Question

Record the following transactions for Sparky’s Pet Shop.

Date	Transaction
Aug. 1	Purchased $6,000 of merchandise on account, terms 2/10, n/30.
3	Returned $1,500 of merchandise purchased on August 1 due to defects.
7	Recorded cash sales for the first week of August, $9,750; cost of the merchandise was $4,000.
10	Made sale on account to a local breeder for $500, terms 1/10, net 30; cost of the merchandise was $200.
11	Paid for the merchandise purchased on August 1, less return.
20	Received payment from sale of August 10. The customer took the discount.

Required:

	Journalize the above transactions. Assume Sparky’s uses a perpetual inventory system. Refer to the Chart of Accounts for exact wording of account titles.
CHART OF ACCOUNTS
Sparky’s Pet Shop
General Ledger
ASSETS 110 Cash 120 Accounts Receivable 125 Notes Receivable 130 Merchandise Inventory 131 Estimated Returns Inventory 140 Supplies 142 Prepaid Insurance 180 Land 190 Equipment 191 Accumulated Depreciation LIABILITIES 210 Accounts Payable 216 Salaries Payable 221 Sales Tax Payable 222 Customers Refunds Payable 231 Unearned Rent 241 Notes Payable EQUITY 310 Owner, Capital 311 Owner, Drawing		REVENUE 410 Sales EXPENSES 510 Cost of Merchandise Sold 521 Delivery Expense 522 Advertising Expense 523 Depreciation Expense 526 Salaries Expense 531 Rent Expense 533 Insurance Expense 534 Supplies Expense 536 Credit Card Expense 560 Miscellaneous Expense 710 Interest Expense

JOURNAL

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16

Answer 1

Journal entry :

Date	Accounts & explanation	Post Ref.	debit	credit
Aug 1	Merchandise inventory		6000
	Account payable			6000
	(To record inventory purchased)
Aug 3	Account payable		1500
	Merchandise inventory			1500
	(To record purchase return)
Aug 7	Cash		9750
	Sales revenue			9750
	Cost of Merchandise sold		4000
	Merchandise inventory			4000
	(To record sale and cost of goods sold)
Aug 10	Account receivable		500
	Sales revenue			500
	Cost of merchandise sold		200
	Merchandise inventory			200
	(To record sale and cost of goods sold)
Aug 11	Account payable (6000-1500)		4500
	Cash (4500*98%)			4410
	Merchandise inventory (4500*2%)			90
	(To record amount paid)
Aug 20	Cash		495
	Sales discount (500*1%)		5
	Account receivable			500
	(To record amount received)