from Gillian’s Gems, $5,500 terms 2/10, net/30, FOB Shipping Point

Tara paid freight on shipment from Gillian’s Gems $1,250

Tara sold Merchandise Inventory to Logan Inc for $8,250 Cost $5,400.Terms 2/10, Net/30

Tara returned $1,550 of Merchandise Inventory purchased from Gillian’s Gems

Logan Inc returned $2,750 of Merchandise Inventory to Tara, cost $1,420.

Tara paid Gillian within discount period.

Tara paid $1,350 for freight on sale to Logan

Received payment from Logan Inc, during the discount period.

REQUIRED:

Record the Transactions in the JOURNAL using the Perpetual Inventory Method

Answer 1

Journal entries are as prepared below:

Date	Particulars	L.F	Amount ($)	Amount ($)
1	Merchandise Inventory		5,500
	Accounts Payable			5,500
	(for goods purchased on credit)
2	Merchandise Inventory		1,250
	Cash			1,250
	(for freight on shipping paid)
3	Accounts Receivable- Logan Inc		8,250
	sales			8,250
	(for goods sold on credit 2/10, n/30)
3	Cost of goods sold		5,400
	Merchandise Inventory			5400
	(For cost of goods sold recorded)
4	Accounts payable		1,550
	Merchandise Inventory			1,550
	(for goods purchased on credit returned)
5	Sales Return		2,750
	Accounts Receivable- Logan Inc			2750
	(for goods returned by customer)
	Merchandise Inventory		1,420
	Cost of goods sold			1420
	(For cost of goods returned recorded)
6	Account payable		3,950
	Merchandise Inventory (5,500-1,550)*2%			79
	Cash			3,871
	(for paid to suuplier)
7	Freight Outwards		1,350
	Cash			1,350
	(for paid for shipping charges)
8	cash		5,390
	Sales discount		110
	Accounts Receivable- Logan Inc			5,500