Question

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.

Answer 1

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)