Question

Prepare journal entries to record the following merchandising transactions of Gonzalez's, which uses the perpetual inventory system and the gross method. (Hint: It will help to identify each receivable and payable; for example, record the purchase on July 1 in Accounts Payable—King.) Jul. 1 Purchased merchandise from King Company for $6,800 under credit terms of 1/15, n/30, FOB shipping point, invoice dated July 1. Jul. 2 Sold merchandise to Wright Co. for $1,300 under credit terms of 2/10, n/60, FOB shipping point, invoice dated July 2. The merchandise had cost $780. Jul. 3 Paid $285 cash for freight charges on the purchase of July 1. Jul. 8 Sold merchandise that had cost $1,500 for $2,500 cash. Jul. 9 Purchased merchandise from Lee Co. for $2,600 under credit terms of 2/15, n/60, FOB destination, invoice dated July 9. Jul. 11 Returned $500 of merchandise purchased on July 9 from Lee Co. and debited its account payable for that amount. Jul. 12 Received the balance due from Wright Co. for the invoice dated July 2, net of the discount. Jul. 16 Paid the balance due to King Company within the discount period. Jul. 19 Sold merchandise that cost $1,400 to Griffin Co. for $2,000 under credit terms of 2/15, n/60, FOB shipping point, invoice dated July 19. Jul. 21 Gave a price reduction (allowance) of $400 to Griffin Co. for merchandise sold on July 19 and credited Griffin’s accounts receivable for that amount. Jul. 24 Paid Lee Co. the balance due, net of discount. Jul. 30 Received the balance due from Griffin Co. for the invoice dated July 19, net of discount. Jul. 31 Sold merchandise that cost $4,700 to Wright Co. for $7,800 under credit terms of 2/10, n/60, FOB shipping point, invoice dated July 31.

Answer 1

No.	Date	General Journal	Debit	Credit
1	July 01	Merchandise inventory	6800
		Accounts payable—King		6800
2	July 02	Accounts receivable—Wright	1300
		Sales		1300
3	July 02	Cost of goods sold	780
		Merchandise inventory		780
4	July 03	Merchandise inventory	285
		Cash		285
5	July 08	Cash	2500
		Sales		2500
6	July 08	Cost of goods sold	1500
		Merchandise inventory		1500
7	July 09	Merchandise inventory	2600
		Accounts payable—Lee		2600
8	July 11	Accounts payable—Lee	500
		Merchandise inventory		500
9	July 12	Cash	1274
		Sales discounts (1300*2%)	26
		Accounts receivable—Wright		1300
10	July 16	Accounts payable—King	6800
		Merchandise inventory (6800*1%)		68
		Cash		6732
11	July 19	Accounts receivable—Griffin	2000
		Sales		2000
12	July 19	Cost of goods sold	1400
		Merchandise inventory		1400
13	July 21	Sales returns and allowances	400
		Accounts receivable—Griffin		400
14	July 24	Accounts payable—Lee	2100
		Merchandise inventory (2100*2%)		42
		Cash		2058
15	July 30	Cash	1568
		Sales discounts (1600*2%)	32
		Accounts receivable—Griffin		1600
16	July 31	Accounts receivable—Wright	7800
		Sales		7800
17	July 31	Cost of goods sold	4700
		Merchandise inventory		4700