Question

The following selected transactions were completed by Betz Company during July of the current year. Betz Company uses the net method under a perpetual inventory system.

July	1	Purchased merchandise from Sabol Imports Co., $13,322, terms FOB destination, n/30.
	3	Purchased merchandise from Saxon Co., $10,650, terms FOB shipping point, 2/10, n/eom. Prepaid freight of $240 was added to the invoice.
	5	Purchased merchandise from Schnee Co., $13,700, terms FOB destination, 2/10, n/30.
	6	Issued debit memo to Schnee Co. for merchandise with an invoice amount of $4,850 returned from purchase on July 5.
	13	Paid Saxon Co. for invoice of July 3.
	14	Paid Schnee Co. for invoice of July 5, less debit memo of July 6.
	19	Purchased merchandise from Southmont Co., $29,840, terms FOB shipping point, n/eom.
	19	Paid freight of $410 on July 19 purchase from Southmont Co.
	20	Purchased merchandise from Stevens Co., $22,200, terms FOB destination, 1/10, n/30.
	30	Paid Stevens Co. for invoice of July 20.
	31	Paid Sabol Imports Co. for invoice of July 1.
	31	Paid Southmont Co. for invoice of July 19.

Journalize the entries to record the transactions of Betz Company for July. Refer to the Chart of Accounts for exact wording of account titles.

Chart of Accounts

CHART OF ACCOUNTS
Betz Company
General Ledger
ASSETS 110 Cash 120 Accounts Receivable 125 Notes Receivable 130 Inventory 131 Estimated Returns Inventory 140 Office Supplies 141 Store Supplies 142 Prepaid Insurance 180 Land 192 Store Equipment 193 Accumulated Depreciation-Store Equipment 194 Office Equipment 195 Accumulated Depreciation-Office Equipment LIABILITIES 211 Accounts Payable-Sabol Imports Co. 212 Accounts Payable-Saxon Co. 213 Accounts Payable-Schnee Co. 214 Accounts Payable-Southmont Co. 215 Accounts Payable-Stevens Co. 216 Salaries Payable 218 Sales Tax Payable 219 Customer Refunds Payable 221 Notes Payable EQUITY 310 Common Stock 311 Retained Earnings 312 Dividends	REVENUE 410 Sales 610 Interest Revenue EXPENSES 510 Cost of Goods Sold 521 Delivery Expense 522 Advertising Expense 524 Depreciation Expense-Store Equipment 525 Depreciation Expense-Office Equipment 526 Salaries Expense 531 Rent Expense 533 Insurance Expense 534 Store Supplies Expense 535 Office Supplies Expense 536 Credit Card Expense 539 Miscellaneous Expense 710 Interest Expense

Journal

Shaded cells have feedback.

Journalize the entries to record the transactions of Betz Company for July. Refer to the Chart of Accounts for exact wording of account titles.

How does grading work?

PAGE 10

JOURNAL

ACCOUNTING EQUATION

Score: 257/301

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT	ASSETS	LIABILITIES	EQUITY
1	✔	✔
2		✔
3	✔	✔
4		✔
5	✔	✔
6		✔
7	✔	✔
8		✔
9	✔	✔
10		✔
11	✔	✔
12		✔
13	✔	✔		✔
14		✔			✔
15	✔	✔
16		✔
17	✔	✔
18		✔
19	✔	✔
20		✔
21	✔	✔
22		✔
23	✔	✔
24		✔

Points:

51.23 / 60

Feedback

Check My Work

Journalize these transactions from the buyer's perspective. Discounts are taken on the amount owed to the seller, except for any freight costs.

July 1, 3, 5, 19 & 20: Using the perpetual inventory system, purchases of inventory on account are recorded by debiting the merchandise inventory account and crediting the accounts payable account. Under FOB shipping point, freight is paid by the buyer, while FOB destination freight is the seller's expense. Often freight must be prepaid for the carrier to deliver.

July 6: Any discounts or returns are recorded directly by the buyer who debits Accounts Payable and credits Merchandise Inventory, basically reversing what was done in recording the purchase.

July 13: Since the invoice is paid within the discount period, the cash paid on account is the difference between the invoice and the discount.

July 14: Returns are not eligible for discounts. Since the invoice is paid within the discount period, Accounts Payable is debited for the balance in the account. The cash paid on account is the difference between the invoice and the discount, less the returns.

July 19: Freight expense increases the cost of the merchandise. However, freight is typically prepaid in cash.

July 30: Since the invoice is paid within the discount period, the cash paid on account is the difference between the invoice and the discount.

July 31: Since no discounts are allowed, no discounts are recorded. The cash paid on account in each case is equal to the invoice.

Answer 1

Betz Company
Journal entries					Page 10
Date	Account	Post ref	Debit	Credit	Assets	Liabilities	Equity	Calculation
1-Jul	Inventory	J10	13,322		↑
	Accounts Payable-Sabol Imports Co.	J10		13,322		↑
3-Jul	Inventory	J10	10,677		↑			=10650*(1-2%)+240
	Accounts Payable-Saxon Co.	J10		10,677		↑
5-Jul	Inventory	J10	13,426		↑			=13700*(1-2%)
	Accounts Payable-Schnee Co.	J10		13,426		↑
6-Jul	Accounts Payable-Schnee Co.	J10	4,850			↓
	Inventory	J10		4,850	↓
13-Jul	Accounts Payable-Saxon Co.	J10	10,677			↓
	Cash	J10		10,677	↓
14-Jul	Accounts Payable-Schnee Co.	J10	8,576			↓		13426-4850
	Cash	J10		8,576	↓
19-Jul	Inventory	J10	29,840		↑
	Accounts Payable-Southmont Co.	J10		29,840		↑
19-Jul	Inventory	J10	410		↑
	Cash	J10		410	↓
20-Jul	Inventory	J10	21,978		↑			=22200*(1-1%)
	Accounts Payable-Stevens Co.	J10		21,978		↑
30-Jul	Accounts Payable-Stevens Co.	J10	21,978			↓
	Cash	J10		21,978	↓
31-Jul	Accounts Payable-Sabol Imports Co.	J10	13,322			↓
	Cash	J10		13,322	↓
31-Jul	Accounts Payable-Southmont Co.	J10	29,840			↓
	Cash	J10		29,840	↓