Question

PROBLEM IV

On a separate sheet, prepare general journal entries, without explanations,

for the merchandising transactions listed for Lowell Company. Assume

use of the perpetual inventory system and use the NET method.

May 1 Sold merchandise to Cento Company for $1,200, terms 2/10,

          n/30, goods cost $800.

     2   Purchased merchandise from Source Corporation for $3,000,

          terms 2/10, n/30.

     3   Gave credit to Cento Company for merchandise returned, $200. Cost of

          goods returned were $120.

     4   Purchased merchandise from Treblow Company for $4,700, terms

          2/10, n/30.

     7 Received amount owed from Cento Company for balance of May 1

          purchase.

    11 Returned $700 in merchandise to Treblow Company for credit.

    11 Paid Treblow Company in full for purchase of May 4.

    15 Paid Source Corporation in full for purchase of May 2.

Answer 1

Journal entries
S.no.	Accounts title and explanations		Debit $	Credit $
01-May	Accounts receivable			1176
	Sales revenue (1200-2%)			1176
	Cost of goods sold			800
	Merchandise inventory			800
02-May	Merchandise inventory		2,940
	Accounts payable (3000-2%)			2940
03-May	Sales return and allowance		196
	Accounts receivable (200-2%)			196
	Merchandise inventory		120
	Cost of goods sold				120
04-May	Merchandise inventory		4606
	Accounts payable (4700-2%)			4606
07-May	Cash account (1176-196)		980
	Accounts receivable			980
11-May	Accounts payable			686
	Merchandise inventory (700-2%)		686
11-May	Accounts payable (4606-686)		3920
	Cash account				3920
15-May	Accounts payable			2940
	Merchandise inventory		60
	Cash account				3000