Question

ABC Merchandise Sales completed the following transactions during the month of March (terms of all sales on credit are 2/10, n30):

March 2:             Purchased merchandise inventory on credit from Johnson Industries, $57,200.

                             Invoice dated March 2, terms 2/10, n30.

March 3:             Received a credit memo from Johnson Industries for unsatisfactory                                                             merchandise inventory purchased on March 2 and returned for credit, $700.

March 4:             Sold merchandise inventory on credit to Farmers Supply, invoice #100,

                             $16,850 (cost of goods sold, $7,580).

March 7:             Sold merchandise inventory on credit to The Country Store for $9,300; invoice #101 (cost of goods sold, $4,770).

March 10:           Borrowed $25,000 cash by signing a long-term note payable with a local bank.

March 12:           Issued cheque #302 to Johnson Industries in payment of the balance regarding the

                             March 2nd invoice, less the return of March 3rd.

March 17:           Received payment from The Country Store regarding the sale of March 7.

March 18:           Purchased store equipment on credit from Furnishing Inc. at a cost of $ 8,600, invoice dated March 15, terms n/30.

March 20:           Sold merchandise inventory on credit to Miracle Mart for $17,365; invoice #102.

                             (cost of goods sold, $7,815).

March 22:           Purchased merchandise inventory on credit from Smith Company, $41,370.

                             Invoice dated March 18, terms 2/10, n/30.

March 24:           Sold merchandise inventory on credit to The Country Store for $4,300; invoice #103 (cost of goods sold, $ 1,935).

March 26:           Miracle Mart returned defective merchandise purchased on credit on March 20 for $375. The merchandise was not returned to inventory.

March 30:           Received payment from Farmers Supply regarding the sale of March 4.

March 31:           Cash sales for the month of March were $12,300; cost of goods sold was $5,530.

March 31:           Issued cheque # 303 to Payroll Bank to cover the payroll for March, $ 14,250.00.

Required

1. Prepare journal entries to record the transactions for March in the appropriate Special Journal, or in the General Journal in cases where a Special Journal does not apply.                                                     (33)

2. Post your Journal Entries to the Accounts Receivable and Accounts Payable Sub ledgers.              (12)

3. Post the special journal totals as wells as the general journal entries to the Accounts Receivable and Accounts Payable Control Accounts.                                                                                     (6)

Prove the accuracy of the subsidiary ledgers. Prepare a Schedule of Accounts Receivable and a Schedule of Accounts Payable as at March 31, 2019.

Answer 1

1. Journal Entries -