Question
In: Accounting
University Wholesale Company purchases merchandise from a variety of manufacturers and sells the merchandise to a...
University Wholesale Company purchases merchandise from a
variety of manufacturers and sells the merchandise to a variety of
retail stores. All sales are subject to a cash discount (terms of
2/10, n/30). University uses a perpetual inventory system. The
following transactions occurred during the month of February:
Feb. 2—Purchased $18,600 of merchandise from Caroline
Manufacturing; terms are 1/10, n/30.
Feb. 5—Paid $750 freight bill for the February 2
purchase.
Feb. 11—Paid Caroline for the February 2 purchase.
Feb. 17—University receives a $420 allowance on the February
13 purchase from Taylor since some of the merchandise was the wrong
color.
Feb. 21—Sold merchandise for $3,000 to Valley Co. on account
(cost of the merchandise sold was $1,250); terms 3/10, n/45.
Feb. 25—Valley Co. returns 10% of the merchandise that it
previously purchased on February 21.
Feb. 28—Receives payment from Valley Co. for the sale on
February 21.
Required
Prepare the journal entries for each of the transactions
listed above.
Solutions
Expert Solution
In The Books Of University Wholesale Company
General Journal
| Date | Description | Debit | Credit |
| Feb 2 | Purchased | 18600 | |
| Accounts Payble - Caroline Manufacturing | 18600 | ||
| ( Being merchendise purchased on account) | |||
| Feb 5 | Freight Inward Account | 750 | |
| Cash Account | 750 | ||
| ( Being freight inward paid ) | |||
| Feb 11 | Accounts Payble - Caroline Manufacturing | 18600 | |
| Cash | 18600 | ||
| ( Being cash paid for accounts payble) | |||
| Feb 17 | Accounts Payble - Taylor | 420 | |
| Allowance | 420 | ||
| ( Being allowance received from Taylor ) | |||
| Feb, 21 | Accounts Receivable - Vally Co. | 3000 | |
| Sales Revenue | 3000 | ||
| ( Being sales made to Vally co on account ) | |||
| Feb 25 | Return Inward | 300 | |
| Accounts Receivable - Vally Co. | 300 | ||
| ( Being 10% return made by vally co.) | |||
| Feb 28 | Cash | 2700 | |
| Accounts Receivable - Vally Co. | 2700 | ||
| ( Being cash received from vally co. ) | |||
Note
1) Return from Vally Co. = ( 3000 X 10/100 ) = $300
2) Please note that no details is given for purchase made on February 13 from Tylor in the question. Thats why no entry made in the journal.
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