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 $82,000, trade discount 20%, terms FOB destination, 2/10, n/30.
4.	Sold merchandise for cash, $34,860. The cost of the goods sold was $21,290.
5.	Purchased merchandise on account from Papoose Creek Co., $43,000, terms FOB shipping point, 2/10, n/30, with prepaid freight of $810 added to the invoice.
6.	Returned $14,400 ($18,000 list price less trade discount of 20%) of merchandise purchased on November 3 from Moonlight Co.
8.	Sold merchandise on account to Quinn Co., $14,650 with terms n/15. The cost of the merchandise sold was $9,800.
13.	Paid Moonlight Co. on account for purchase of November 3, less return of November 6.
14.	Sold merchandise on VISA, $253,780. The cost of the goods sold was $153,950.
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., $56,500, terms 1/10, n/30. The cost of the goods sold was $33,500.
28.	Paid VISA service fee of $3,190.
30.	Paid Quinn Co. a cash refund of $6,140 for returned merchandise from sale of November 8. The cost of the returned merchandise was $3,090.

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	Accouunts Title & Explanation	Debit	Credit
Nov 3	Merchandise Inventory	65,600
	Accounts Payable—Moonlight Co.		65,600
	[$82,000 – ($82,000 × 20%)] = $65,600.
Nov 4	Cash	34,860
	Sales		34,860
Nov 4	Cost of Merchandise Sold	21,290
	Merchandise Inventory		21,290
Nov 5	Merchandise Inventory	43,810
	Accounts Payable—Papoose Creek Co.		43,810
Nov 6	Accounts Payable—Moonlight Co.	14,400
	Merchandise Inventory		14,400
Nov 8	Accounts Receivable—Quinn Co.	14,650
	Sales		14,650
Nov 8	Cost of Merchandise Sold	9,800
	Merchandise Inventory		9,800
Nov 13	Accounts Payable—Moonlight Co.	51,200
	Cash		50,176
	Merchandise Inventory		1,024
Nov 14	Cash	253,780
	Sales		253,780
Nov 14	Cost of Merchandise Sold	153,950
	Merchandise Inventory		153,950
Nov 15	Accounts Payable—Papoose Creek Co.	43,810
	Cash		42,950
	Merchandise Inventory(43000 x 2%)		860
Nov 23	Cash	14,650
	Accounts Receivable—Quinn Co.		14,650
Nov 24	Accounts Receivable—Rabel Co.	56,500
	Sales		56,500
Nov 24	Cost of Merchandise Sold	33,500
	Merchandise Inventory		33,500
Nov 28	Credit Card Expense	3,190
	Cash		3,190
Nov 30	Sales Returns and Allowances	6,140
	Cash		6,140
Nov 30	Merchandise Inventory	3,090
	Cost of Merchandise Sold		3,090