Question

At the beginning of June, Circuit Country has a balance in inventory of $2,900. The following transactions occur during the month of June.  

June 2 Purchase radios on account from Radio World for $2,600, terms 1/15, n/45.

June 4 Pay cash for freight charges related to the June 2 purchase from Radio World, $380.

June 8 Return defective radios to Radio World and receive credit, $200.

June 10 Pay Radio World in full.

June 11 Sell radios to customers on account, $4,800, that had a cost of $3,100.

June 18 Receive payment on account from customers, $3,800.

June 20 Purchase radios on account from Sound Unlimited for $3,700, terms 2/10, n/30.

June 23 Sell radios to customers for cash, $5,200, that had a cost of $3,500.

June 26 Return damaged radios to Sound Unlimited and receive credit of $300.

June 28 Pay Sound Unlimited in full.  

Assuming that Circuit Country uses a perpetual inventory system, record the transactions.

Answer 1

Date	Account titles and explanation	Debit	Credit
Jun 2	Inventory	$2600
	Account payable- Radio World		$2600
	(To record inventory purchased on account)
Jun 4	Inventory	$380
	Cash		$380
	(To record freight charges paid)
Jun 8	Account payable- Radio World	$200
	Inventory		$200
	(To record purchased inventory return)
Jun 10	Account payable- Radio World (2600-200)	$2400
	Inventory (2600-200)*1%		$24
	Cash (2600-200)*99%		$2376
	(To record amount paid to Radio World)
Jun 11	Account receivable	$4800
	Sales revenue		$4800
	(To record merchandise sold on account)
	Cost of goods sold	$3100
	Inventory		$3100
	(To record cost of goods sold)
Jun 18	Cash	$3800
	Account receivable		$3800
	(To record amount received from customers)
Jun 20	Inventory	$3700
	Account payable- Sound Unlimited		$3700
	(To record inventory purchased on account)
Jun 23	Cash	$5200
	Sales revenue		$5200
	(To record merchandise sold)
	Cost of goods sold	$3500
	Inventory		$3500
	(To record cost of goods sold)
Jun 26	Account payable- Sound Unlimited	$300
	Inventory		$300
	(To record purchased inventory return)
Jun 28	Account payable- Sound Unlimited (3700-300)	$3400
	Inventory (3700-300)*2%		$68
	Cash (3700-300)*98%		$3332
	(To record amount paid to Sound Unlimited)