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 $4,840 plus a freight charge of $340 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 $780. The cost of the dresses sold was $490.
	7		Received Credit Memorandum 210 for $640 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 $290. The cost of the returned dress was $225.
	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, $12,900; the bank charges a 3% fee on all credit card sales. The cost of merchandise sold was $8,900.
	17		Purchased merchandise on account from Fashion Wholesalers for $5,400, 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	$5,180
	Accounts payable		$4,840
	Cash		$340
	[To record credit purchases & freight]
July 5	Accounts receivable	$780
	Sales revenue		$780
	[To record sales revenue]
	Cost of goods sold	$490
	Inventory		$490
	[To record cost of goods sold]
July 7	Accounts payable	$640
	Inventory		$640
	[To record purchase returns]
july 9	Sales returns and allowance	$290
	Accounts receivable		$290
	[To record sales revenue]
	Inventory	$225
	Cost of goods sold		$225
	[To record cost of sales returns]
July 10	Cash	$4,158
	Inventory [4200 x 1%]	$42
	Accounts payble [4840-640]		$4,200
	[To record Cash paid for accounts payable]
July 15	Cash	$480.20
	Sales discount [490 x 2%]	$9.80
	Accounts receivable [780-290]		$490
	[To record collections from customers]
July 15	Accounts receivable	$12,513
	Card fees expense [12900 x 3%]	$387
	Sales revenue		$12,900
	[To record sales revenue]
	Cost of goods sold	$8,900
	Inventory		$8,900
	[To record cost of goods sold]
July 17	Inentory [$5,400 x 55%*]	$2,970
	Accounts payable		$2,970
	[To record purchase of inventory on account]
July 26	Accounts payable	$2,910.60
	Inventory [2970 x 2%]	$59.40
	Cash		$2,970
	[To record cash paid for accounts payable]

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