Question

P5-1A. Journal Entries For Merchandise Transactions on Seller's and Buyer's Books-Perpetual System

The following transactions occurred between the Decker Company and Mann Stores, Inc., during March:

Mar. 8    Decker sold $14,000 worth of merchandise ($9,600 cost) to Mann Stores with items of 2/10, n/30.

   10 Mann Stores paid freight charges on the shipment from Decker Company, $500.

   12 Mann Stores returned $2,000 of the merchandise ($1,600 cost) shipped on March 8.

   17 Decker Received full payment for the net amount due from the March 8 sale.

   20 Mann Stores returned goods that had been billed originally at $800 ($600 cost). Decker issued a check for $784.

Required

Prepare the necessary journal entries for (a) the books of Decker Company and (b) the books of Mann Stores, Inc. Assume that both companies use the perpetual inventory system.

Answer 1

Journal Entry -in the books of Decker Company
Date	Account Tittle	Debit	Credit
8-Mar	Accounts receivable	$14,000.00
	Sales revenue		$14,000.00
	TO Record Sales made to Mann Store
8-Mar	Cost of goods sold	$9,600.00
	Inventory		$9,600.00
	TO Record Cost of Goods Sold
12-Mar	Sales returns and allowances	$2,000.00
	Accounts receivable		$2,000.00
	To Record Return of Goods
12-Mar	Inventory	$1,600.00
	Cost of goods sold		$1,600.00
	To Record Cost of Sales Return
17-Mar	Cash	$11,760.00
	Sales discounts (12000 x 2%)	$240.00
	Accounts receivable (14000-2000)		$12,000.00
	TO Record Received of Due from Mann Store
20-Mar	Sales returns and allowances	$800.00
	Sales discount		$16.00
	Cash		$784.00
	To Record Return of Goods
20-Mar	Inventory	$600.00
	Cost of goods sold		$600.00
	To Record Cost of Sales Return
b. Journal Entry -in the books of Mann Stores
Date	Account Tittle	Debit	Credit
8-Mar	Inventory	$14,000.00
	Accounts payable		$14,000.00
	TO Record Purchase of Inventory
10-Mar	Inventory	$500.00
	Cash		$500.00
	TO Record Freight Charges Paid
12-Mar	Accounts payable	$2,000.00
	Inventory		$2,000.00
	To Record Return of Goods
17-Mar	Accounts payable	$12,000.00
	Inventory		$240.00
	Cash		$11,760.00
	TO Record Payment made to Decker Co.
20-Mar	Cash	$784.00
	Inventory		$784.00
	To Record Return of Goods & Refund of money back