Question

At the beginning of September 2021, Stojanovic Distributing Company's ledger showed Cash $12,500, Merchandise Inventory $7,500, and D. Stojanovic, Capital, $20,000. Stojanovic uses the perpetual inventory system and the earnings approach. During the month of September, the company had the following selected transactions: Record and post inventory transactions—perpetual system and earnings approach. Prepare partial income statement. Sept. 2 Purchased $13,500 of merchandise inventory from Moon Supply Co., terms 1/15, n/30, FOB destination. 4 The correct company paid $325 cash for freight charges on the September 2 purchase. 5 Sold merchandise inventory to Brandon Retailers for $18,000. The cost of the merchandise was $11,310 and the terms were 2/10, n/30, FOB destination. 6 Issued a $1,400 credit for merchandise returned by Brandon Retailers. The merchandise originally cost $890 and was returned to inventory. 6 The correct company paid $420 freight on the September 5 sale. 8 Purchased $900 of supplies for cash. 10 Purchased $6,450 of merchandise inventory from Tina Wholesalers, terms 2/10, n/30, FOB shipping point. 10 The correct company paid $150 freight costs on the purchase from Tina Wholesalers. 12 Received a $450 credit from Tina Wholesalers for returned merchandise. 15 Paid Moon Supply Co. the amount due. 15 Collected the balance owing from Brandon Retailers. 19 Sold merchandise for $10,875 cash. The cost of this merchandise was $6,855. 20 Paid Tina Wholesalers the balance owing from the September 10 purchase. 25 Made a $750 cash refund to a cash customer for merchandise returned. The returned merchandise had a cost of $470. The merchandise was damaged and could not be resold. 30 Sold merchandise to Dragen & Company for $6,420, terms n/30, FOB shipping point. Stojanovic's cost for this merchandise was $4,050. Instructions a. Record the transactions assuming Stojanovic uses a perpetual inventory system. b. Set up general ledger accounts for Merchandise Inventory, Sales, Sales Returns and Allowances, Sales Discounts, and Cost of Goods Sold. Enter the beginning Merchandise Inventory balance, post the transactions, and calculate the balances for each account. c. Prepare a partial multiple-step income statement, up to gross profit, for the month of September 2021

Answer 1

Stojanovic Distributing Company
Date	Account	Debit	Credit	Calculation
2-Sep	Merchandise Inventory	$ 13,500			terms 1/15, n/30
	Accounts Payable		$ 13,500		FOB destination
	(To record goods purchased on account)
4-Sep	No entry	$           -			Seller pays freight on FOB destination
	No entry		$           -
5-Sep	Accounts Receivable	$ 18,000			terms were 2/10, n/30
	Sales		$ 18,000		FOB destination
	(To record sales on account)
5-Sep	Cost of goods sold	$ 11,310
	Merchandise Inventory		$ 11,310
	(To record cost)
6-Sep	Sales Returns and Allowances	$    1,400
	Accounts Receivable		$    1,400
	(To record credit issued for sales returns)
6-Sep	Merchandise Inventory	$        890
	Cost of goods sold		$        890
	(To record cost of the returned merchandise & restored to inventory)
6-Sep	Freight out expenses	$        420			Seller pays freight on FOB destination
	Cash		$        420
	(To record payment of freight on goods sold)
8-Sep	Supplies	$        900
	Cash		$        900
	(To record supplies purchased)
10-Sep	Merchandise Inventory	$    6,450			terms 2/10, n/30
	Accounts Payable		$    6,450		FOB shipping point
	(To record goods purchased on account)
10-Sep	Merchandise Inventory	$        150			Buyer pays freight on FOB shipping point
	Cash		$        150
	(To record payment of freight on goods purchased)
12-Sep	Accounts Payable	$        450
	Merchandise Inventory		$        450
	(To record purchase returns)
15-Sep	Accounts Payable	$ 13,500			terms 1/15, n/30 means 1% discount if paid within 15 days or else full invoice to be paid within 30 days.
	Cash		$ 13,365
	Merchandise Inventory		$        135	13500 * 1%
	(To record cash paid to Moon Supply Co.)
15-Sep	Cash	$ 16,268
	Sales Discounts	$        332		16600 * 2%
	Accounts Receivable		$ 16,600	18000-1400
	(To record cash received from Brandon Retailers)
15-Sep	Cash	$ 10,875
	Sales		$ 10,875
	(To record sales for cash)
15-Sep	Cost of goods sold	$    6,855
	Merchandise Inventory		$    6,855
	(To record cost)
20-Sep	Accounts Payable	$    6,000		6450-450
	Cash		$    5,880
	Merchandise Inventory		$        120	6000 * 2%
	(To record cash paid to Tina Wholesalers)
25-Sep	Sales Returns and Allowances	$        750
	Cash		$        750
	(To record cash paid for sales returns)
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