Question

The following are selected transactions of XYZ Ltd: 12 July Sold goods on account to ABC Ltd for $3750, terms 1/10, n/30. The cost of the goods sold was $2500. 19 July Forwarded a credit note for $300 to ABC Ltd covering part of the goods sold on 12 July, which cost $200, that were returned by ABC Ltd as inappropriate. The goods returned were not defective. 21 July Received from ABC Ltd a cheque in full settlement of the above transactions. Both XYZ Ltd and ABC Ltd use perpetual inventory system. Assuming that neither business is registered for GST. Required Record the above transactions in the general journal of (1) XYZ Ltd (5.5 marks), and (2) ABC Ltd (3.5 marks) (Both account names and figures should be correct in order to award marks.

Answer 1

(1) XYZ Ltd

Date	Account Titles	Debit	Credit
12-Jul	Accounts Receivable	$      3,750.00
	Sales Revenue		$      3,750.00
	Cost of Goods Sold	$      2,500.00
	Inventory		$      2,500.00
19-Jul	Sales Returns and Allowances	$          300.00
	Accounts Receivable		$          300.00
	Inventory	$          200.00
	Cost of Goods Sold		$          200.00
21-Jul	Cash	$      3,415.50
	Sales Discount	$            34.50
	Accounts Receivable		$      3,450.00

(2) ABC Ltd

Date	Account Titles	Debit	Credit
12-Jul	Inventory	$      3,750.00
	Accounts Payable		$      3,750.00
19-Jul	Accounts Payable	$          300.00
	Inventory		$          300.00
21-Jul	Accounts Payable	$      3,450.00
	Cash		$      3,415.50
	Inventory		$            34.50