Question

Sales-Related and Purchase-Related Transactions Using Perpetual Inventory System

The following were selected from among the transactions completed by Babcock Company during November of the current year:

Nov. 3.	Purchased merchandise on account from Moonlight Co., list price $91,000, trade discount 20%, terms FOB destination, 2/10, n/30.
4.	Sold merchandise for cash, $36,270. The cost of the goods sold was $23,850.
5.	Purchased merchandise on account from Papoose Creek Co., $50,600, terms FOB shipping point, 2/10, n/30, with prepaid freight of $780 added to the invoice.
6.	Returned $12,800 ($16,000 list price less trade discount of 20%) of merchandise purchased on November 3 from Moonlight Co.
8.	Sold merchandise on account to Quinn Co., $15,950 with terms n/15. The cost of the merchandise sold was $10,050.
13.	Paid Moonlight Co. on account for purchase of November 3, less return of November 6.
14.	Sold merchandise on VISA, $215,830. The cost of the goods sold was $141,070.
15.	Paid Papoose Creek Co. on account for purchase of November 5.
23.	Received cash on account from sale of November 8 to Quinn Co.
24.	Sold merchandise on account to Rabel Co., $55,100, terms 1/10, n/30. The cost of the goods sold was $33,880.
28.	Paid VISA service fee of $3,690.
30.	Paid Quinn Co. a cash refund of $6,130 for returned merchandise from sale of November 8. The cost of the returned merchandise was $3,570.

Required:

Journalize the transactions.

Nov. 3
Nov. 4-sale
Nov. 4-cost
Nov. 5
Nov. 6
Nov. 8
Nov. 8
Nov. 13
Nov. 14-sale
Nov. 14-cost
Nov. 15
Nov. 23
Nov. 24-sale
Nov. 24-cost
Nov. 28
Nov. 30-refund
Nov. 30-cost

Answer 1

Journal entries are as follows:

Date	Account and Explanation	Debit($)	Credit($)
Nov. 3	Merchandise Inventory ( $91,000 - ($91,000 *20%)	72,800
	Account Payable		72,800
	(Recorded the purchase of from Moonlight Co. )
Nov. 4	Account Receivable	36,270
	Sales		36,270
	(Recorded the sale from the customer on credit)
Nov. 4	Cost of Goods Sold	23,850
	Merchandise Inventory		23,850
	(Recorded the Cost of Goods Sold)
Nov. 5	Merchandise Inventory	50,600
	Account Payable		50,600
	(Recorded the purchase on the credit)
Nov. 6	Account Payable	12,800
	Merchandise Inventory		12,800
	(Recorded the return of the Merchandise Inventory)
Nov. 8	Account Receivable	15,950
	Sales		$15,950
	(Recorded the sales from the customer)
Nov. 8	Cost of Goods Sold	10,000 (Assumed)
	Merchandise Inventory		10,000 (Assumed)
	(Recorded the Cost of Goods Sold)
Nov. 13	Account Payable ($72,800 - $ 12,800)	60,000
	Cash		60,000
	(Recorded the payment of account payable)
Nov. 14	Account Receivable	215,830
	Sales		215,830
	(Recorded the sales on credit)
Nov. 14	Cost of Goods Sold	141,070
	Merchandise Inventory		141,070
	(Recorded the Cost of Goods Sold)
Nov. 15	Account Payable	50,600
	Cash		50,600
	(Recorded the payment of the Account Payable)
Nov. 23	Cash	15,950
	Account Receivable		15,950
	(Recorded the cash from the customers)
Nov. 24	Account Receivable	55,100
	Sales		55,100
	(Recorded the Account Receivable)
Nov. 24	Cost of Goods Sold	50,000 (Assumed)
	Merchandise Inventory		50,000 (Assumed)
	(Recorded the Cost of Goods Sold)
Nov. 28	VISA service fee	3,690
	Cash		3,690
	(Recorded the payment of VISA service fee )
Nov. 30	Sales Return and Allowance	6,130
	Account Receivable		6,130
	(Recorded the Sales Return and Allowance)
Nov. 30	Merchandise Inventory	5,000 (Assumed)
	Cost of Goods Sold		5,000 (Assumed)
	(Recorded the return as Cost of Goods Sold)

Note: The amount of cost of goods sold is hided behind the My Stats, So we assumed some amount of the cost of goods sold are specified as above.