Question

Problem 6-71B (Algorithmic)
Recording Sale and Purchase Transactions

Jefferson Jetts sells athletic shoes and uses the perpetual inventory system. During June 2018, Jefferson engaged in the following transactions its first month of operations:

1. On June 1, Jefferson purchased, on credit, 100 pairs of basketball shoes and 210 pairs of running shoes with credit terms of 2/10, n/30. The basketball shoes were purchased at a cost of $75 per pair, and the running shoes were purchased at a cost of $55 per pair. Jefferson paid Mole Trucking $250 cash to transport the shoes from the manufacturer to Jefferson's warehouse, shipping terms were FOB shipping point, and the items were shipped on June 1 and arrived on June 4.
2. On June 2, Jefferson purchased 80 pairs of cross-training shoes for cash. The shoes cost Jefferson $60 per pair.
3. On June 6, Jefferson purchased 120 pairs of tennis shoes on credit. Credit terms were 2/10, n/25. The shoes were purchased at a cost of $40 per pair.
4. On June 10, Jefferson paid for the purchase of the basketball shoes and the running shoes in Transaction a.
5. On June 12, Jefferson determined that $480 of the tennis shoes were defective. Jefferson returned the defective merchandise to the manufacturer.
6. On June 18, Jefferson sold 50 pairs of basketball shoes at $110 per pair, 100 pairs of running shoes for $85 per pair, 18 pairs of cross-training shoes for $100 per pair, and 35 pairs of tennis shoes for $65 per pair. All sales were for cash. The cost of the merchandise sold was $12,150.
7. On June 21, customers returned 10 pairs of the basketball shoes purchased on June 18. The cost of the merchandise returned was $750.
8. On June 23, Jefferson sold another 20 pairs of basketball shoes, on credit, for $110 per pair and 15 pairs of cross-training shoes for $100 cash per pair. The cost of the merchandise sold was $2,400.
9. On June 30, Jefferson paid for the June 6 purchase of tennis shoes minus the return on June 12.
10. On June 30, Jefferson purchased 60 pairs of basketball shoes, on credit, for $75 each. The shoes were shipped FOB destination and arrived at Jefferson on July 3.

Required:

1. Prepare the journal entries to record the sale and purchase transactions for Jefferson during June 2018. If no entry is required, select "No entry required" and leave the amount boxes blank. For a compound transaction, if those boxes in which no entry is required, leave the box blank.

a. June 1	Inventory
	Accounts Payable
	(Purchased inventory on account)
June 1	Inventory
	Cash
	(Paid freight costs)
b. June 2	Inventory
	Cash
	(Purchased inventory for cash)
c. June 6	Inventory
	Accounts Payable
	(Purchased inventory on account)
d. June 10	Accounts Payable
	Inventory
	Cash
	(Paid accounts payable within discount period)
e. June 12	Accounts Payable
	Inventory
	(Returned inventory)
f. June 18	Cash
	Sales Revenue
	(Recorded cash sales)
June 18	Cost of Goods Sold
	Inventory
	(Sold inventory)
g. June 21	Sales Returns and Allowances
	Cash
	(Recorded return of sales merchandise)
June 21	Inventory
	Cost of Goods Sold
	(Recorded cost of inventory returned)
h. June 23	Accounts Receivable
	Cash
	Sales Revenue
	(Recorded sales, both cash and on account)
June 23	Cost of Goods Sold
	Inventory
	(Recorded cost of merchandise sold)
i. June 30	Accounts Payable
	Cash
	(Paid off accounts payable)
j. June 30	No entry required
	No entry required
	(Purchased inventory on account)

2. Assuming operating expenses of $5,300, prepare Jefferson's statement of earnings for June 2018 (Ignore income tax expense.)

Jefferson Jetts
Statement of Earnings
For the Period Ended June 30, 2018
Sales	$
Less: Sales returns and allowances
Net sales	$
Less: Cost of goods sold
Gross margin	$
Less: Operating expenses
Net income	$

Answer 1

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