Question

Sales-Related and Purchase-Related Transactions Using Perpetual Inventory System

The following were selected from among the transactions completed by Babcock Company during November of the current year:

Nov. 3.	Purchased merchandise on account from Moonlight Co., list price $83,000, trade discount 30%, terms FOB destination, 2/10, n/30.
4.	Sold merchandise for cash, $38,000. The cost of the goods sold was $20,930.
5.	Purchased merchandise on account from Papoose Creek Co., $44,600, terms FOB shipping point, 2/10, n/30, with prepaid freight of $790 added to the invoice.
6.	Returned $13,300 ($19,000 list price less trade discount of 30%) of merchandise purchased on November 3 from Moonlight Co.
8.	Sold merchandise on account to Quinn Co., $16,920 with terms n/15. The cost of the merchandise sold was $8,990.
13.	Paid Moonlight Co. on account for purchase of November 3, less return of November 6.
14.	Sold merchandise on VISA, $234,310. The cost of the goods sold was $148,570.
15.	Paid Papoose Creek Co. on account for purchase of November 5.
23.	Received cash on account from sale of November 8 to Quinn Co.
24.	Sold merchandise on account to Rabel Co., $61,500, terms 1/10, n/30. The cost of the goods sold was $31,520.
28.	Paid VISA service fee of $3,440.
30.	Paid Quinn Co. a cash refund of $5,760 for returned merchandise from sale of November 8. The cost of the returned merchandise was $3,550.

Required:

Journalize the transactions.

Nov. 3
Nov. 4-sale
Nov. 4-cost
Nov. 5
Nov. 6
Nov. 8
Nov. 8
Nov. 13
Nov. 14-sale
Nov. 14-cost
Nov. 15
Nov. 23
Nov. 24-sale
Nov. 24-cost
Nov. 28
Nov. 30-refund
Nov. 30-cost

Answer 1

Date	Account titles & Explanations				Debit	Credit
3-Nov	Merchandise inventory				56938
	Accounts payable-Moonlight co					56938
	(83000*70% =		58100
	(58100*98%=		56938
4-Nov	Cash				38,000
	Sales					38,000
	Cost of goods sold				20,930
	Merchandise inventory					20,930
5-Nov	Merchandise inventory				44498
	Accounts payable-		Papoose Creek			44498
	(44,600*98% +790)
6-Nov	Accounts payable-Moonlight co				13034
	Merchandise inventory					13,024
	(13,300*98%)
8-Nov	Accounts receivable-Quinn co				16,920
	Sales					16,920
	Cost of goods sold				8,990
	Merchandise inventory					8,990
13-Nov	Accounts payable-Moonlight co				43904
	Cash					43904
14-Nov	Cash				234,310
	Sales					234,310
	Cost of goods sold				148,570
	Merchandise inventory					148,570
15-Nov	Accounts payable-		Papoose Creek		44498
	Cash					44498
23-Nov	Cash				16,920
	Accounts receivable-Quinn co					16,920
24-Nov	Accounts receivable-		Rabel Co		60885
	Sales					60885
	Cost of goods sold				31,520
	Merchandise inventory					31,520
28-Nov	Credit card expense				3,440
	Cash					3,440
30-Nov	Customers refund payable				5,760
	Cash					5,760
	Merchandise inventory				3,550
	Estimated returns inventory					3,550