Question

Littleton Books has the following transactions during May.

May		2		Purchases books on account from Readers Wholesale for $2,800, terms 3/10, n/30.
May		3		Pays cash for freight costs of $150 on books purchased from Readers.
May		5		Returns books with a cost of $300 to Readers because part of the order is incorrect.
May		10		Pays the full amount due to Readers.
May		30		Sells all books purchased on May 2 (less those returned on May 5) for $3,500 on account.

Exercise 6-9A Part 1

Required:

1. Record the transactions of Littleton Books, assuming the company uses a perpetual inventory system. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

2. Assume that payment to Readers is made on May 24 instead of May 10. Record this payment. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

Answer 1

1.

Journal Entries
Date	Particulars	Debit	Credit
02-Mar	Inventory	$2,800
	Accounts payable		$2,800
03-May	Inventory	$150
	Cash		$150
05-May	Accounts payable	$300
	Inventory		$300
10-May	Accounts Payable ($2800-300)	$2,500
	Inventory ($2500*3%)		$75
	Cash		$2,425
30-May	Accounts Receivable	$3,500
	Sales Revenue		$3,500
30-May	Cost of goods sold (2500+150-75)	$2,575
	Inventory		$2,575

2.

Date	Particulars	Debit	Credit
24-May	Accounts Payable ($2800-300)	$2,500
	Cash		$2,500