Question

John’s Specialty Store uses a periodic inventory system. The following are some inventory transactions for the month of May 2018:

1. John's purchased merchandise on account for $5,900. Freight charges of $750 were paid in cash.
2. John’s returned some of the merchandise purchased in (1). The cost of the merchandise was $1,050 and John’s account was credited by the supplier.
3. Merchandise costing $3,250 was sold for $6,100 in cash.

Required:
Prepare the necessary journal entries to record these transactions. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

1. Record the merchandise purchased on account for $5,900.

2. Record the payment of freight charges for $750.

3. Record the return of merchandise costing $1,050.

4. Record the sale of merchandise for $6,100 in cash.

5. Record the cost of goods sold for $3,250.

Answer 1

Correct Answer:

Transaction	General Journal	Debit	Credit
1	Merchandise Inventory	$          5,900
	Accounts Payable		$          5,900
	(To Record purchase of Merchandise on Account)
2	Merchandise Inventory	$              750
	Cash		$              750
	(Freight charges paid)
3	Accounts Payable	$          1,050
	Merchandise Inventory		$          1,050
	(To Record Return of Merchandise)
4	Cash	$          6,100
	Sale		$          6,100
	(To Record of Sale of Goods)
5	Cost of Goods sold	$          3,250
	Merchandise Inventory		$          3,250
	(To Record Cost of Goods Sold)

End of Answer:

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