Question

1. Maeve's Wholesaler had the following transactions during December, the last month of the accounting period:

Dec.	12	Sold merchandise on credit to Jack’s Convenience for $7,000, cost $3,000 terms 1/10, n/30.
	13	Purchased $1,900 merchandise for cash from Western Distribution.
	14	Purchased merchandise on credit from Eastern Distribution for $5,600, terms 2/10, n/30.
	15	Issued a credit memorandum for $600 to a Jack’s who returned merchandise purchased December 1, cost $400.
	21	Received payment for merchandise sold December 12.
	22	Received a credit memorandum for $600 for the return of faulty merchandise to Eastern Distribution. Merchandise purchased on December 14.
	18	Paid freight charges of $50 for merchandise ordered December 14.
	20	Paid for the merchandise purchased December 14 less merchandise returned.
	22	Sold merchandise on credit for $9,000, terms 1/10 n/30, cost $6,500.
	27	Received payment for merchandise sold on December 22.

Prepare general journal entries to record these transactions, using a perpetual inventory system.

Answer 1

Journal Entries:

Date	Account and explanations	Debit	Credit
Dec. 12	Jack’s Convenience	$7,000
	Revenue/Sale		$7,000
(To record sales)
Dec. 12	Cost of Goods Sold	$3,000
	Inventory		$3,000
(To record cost of goods sold)
Dec. 13	Inventory	$1,900
	Cash		$1,900
(To record goods purchased)
Dec. 14	Inventory	$5,600
	Eastern Distrubution		$5,600
(To record goods purchased)
Dec. 15	Sales Returns	$600
	Jack’s Convenience		$600
(To record sales return)
Dec. 15	Inventory	$400
	Cost of Goods Sold		$400
(To record goods returned)
Dec. 21	Cash	$6,336
	Discount allowed *	$64
	Jack’s Convenience		$6,400
(To record receipts from debtors)
* Discount allowed = (7000-600)*1% = $64 as payment received within 10 days
Dec. 22	Eastern Distrubution	$600
	Inventory		$600
(To record purchase return)
Dec. 18	Inventory	$50
	Cash		$50
(To record freight on inventory purchased)
Dec. 20	Eastern Distrubution	$5,000
	Discount Received *		$100
	Cash		$4,900
(To record receipts from debtors)
* Discount received = (5600-600)*2% = $100 as payment made within 20 days
Dec. 22	Accounts Receivable	$9,000
	Revenue/Sale		$9,000
(To record sales)
Dec. 22	Cost of Goods Sold	$6,500
	Inventory		$6,500
(To record cost of goods sold)
Dec. 27	Cash	$8,910
	Discount allowed *	$90
	Accounts Receivable		$9,000
(To record receipts from debtors)
* Discount allowed = 9000*1% = $90 as payment received within 10 days