Question

Question 1

At the beginning of June 2017, Pina Colada Distributing Company’s ledger showed Cash $17,000, Merchandise Inventory $4,900, and D. Pina Colada, Capital, $21,900. During the month of June, the company had the following selected transactions:

June 1		Purchased $8,800 of merchandise inventory from Sun Supply Co., terms 1/15, n/30, FOB destination.
2		The correct company paid $220 cash for freight charges on the June 1 purchase.
5		Sold merchandise inventory to Moose Jaw Retailers for $12,000. The cost of the merchandise was $7,700 and the terms were 2/10, n/30, FOB destination.
6		Issued a $800 credit for merchandise returned by Moose Jaw Retailers. The merchandise originally cost $580 and was returned to inventory.
6		The correct company paid $290 freight on the June 5 sale.
7		Purchased $780 of supplies for cash.
10		Purchased $4,750 of merchandise inventory from Fey Wholesalers, terms 2/10, n/30, FOB shipping point.
10		The correct company paid $120 freight costs on the purchase from Fey Wholesalers.
12		Received a $250 credit from Fey Wholesalers for returned merchandise.
14		Paid Sun Supply Co. the amount due.
15		Collected the balance owing from Moose Jaw Retailers.
19		Sold merchandise for $7,500 cash. The cost of this merchandise was $4,500.
20		Paid Fey Wholesalers the balance owing from the June 10 purchase.
25		Made a $530 cash refund to a cash customer for merchandise returned. The returned merchandise had a cost of $325. The merchandise was damaged and could not be resold.
30		Sold merchandise to Bauer & Company for $4,500, terms n/30, FOB shipping point. Pina Colada's cost for this merchandise was $2,600.

(a)

Record the transactions assuming Pina Colada uses a perpetual inventory system. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Record journal entries in the order presented in the problem.)

Answer 1

A	B	C	D	E	F	G	H	I	J
2
3		Journal entry will be as follows:
4		Date	Accounts	Debit	Credit
5		1-Jun	Merchandise inventory	$8,800
6			Accounts Payable		$8,800
7			(1/15,n/30, FOB Destination)
8
9		2-Jun	No entry required as company purchased the inventory on FOB destination terms
10			and hence doesn't need to pay freight charges.
11
12		5-Jun	Accounts Receivable	$12,000
13			Sales Revenue		$12,000
14			(2/10, n/30, FOB Destination)
15			Cost of goods sold	$7,700
16			Merchandise		$7,700
17
18		6-Jun	Sales Return and allowances	$800
19			Accounts Receivable		$800
20
21			Merchandise Inventory	$580
22			Cost of goods sold		$580
23
24		6-Jun	Freight Expense	$290		(Since company sold at FOB destination term)
25			Cash		$290
26
27		7-Jun	Supplies	$780
28			Cash		$780
29
30		10-Jun	Merchandise inventory	$4,750
31			Accounts Payable		$4,750
32			(2/10,n/30, FOB Destination)
33
34		10-Jun	No entry required as company purchased the inventory on FOB destination terms
35			and hence doesn't need to pay freight charges.
36
37		12-Jun	Accounts Payable	$250
38			Purchase return and allowances		$250
39
40		14-Jun	Accounts Payable	$8,800
41			Purchase Discount		$88	=E40*1%
42			Cash		$8,712	=E40-F41
43
44		15-Jun	Cash	$10,976		=F46-E45
45			Sales Discount	$224		=F46*2%
46			Accounts Receivable		$11,200
47
48		19-Jun	Cash	$7,500
49			Sales Revenue		$7,500
50
51			Cost of goods sold	$4,500
52			Merchandise		$4,500
53
54		20-Jun	Accounts Payable	$4,500
55			Purchase Discount		$90	=E54*2%
56			Cash		$4,410	=E54-F55
57
58		25-Jun	Sales return and allowances	$530
59			Cash		$530
60
61			Merchandise Inventory	$325
62			Cost of goods sold		$325
63
64		30-Jun	Accounts Receivable	$4,500
65			Sales Revenue		$4,500
66			(n/30, FOB Shipping point)
67			Cost of goods sold	$2,600
68			Merchandise		$2,600
69