Question

The following are transactions for Chandler Fashions for the month of June.

June 2              Purchased 3,000 items of inventory under terms 1/10, n/60 and FOB shipping point from Flower Manufacturing.  The merchandise had a cost of $12,000

June 7                  Returned defective merchandise to Flower Manufacturing with invoice price of $4,000.

June 8                 Paid the freight charges on the purchase from Flower Manufacturing in     cash for $200.

June 9              Sold merchandise to Trendy Store on account for $10,000 with terms 2/15, n/60  FOB shipping point.

                   Cost of the merchandise sold was  $6,000.

June 10                Paid Flower Manufacturing the balance on account.

June 12                Granted sales allowance of $1,000 to Trendy Store for defective merchandise.

June 23                Collected balance owing from Trendy Store.

June 27                Purchased 500 items of inventory, terms 1/15, n/30, FOB destination from Sparkle Co.                     The merchandise had a cost $2,000.

June 30                Paid for the merchandise from Sparkle Co.

Using a perpetual inventory system, prepare the journal entries to record the transactions

Answer 1

June 2	Inventory	12,000
	To Accounts payable		12,000
	(Purchased goods on account)
June 7	Accounts payable	4,000
	To Inventory		4,000
	(Returned goods)
June 8	Freight inward	200
	To Cash		200
	(Paid freight charges in cash)
June 9	Accounts recievable	10,000
	To Sales		10,000
	(Goods sold on account)
	Cost of goods sold	6,000
	To Inventory		6,000
	(COGS entry for goods sold)
June 10	Accounts payable	8,000
	To Bank		7,920
	To Discount		80
	(Discount availed 1% as payment made within 10 days)
June 12	Sales allowance	1,000
	To accounts recievable		1,000
	(Granted sales allowance)
June 23	Bank	8,910
	Discount	90
	To accounts recievable		9,000
	(Discount provided 1% as payment recieved within 15 days)
June 27	Inventory	2,000
	To Accounts payable		2,000
	(Purchased goods on account)
June 30	Accounts payable	2,000
	To Discount		20
	To Bank		1,980
	(Discount availed 1% as payment made within 15 days)

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