Question

Littleton Books has the following transactions during May.

May		2		Purchases books on account from Readers Wholesale for $3,500, terms 2/10, n/30.
May		3		Pays cash for freight costs of $220 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 $4,200 on account.

Exercise 6-17A Part 1

Required:

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

2. Record the period-end adjustment to cost of goods sold on May 31, assuming the company has no beginning or ending inventory. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

Answer 1

Date	Account titles and explanation		Debit(in $)	Credit(in $)
May-02	Purchase		3500
	Accounts Payable			3500
	(to books purchased on account)
May-03	Freight Inward		220
	Cash			220
	(to freight paid for books)
May-05	Accounts payable		300
	Purchase Returns			300
	(to books returned)
May-10	Accounts Payable		3200
	Cash($3,200*0.98)			3136
	Purchase discount($3,200*0.02)			64
	(to amount paid to seller net of discount)
May-30	Accounts Receivable		4200
	Sales Revenue			4200
	(to books sold on account)
May-30	Cost of goods sold		3356
	Purchase return		300
	Purchase discount		64
	Purchase			3500
	Freight Inward			220
	(to adjusting entry passed)