Question

The following transactions took place at Fine Fashions Outlet during July 20X1. Fine Fashions Outlet uses a perpetual inventory system.

DATE			TRANSACTIONS
20X1
July	1		Purchased dresses for $4,780 plus a freight charge of $280 from Fashion Expo, Invoice 101, dated July 1; the terms are 1/10, n/30.
	5		Sold two dresses on account to Alice Chu, terms 2/10, n/30; issued Sales Slip 788 for $660. The cost of the dresses sold was $430.
	7		Received Credit Memorandum 210 for $580 from Fashion Expo for damaged dresses returned; the goods were purchased on Invoice 101, dated July 1.
	9		Accepted a return of a dress from Alice Chu; the dress was originally sold on Sales Slip 788 of July 5; issued Credit Memorandum 89 for $230. The cost of the returned dress was $165.
	10		Issued Check 1255 to pay the amount due to Fashion Expo for Invoice 101, dated July 1, less the return of July 7 and less the cash discount.
	15		Received payment from Alice Chu for the sale of July 5, less the return of July 9 and less the cash discount.
	15		Recorded sales on bank credit cards for the two-week period ended July 15, $12,300; the bank charges a 3% fee on all credit card sales. The cost of merchandise sold was $8,300.
	17		Purchased merchandise on account from Fashion Wholesalers for $4,800, subject to trade discounts of 30% and 15%; terms 2/10, n/30, Invoice 2078.
	26		Paid amount owed to Fashion Wholesalers for the purchase of July 17, Check 106.

Required:
Record the transactions in a general journal.

Analyze:
What percentage of the total amount due to Fashion Expo on July 1 is due to the freight charge?

Answer 1

Date	Account title and explanation	Debit	Credit
July 1	Inventory	$5,060
	Accounts payable		$4,780
	Cash		$280
	[To record credit purchases & freight]
July 5	Accounts receivable	$660
	Sales revenue		$660
	[To record sales revenue]
	Cost of goods sold	$430
	Inventory		$430
	[To record cost of goods sold]
July 7	Accounts payable	$580
	Inventory		$580
	[To record purchase returns]
july 9	Sales returns and allowance	$230
	Accounts receivable		$230
	[To record sales revenue]
	Inventory	$165
	Cost of goods sold		$165
	[To record cost of sales returns]
July 10	Cash	$4,158
	Inventory [4200 x 1%]	$42
	Accounts payble [4780-580]		$4,200
	[To record Cash paid for accounts payable]
July 15	Cash	$421.40
	Sales discount [430 x 2%]	$8.60
	Accounts receivable [660-230]		$430
	[To record collections from customers]
July 15	Accounts receivable	$11,931
	Card fees expense [12300 x 3%]	$369
	Sales revenue		$12,300
	[To record sales revenue]
	Cost of goods sold	$8,300
	Inventory		$8,300
	[To record cost of goods sold]
July 17	Inentory [$4,800 x 55%*]	$2,640
	Accounts payable		$2,640
	[To record purchase of inventory on account]
July 26	Accounts payable	$2,587.20
	Inventory [2970 x 2%]	$52.80
	Cash		$2,640
	[To record cash paid for accounts payable]

*% After Trade discount =100%-30% = 70%; 70% - 15% = 55%.