Question

Problem 5-3A Journal entries for merchandising activities—perpetual LO3 The Jewel Box purchases jewellery from around the world and sells to local retailers in Canada. Prepare gen-eral journal entries to record the following perpetual system merchandising transactions of The Jewel Box. Use a separate account for each receivable and payable; for example, record the purchase on August 1 in Accounts Payable—Luu Company.

Aug. 1 Purchased necklaces from Luu Company for $4,000 under credit terms of 1/10, n/30, FOB destination. 4 At Luu Company’s request, paid $350 for freight charges on the August 1 purchase, reducing the amount owed to Luu.

5 Sold rings to Green Ruby for $3,800 under credit terms of 2/10, n/60, FOB destination. The merchandise had cost $2,470.

8 Purchased bracelets from Jane Co. for $5,200 under credit terms of 1/10, n/45, FOB shipping point. 9 Paid $325 shipping charges related to the August 5 sale to Green Ruby.

10 Green Ruby returned the rings purchased from the August 5 sale that had cost $440 and been sold for $800. The merchandise was restored to inventory.

12 After negotiations with Jane Co. concerning problems with the merchandise purchased on August 8, received a credit memo from Jane granting a price reduction of $400.

15 Received balance due from Green Ruby for the August 5 sale. 17 Purchased office equipment from WestCo on credit, $6,000, n/45. 18 Paid the amount due Jane Co. for the August 8 purchase. 19 Sold earrings to Chic Jewellery for $1,800 under credit terms of 1/10, n/30, FOB shipping point. The merchandise had cost $990.

22 Chic Jewellery requested a price reduction on the August 19 sale because the merchandise did not meet specifications. Sent Chic Jewellery a credit memo for $300 to resolve the issue.

29 Received Chic Jewellery’s payment of the amount due from the August 19 purchase. 30 Paid Luu Company the amount due from the August 1 purchase.

Answer 1

Journal Entries for August tabulated hereunder: