Question

The following selected transactions were completed by Amsterdam Supply Co., which sells office supplies primarily to wholesalers and occasionally to retail customers. Also note that the company uses a clearing house to take care of all bank as well as non-bank credit cards used by its customers.

Record on page 10 of the journal

Mar. 2 Sold merchandise on account to Equinox Co., $18,900, terms FOB destination, 1/10, n/30. The cost of the goods sold was $13,300.

3 Sold merchandise for $11,350 plus 6% sales tax to retail cash customers. The cost of the goods sold was $7,000.

4 Sold merchandise on account to Empire Co., $55,400, terms FOB shipping point, n/eom. The cost of the goods sold was $33,200.

5 Sold merchandise for $30,000 plus 6% sales tax to retail customers who used MasterCard. The cost of the goods sold was $19,400.

12 Received check for amount due from Equinox Co. for sale on March 2.

14 Sold merchandise to customers who used American Express cards, $13,700. The cost of the goods sold was $8,350.

16 Sold merchandise on account to Targhee Co., $27,500, terms FOB shipping point, 1/10, n/30. The cost of the goods sold was $16,000.

18 Issued credit memo for $4,800 to Targhee Co. for merchandise returned from sale on March 16. The cost of the merchandise returned was $2,900.

Record on page 11 of the journal Mar.

Mar.19 Sold merchandise on account to Vista Co., $8,250, terms FOB shipping point, 2/10, n/30. Added $75 to the invoice for prepaid freight. The cost of the goods sold was $5,000.

26 Received check for amount due from Targhee Co. for sale on March 16 less credit memo of March 18. 28 Received check for amount due from Vista Co. for sale of March 19.

31 Received check for amount due from Empire Co. for sale of March 4.

31 Paid Fleetwood Delivery Service $5,600 for merchandise delivered during March to customers under shipping terms of FOB destination.

Apr. 3 Paid City Bank $940 for service fees for handling MasterCard and American Express sales during March.

15 Paid $6,544 to state sales tax division for taxes owed on sales.

Answer 1

SOLUTION

Date	Accounts titles and Explanation	Debit ($)	Credit ($)
March
2	Accounts receivable	18,900
	Sales revenue		18,900
	Cost of goods sold	13,300
	Merchandise inventory		13,300
3	Accounts receivable	12,031
	Sales tax payable (11,350*6%)		681
	Sales revenue		11,350
	Cost of goods sold	7,000
	Merchandise inventory		7,000
4	Accounts receivable	55,400
	Sales revenue		55,400
	Cost of goods sold	33,200
	Merchandise inventory		33,200
5	Accounts receivable	31,800
	Sales tax payable (30000*6%)		1,800
	Sales revenue		30,000
	Cost of goods sold	19,400
	Merchandise inventory		19,400
12	Cash (18,900*99%)	18,711
	Sales discounts	189
	Accounts receivable		18,900
14	Accounts receivable-American Express cards	13,700
	Sales revenue		13,700
	Cost of goods sold	8,350
	Merchandise inventory		8,350
16	Accounts receivable	27,500
	Sales revenue		27,500
	Cost of goods sold	16,000
	Merchandise inventory		16,000
18	Sales returns and allowances	4,800
	Accounts receivable		4,800
	Merchandise inventory	2,900
	Cost of goods sold		2,900
19	Accounts receivable	8,325
	Sales revenue		8,250
	Outward freight		75
	Cost of goods sold	5,000
	Merchandise inventory		5,000
26	Cash [(27,500-4,800)*99%]	22,473
	Sales discounts	227
	Accounts receivable		22,700
28	Cash (8,325-165)	8,160
	Sales discounts (8,250*2%)	165
	Accounts receivable		8,325
	Freight outwards	5,600
	Cash		5,600
April
3	Bank service charges	940
	Cash		940
15	Sales tax payable	6,544
	Cash		6,544