Question

At the beginning of June 2017, Pina Colada Distributing Company’s ledger showed Cash $18,000, Merchandise Inventory $6,000, and D. Pina Colada, Capital, $24,000. During the month of June, the company had the following selected transactions: June 1 Purchased $8,910 of merchandise inventory from Sun Supply Co., terms 1/15, n/30, FOB destination. 2 The correct company paid $220 cash for freight charges on the June 1 purchase. 5 Sold merchandise inventory to Moose Jaw Retailers for $12,200. The cost of the merchandise was $7,700 and the terms were 2/10, n/30, FOB destination. 6 Issued a $820 credit for merchandise returned by Moose Jaw Retailers. The merchandise originally cost $540 and was returned to inventory. 6 The correct company paid $280 freight on the June 5 sale. 7 Purchased $840 of supplies for cash. 10 Purchased $4,550 of merchandise inventory from Fey Wholesalers, terms 2/10, n/30, FOB shipping point. 10 The correct company paid $150 freight costs on the purchase from Fey Wholesalers. 12 Received a $300 credit from Fey Wholesalers for returned merchandise. 14 Paid Sun Supply Co. the amount due. 15 Collected the balance owing from Moose Jaw Retailers. 19 Sold merchandise for $7,100 cash. The cost of this merchandise was $4,500. 20 Paid Fey Wholesalers the balance owing from the June 10 purchase. 25 Made a $520 cash refund to a cash customer for merchandise returned. The returned merchandise had a cost of $325. The merchandise was damaged and could not be resold. 30 Sold merchandise to Bauer & Company for $4,200, terms n/30, FOB shipping point. Pina Colada's cost for this merchandise was $2,600. A physical inventory count shows $3,900 of inventory on hand on June 30, 2017.

1)Record the transactions assuming Pina Colada uses a periodic inventory system

2) Set up general ledger accounts for merchandise inventory and all of the temporary accounts used in the merchandising transactions. Enter beginning balances, and post the transactions.

Merchandise Inventory
Date	Explanation	Ref.	Debit	Credit	Balance
June 1	Balance	√
Sales
Date	Explanation	Ref.	Debit	Credit	Balance
June 5		J1
19		J1
30		J1
Sales Returns and Allowances
Date	Explanation	Ref.	Debit	Credit	Balance
June 6		J1
25		J1
Sales Discounts
Date	Explanation	Ref.	Debit	Credit	Balance
June 15		J1
Purchases
Date	Explanation	Ref.	Debit	Credit	Balance
June 1		J1
10		J1
Purchases Discounts
Date	Explanation	Ref.	Debit	Credit	Balance
June 14		J1
June 20		J1
Purchases Returns and Allowances
Date	Explanation	Ref.	Debit	Credit	Balance
June 12		J1
Freight In
Date	Explanation	Ref.	Debit	Credit	Balance
June 10		J1
Freight Out
Date	Explanation	Ref.	Debit	Credit	Balance
June 6		J1

Answer 1

PINA COLADA DIST. CO.:
1) Journal entries of transactions:
Date	Acc Titles	Dr. $	Cr. $
1-Jun	Merchandise Inventory	8910
	Accounts payable		8910
	(purchase of inventory)
2-Jun	No entry for Freight, being FOB dist.
5-Jun	Accounts Receivable	12200
	Sales revenue		12200
	(goods sold to Moose)
	COGS	7700
	Merchandise Inventory		7700
	(cost of sales recorded)
6-Jun	Sales return & Allowances	820
	Accounts Receivable		820
	(return of goods)
	Merchandise Inventory	540
	COGS		540
	(cost of goods returned recorded)
6-Jun	Freight Outward	280
	Cash		280
	(freight paid for goods dispatched)
7-Jun	Supplies	840
	Cash		840
	(purchased supplies)
10-Jun	Merchandise Inventory	4550
	Accounts payable		4550
	(purchase of inventory)
	Freight Inward	150
	Cash		150
	(freight paid for purchases)
12-Jun	Accounts payable	300
	Purchase return & allowance		300
	(credit on return of goods)
14-Jun	Accounts payable	8910
	Cash		8910
	(payment to AP)
15-Jun	Cash	11380		(12200-820)
	Accounts Receivable		11380
	(payment received)
19-Jun	Cash	7100
	Sales revenue		7100
	(cash sales made)
	COGS	4500
	Merchandise Inventory		4500
	(cost of sales recorded)
20-Jun	Accounts payable	4250		(4550-300)
	Cash		4250
	(payment to AP)
25-Jun	Sales return & Allowances	520
	Cash		520
	(cash sales returned)
30-Jun	Accounts Receivable	4200
	Sales revenue		4200
	(goods sold to Bauer)
	COGS	2600
	Merchandise Inventory		2600
	(cost of sales recorded)

2) General Ledger:
DEBIT	AMOUNT $	CREDIT	AMOUNT $
Merchandise Inventory
OB	6000	5	7700
1	8910	19	4500
6	540	30	2600
10	4550	Inventory loss	1300
		CB	3900
Acc payable
12	300	1	8910
14	8910	10	4550
20	4250
Acc Receivable
5	12200	6	820
30	4200	15	11380
		CB	4200
Sales revenue
CB	23500	5	12200
		19	7100
		30	4200
COGS
5	7700	6	540
19	4500	CB	14260
30	2600
Sales return & Allowances
6	820	CB	1340
25	520
Freight Outward
6	280
Supplies
7	840
Freight Inward
10	150
Purchase return & allowance
		12	300