Question

Prepare journal entries to record the following merchandising transactions of Walker's, which uses the perpetual inventory system and the gross method. (Hint: It will help to identify each receivable and payable; for example, record the purchase on July 1 in Accounts Payable—Thompson.) Jul. 1 Purchased merchandise from Thompson Company for $7,200 under credit terms of 1/15, n/30, FOB shipping point, invoice dated July 1. Jul. 2 Sold merchandise to Mitchell Co. for $1,500 under credit terms of 2/10, n/60, FOB shipping point, invoice dated July 2. The merchandise had cost $900. Jul. 3 Paid $365 cash for freight charges on the purchase of July 1. Jul. 8 Sold merchandise that had cost $1,700 for $2,900 cash. Jul. 9 Purchased merchandise from Mannion Co. for $2,800 under credit terms of 2/15, n/60, FOB destination, invoice dated July 9. Jul. 11 Returned $600 of merchandise purchased on July 9 from Mannion Co. and debited its account payable for that amount. Jul. 12 Received the balance due from Mitchell Co. for the invoice dated July 2, net of the discount. Jul. 16 Paid the balance due to Thompson Company within the discount period. Jul. 19 Sold merchandise that cost $1,700 to Sanchez Co. for $2,400 under credit terms of 2/15, n/60, FOB shipping point, invoice dated July 19. Jul. 21 Gave a price reduction (allowance) of $500 to Sanchez Co. for merchandise sold on July 19 and credited Sanchez’s accounts receivable for that amount. Jul. 24 Paid Mannion Co. the balance due, net of discount. Jul. 30 Received the balance due from Sanchez Co. for the invoice dated July 19, net of discount. Jul. 31 Sold merchandise that cost $4,900 to Mitchell Co. for $8,200 under credit terms of 2/10, n/60, FOB shipping point, invoice dated July 31.

Answer 1

	Date	General Journal					Debit	Credit
	1-Jul	Merchandise inventory					7,200
		Accounts payable-thompson						7,200
	2-Jul	Accounts receivable-Mitchell co					1,500
		Sales						1,500
		cost of goods sold					900
		Merchandise inventory						900
	3-Jul	Merchandise inventory					365
		cash						365
	8-Jul	Cash					2,900
		sales						2,900
		cost of goods sold					1,700
		Merchandise inventory						1,700
	9-Jul	Merchandise inventory					2,800
		Accounts payable-Mannion co						2,800
	11-Jul	Accounts payable-Mannion co					600
		merchandise inventory						600
	12-Jul	Cash					1,470
		Sales discount					30
		Accounts receivable-Mitchell						1,500
	16-Jul	Accounts payable-thompson					7,200
		Merchandise inventory						72
		cash						7128
	19-Jul	Accounts receivable-Sanchez co					2,400
		Sales						2,400
		Cost of goods sold					1,700
		Merchandise inventoy						1,700
	21-Jul	Sales return and allowance					500
		Accounts receivable-Sanchez co						500
	24-Aug	Accounts payable-Mannin co					2,200
		Merchandise inventory						44
		Cash						2156
	30-Jul	Cash					1862
		Sales discount					38
		Accounts receivable-sanchez co						1,900
	31-Jul	Accounts recievable-Mitchell co					8,200
		Sales						8,200
		Merchandise inventory					4,900
		Cost of goods sold						4,900