Question

Following are the merchandising transactions for Dollar Store.

Nov. 1 Dollar Store purchases merchandise for $1,800 on terms of 2/5, n/30, FOB shipping point, invoice dated November 1.

5 Dollar Store pays cash for the November 1 purchase.

7 Dollar Store discovers and returns $200 of defective merchandise purchased on November 1, and paid for on November 5, for a cash refund.

10 Dollar Store pays $90 cash for transportation costs for the November 1 purchase.

13 Dollar Store sells merchandise for $1,944 with terms n/30. The cost of the merchandise is $972.

16 Merchandise is returned to the Dollar Store from the November 13 transaction. The returned items are priced at $280 and cost $140? the items were not damaged and were returned to inventory.

Journalize the above merchandising transactions for the Dollar Store assuming it uses a perpetual inventory system and the gross method.

Answer 1

01-Nov	Inventory	1800
	Accounts payable		1800
05-Nov	Accounts payable	1800
	Inventory		36
	Cash		1764
07-Nov	Cash	196	(200*98%)
	Inventory		196
10-Nov	Inventory	90
	Cash		90
13-Nov	Accounts receivable	1944
	Sales revenue		1944
	Cost of goods sold	972
	Inventory		972
16-Nov	Sales return and allowance	280
	Accounts receivable		280
	Inventory	140
	Cost of goods sold		140