Question

In: Accounting

Following are the merchandising transactions for Dollar Store. Nov. 1 Dollar Store purchases merchandise for $2,900...

Following are the merchandising transactions for Dollar Store.

Nov. 1 Dollar Store purchases merchandise for $2,900 on terms of 2/5, n/30, FOB shipping point, invoice dated November 1.
5 Dollar Store pays cash for the November 1 purchase.
7 Dollar Store discovers and returns $200 of defective merchandise purchased on November 1, and paid for on November 5, for a cash refund.
10 Dollar Store pays $145 cash for transportation costs for the November 1 purchase.
13 Dollar Store sells merchandise for $3,132 with terms n/30. The cost of the merchandise is $1,566.
16 Merchandise is returned to the Dollar Store from the November 13 transaction. The returned items are priced at $260 and cost $130; the items were not damaged and were returned to inventory.


Journalize the above merchandising transactions for the Dollar Store assuming it uses a perpetual inventory system and the gross method.

Solutions

Expert Solution

Date General journal Debit credit
November 1 merchandise inventory. Dr $2900
To accounts payable $2900
( To record purchase of merchandise)
November 5 Accounts payable. Dr $2900
To merchandise inventory(2900*2%) $58
To cash $2842
( To amount paid for merchandise inventory)
November 7 cash. Dr(200*(100-2)% $196
To merchandise inventory $196
( To record returned goods)
November 10 merchandise inventory. Dr $145
To cash $145
( To record payment of transportation costs)
November 13 accounts receivable. Dr $3132
To sales $3132
( To record merchandise sales)
November 13 cost of goods sold. Dr $1566
To merchandise inventory. ¥1566
( To record the cost of goods sold )
November 16 sales return and allowances. Dr $260
To Account receivable $260
( To record sales return)
November 16 merchandise inventory. Dr $130
To cost of goods sold $130
(To record cost of goods sold)

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