Question

Chad Funk is a hair stylist who opened a business selling hair products. He imports products from around the world and sells to salons in Canada.

Oct. 1 Purchased $1,400 of hair spray from Orbit Pro; terms 3/10, n/30, FOB shipping point. The appropriate party paid the shipping cost of $200.
      5 Sold shampoo costing $420 to Barber & Co. for a price of $600 with terms of 2/10, n/30, FOB shipping point. The appropriate party paid the shipping cost of $80.
        7 Returned $500 of inventory to Orbit Pro due to an error in the Oct. 1 order.
      10 Paid Orbit Pro for the purchase on October 1.
      14 Barber & Co. returned $100 of inventory from the sale on Oct. 5. The inventory had a cost of $70.
    22 Received the payment from Barber & Co. on the October 5 sale.
      23 Purchased $2,000 of hair conditioner from Keratin Hair; terms 2/10, n/30, FOB shipping point. The appropriate party paid the shipping cost of $300.
      25 Sold hair gel to Styling Room for an invoice price of $1,000, terms 2/10, n/30, FOB destination. The hair gel had a cost of $700. The appropriate party paid the shipping cost of $150.
      26 Paid for the purchase on October 23.
      31 Received the payment from Styling Room on the October 25 sale.

Required:
Record the journal entries for the month of October. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Journal entry descriptions are provided already in the journal entry worksheet.)  

Answer 1

Date	Account Title	Debit	Credit
Oct. 1	Inventory (1400+200)	$1,600		( FOB shipping point. Chad Funk bears cost of shipping $200)
	Accounts payable		$1,400
	Cash		$200	(Shipping cost)
	( To record the purchase of the inventory on account and paid shipping cost)
Oct.5	Accounts receivable	$600		( FOB shipping point. Barber & Co. bears cost of shipping $80)
	Sales		$600
	( to record the sale of inventory on account)
	Cost of goods sold	$420
	Inventory		$420
	( To record the cost of goods sold)
Oct.7	Accounts payable	$500
	Inventory		$500
	( To record the inventory returns)
Oct.10	Accounts payable	$900		(1400-500)
	Cash		$873	(900-discount)=900-27
	Purchase discounts		$27	(3% of 900=0.03*900=
	( To record the payment toward the purchases and availed discount)
Oct.14	Sales returns and allowances	$100
	Accounts receivable		$100
	( to record the sales returns)
	Cost of goods sold		$70
	Inventory	$70
	( To record the cost of sales returns)
Oct.22	Cash	$500		Full amount received without discount for payment after 17 days
	Accounts receivable		$500	(600-100)
	( To record the cash receipts from accounts receivable after adjustment of the sales returns)
Oct. 23	Inventory	$2,300		( FOB shipping point. Chad Funk bears cost of shipping $300)
	Accounts payable		$2,000
	Cash		$300	(Shipping cost)
	( To record the purchase of the inventory on account and paid shipping cost)
Oct. 25	Accounts receivable	$1,000		( FOB destination. Chad funk bears cost of shipping $150)
	Sales		$1,000
	( to record the sale of inventory on account)
	Cost of goods sold	$700
	Inventory		$700
	( To record the cost of goods sold)
	Shipping cost	$150
	Cash		$150
	( To record the payment of shipping cost)
Oct. 26	Accounts payable	$2,000
	Cash		$1,960	(2000-40)
	Purchase discount		$40	(Discount=2% of 2000=0.02*2000=$40)
	(To record the payment towards purchase of inventory on oct23 and availed discount)
Oct.31	Cash	$980		(1000-20)
	Sales discount	$20		(2% of 1000=$20
	Accounts receivable		$1,000
	( to record the receipt of cash from accounts receivable and allowed discount)