Question

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 $85,000, trade discount 25%, terms FOB destination, 2/10, n/30.
	4	Sold merchandise for cash, $37,680. The cost of the merchandise sold was $22,600.
	5	Purchased merchandise on account from Papoose Creek Co., $47,500, terms FOB shipping point, 2/10, n/30, with prepaid freight of $810 added to the invoice.
	6	Returned $13,500 ($18,000 list price less trade discount of 25%) of merchandise purchased on November 3 from Moonlight Co.
	8	Sold merchandise on account to Quinn Co., $15,600 with terms n/15. The cost of the merchandise sold was $9,400.
	13	Paid Moonlight Co. on account for purchase of November 3, less return of November 6.
	14	Sold merchandise on VISA, $236,000. The cost of the merchandise sold was $140,000.
	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., $56,900, terms 1/10, n/30. The cost of the merchandise sold was $34,000.
	28	Paid VISA service fee of $3,540.
	30	Paid Quinn Co. a cash refund of $6,000 for returned merchandise from sale of November 8. The cost of the returned merchandise was $3,300.

Journalize the entries to record the transactions of Babcock Company for November using the periodic inventory system. Refer to the Chart of Accounts for exact wording of account titles.

(27 lines)

Answer 1

   IN THE BOOKS OF BABCOCK COMPANY

JOURNAL ENTRY   

Dr. Cr.

(Amount in $)    (Amount in $)

Nov 3. Merchandise Inventory A/c    62475

Moonlight Co. A/c (REFER W.N.1.)    62475

Nov 4. Cash A/c   37680

Sales A/c     37680

Nov 4. Cost of Goods Sold A/c 22600

Merchandise Inventory A/c 22600

Nov 5. Merchandise Inventory A/c 47360

  Papoose Creek Co. A/c (REFER W.N.2.)   47360

Nov 6.   Moonlight Co. A/c    13230

  Merchandise Inventory A/c (REFER W.N.3.)    13230

Nov 8. Quinn Co. A/c     15600

Sales A/c 15600

Nov 8.  Cost of Goods Sold A/c 9400

   Merchandise Inventory A/c 9400

Nov 13.  Moonlight Co. A/c 49245

Cash A/c (REFER W.N.4.) 49245

Nov 14.   Cash A/c   236000

Sales  A/c 236000

Nov 14. Cost of Goods Sold A/c 140000

Merchandise Inventory A/c 140000

Nov 15. Papoose Creek Co. A/c    47360

Cash A/c 47360

Nov 23. Cash A/c 15600

Quinn Co. A/c 15600

Nov 24.  Rabel Co. A/c 56331

Sales A/c 56331

Nov 24. Cost of Goods Sold A/c 34000

Merchandise Inventory A/c (REFER W.N.5) 34000

Nov 28. Credit Card Expenses A/c 3540

Cash A/c 3540

Nov 30. Quinn Co. A/c (Refund) 6000

Cash A/c 6000

Nov 30. Merchandise Inventory A/c 3300

Estimated Return Inventory A/c 3300

WORKING NOTES:

1. Nov3.

$85000-($85000*25%)= $63750

$63750-($63750*2%) = $62475

2. Nov 5.

$47500-($47500*2%) +$810 = $47360

3. Nov 6.

$13500-($13500*2%) = $13230

4. Nov 13.

$62475-$13230 = $49245

5. Nov 24.

$56900-($56900*1%) =$56331