In: Accounting
The following transactions were recorded by an inexperienced
bookkeeper during the months of June and July for Pharoah Company.
Pharoah Company uses a perpetual inventory system.
June 10
A purchase of $4,000 of merchandise from DanDan Distributors was
debited to Purchases and credited to Cash. The terms of the
purchase were 2/10, n/30, FOB shipping point.
11
The invoice for freight in the amount of $185 for the delivery of
merchandise purchased from DanDan was paid and was debited to
Delivery Expense.
12
Damaged goods totalling $100 were returned to DanDan Distributors
for credit. The bookkeeper recorded a debit to Accounts Receivable
and a credit to Sales Returns and Allowances.
20
A payment was made to DanDan Distributors for the June 10 purchase.
The payment was recorded as a debit to Purchases and a credit to
Cash.
July 15
Pharoah sold goods for $9,285, Sales was credited and Cost of Goods
Sold was debited for this amount. The cost of the inventory sold
was $3,600. The terms of the sale were 1/15, n/30, FOB
destination.
15
Freight charges on the above transaction were debited to Accounts
Receivable and credited to Cash for $155. The bookkeeper believed
the customer had to pay for the freight charges.
17
Pharoah’s manager gave the customer from July 15 a $380 allowance.
The entry made to record the allowance was a debit to Sales and a
credit to Sales Returns and Allowances.
Review each transaction below and indicate whether you agree or
disagree with how the bookkeeper accounted for the
transaction.
June 10
A purchase of $4,000 of merchandise from DanDan Distributors was
debited to Purchases and credited to Cash. The terms of the
purchase were 2/10, n/30, FOB shipping point.
Agree
Disagree
11
The invoice for freight in the amount of $185 for the delivery of
merchandise purchased from DanDan was paid and was debited to
Delivery Expense.
Agree
Disagree
12
Damaged goods totalling $100 were returned to DanDan Distributors
for credit. The bookkeeper recorded a debit to Accounts Receivable
and a credit to Sales Returns and Allowances.
Agree
Disagree
20
A payment was made to DanDan Distributors for the June 10 purchase.
The payment was recorded as a debit to Purchases and a credit to
Cash.
Agree
Disagree
July 15
Pharoah sold goods for $9,285, Sales was credited and Cost of Goods
Sold was debited for this amount. The cost of the inventory sold
was $3,600. The terms of the sale were 1/15, n/30, FOB
destination.
Agree
Disagree
15
Freight charges on the above transaction were debited to Accounts
Receivable and credited to Cash for $155. The bookkeeper believed
the customer had to pay for the freight charges.
Agree
Disagree
17
Pharoah’s manager gave the customer from July 15 a $380 allowance.
The entry made to record the allowance was a debit to Sales and a
credit to Sales Returns and Allowances.
Agree
Disagree
SHOW LIST OF ACCOUNTS
LINK TO TEXT
LINK TO TEXT
If you disagreed with any of the accounting, prepare the correct entry
Solution:
June 10: Disagree
Corrected Journal Entries | ||
Particulars | Debit | Credit |
Inventory Dr | $4,000.00 | |
To Accounts Payable | $4,000.00 |
June 11:Disagree
Corrected Journal Entries | ||
Particulars | Debit | Credit |
Inventory Dr | $185.00 | |
To Cash | $185.00 |
June 12: Disagree
Corrected Journal Entries | ||
Particulars | Debit | Credit |
Accounts Payable Dr | $100.00 | |
To Inventory | $100.00 |
June 20: Disagree
Corrected Journal Entries | ||
Particulars | Debit | Credit |
Accounts Payable Dr | $3,900.00 | |
To Cash | $3,822.00 | |
To Inventory | $78.00 |
July 15: Disagree
Corrected Journal Entries | ||
Particulars | Debit | Credit |
Accounts receivables Dr | $9,285.00 | |
To Sales revenue | $9,285.00 | |
Cost of goods sold Dr | $3,600.00 | |
To Inventory | $3,600.00 |
July 15: Disagree
Corrected Journal Entries | ||
Particulars | Debit | Credit |
Freight outward Dr | $155.00 | |
To Cash | $155.00 |
July 17: Disagree
Corrected Journal Entries | ||
Particulars | Debit | Credit |
Sales returns and allowances Dr | $380.00 | |
To Accounts receivables | $380.00 |