Question

Aug. 1

Purchased merchandise from Abilene Company for $4,800 under credit terms of 1/10, n/30, FOB destination, invoice dated August 1.

4

At Abilene's request, Stone paid $400 cash for freight charges on the August 1 purchase, reducing the amount owed to Abilene.

5

Sold merchandise to Lux Corp. for $3,360 under credit terms of 2/10, n/60, FOB destination, invoice dated August 5. The merchandise had cost $2,399.

8

Purchased merchandise from Welch Corporation for $4,100 under credit terms of 1/10, n/45, FOB shipping point, invoice dated August 8. The invoice showed that at Stone’s request, Welch paid the $240 shipping charges and added that amount to the bill. (Hint: Discounts are not applied to freight and shipping charges.)

9

Paid $230 cash for shipping charges related to the August 5 sale to Lux Corp.

10

Lux returned merchandise from the August 5 sale that had cost Stone $400 and been sold for $560. The merchandise was restored to inventory.

12

After negotiations with Welch Corporation concerning problems with the merchandise purchased on August 8, Stone received a credit memorandum from Welch granting a price reduction of $619.

15

Received balance due from Lux Corp. for the August 5 sale less the return on August 10.

18

Paid the amount due to Welch Corporation for the August 8 purchase less the price reduction granted.

19

Sold merchandise to Trax Co. for $2,880 under credit terms of 1/10, n/30, FOB shipping point, invoice dated August 19. The merchandise had cost $1,999.

22

Trax requested a price reduction on the August 19 sale because the merchandise did not meet specifications. Stone sent Trax a $480 credit memorandum to resolve the issue.

29

Received Trax's cash payment for the amount due from the August 19 sale.

30

Paid Abilene Company the amount due from the August 1 purchase.

Prepare journal entries to record the above merchandising transactions of Stone Company, which applies the perpetual inventory system. (Identify each receivable and payable; for example, record the purchase on August 1 in Accounts Payable—Abilene.) (Round your answer to nearest dollar amount. Omit the "$" sign in your response.)

Answer 1

Journal entries in the books of stone company under Perpetual Inventory System
	Date	Particulars	Debit($)	Credit($)
	01.08.2018	Inventory A/c	4800
		To Abilene A/c		4800
	Being merchandise purchase from Abilene Company
	04.08.2018	Abilene A/c	400
		To Cash A/c		400
	Being Frieght Charges paid to Abilene
	05.08.2018	Lux A/c	3360
		To Sales A/c		3360
	Being Merchandise sold to Lux Corp
	05.08.2018	Cost of Goods sold	2399
		To Inventory A/c		2399
	Being Merchandise sold to Lux Corp
	08.08.2018	Inventory A/c	4100
		To welch A/c		4100
	Being merchandise purchase from Welch Company
	09.08.2018	Shipping Charges	230
		To Cash A/c		230
	Being Shipping Charges paid w.r.t sales made to Lux
	10.08.2018	Sale A/c	560
		To Lux A/c		560
	Being Sales Return from Lux accounted
	10.08.2018	Inventory A/c	400
		To Cost of goods sold		400
	12.08.2018	Welch A/c	619
		To Inventory A/c		619
	Being Discount received in form of Price reduction on account of damage merchandise
	15.08.2018	Cash A/c	2800
		To Lux A/c		2800
	Being amount due received from Lux
	18.08.2018	Welch A/c	3481
		To Cash A/c		3481
	Being amount paid to welch
	19.08.2018	Trax A/c	2880
		To Sales A/c		2880
		Being Merchandise sold to Trax Corp
	19.08.2018	Cost of goods Sold A/c	2880
		To Inventory A/c		2880
		Being Merchandise sold to Trax Corp
	22.08.2018	Sales A/c	480
		To Trax A/c		480
		Being Price redction made to Trax Corp
		Inventory A/c Dr	480
		To Cost of goods A/c		480
		Being Price redction made to Trax Corp
	29.08.2018	Cash A/c	2400
		To Trax A/c		2400
		Being cash received from trax
	30.08.2018	Abilene A/c	4400
		To Cash A/c		4400
		Being amount paid to abilene a/c