Question

The following selected transactions were completed during August between Summit Company and Beartooth Co.:

Aug.	1	Summit Company sold merchandise on account to Beartooth Co., $49,050, terms FOB destination, 2/15, n/eom. The cost of the goods sold was $28,370.
	2	Summit Company paid freight of $1,160 for delivery of merchandise sold to Beartooth Co. on August 1.
	5	Summit Company sold merchandise on account to Beartooth Co., $68,590, terms FOB shipping point, n/eom. The cost of the goods sold was $43,250.
	9	Beartooth Co. paid freight of $2,440 on August 5 purchase from Summit Company.
	15	Summit Company sold merchandise on account to Beartooth Co., $59,500, terms FOB shipping point, 1/10, n/30. Summit Company paid freight of $1,755, which was added to the invoice. The cost of the goods sold was $31,720.
	16	Beartooth Co. paid Summit Company for purchase of August 1.
	25	Beartooth Co. paid Summit Company on account for purchase of August 15.
	31	Beartooth Co. paid Summit Company on account for purchase of August 5.

Journalize the August transactions for (1) Summit Company and (2) Beartooth Co. Refer to the Chart of Accounts of the appropriate company for exact wording of account titles.

Answer 1

Solution 1:

Summit Company
Date	Account Title	Debit	credit
01-Aug	Accounts Receivable	$49,050
	Sales Revenue		$49,050
	Cost of goods sold	$28,370
	Inventory		$28,370
02-Aug	Freight-out	$1,160
	Cash		$1,160
05-Aug	Accounts Receivable	$68,590
	Sales Revenue		$68,590
	Cost of goods sold	$43,250
	Inventory		$43,250
09-Aug	No entry required (as terms are FOB Shipping)
15-Aug	Accounts Receivable	$61,255
	Cash (Freight)		$1,755
	Sales Revenue		$59,500
	Cost of goods sold	$31,720
	Inventory		$31,720
16-Aug	Cash	$48,069
	Sales Discount ($49050*2%)	$981
	Accounts Receivable		$49,050
25-Aug	Cash	$60,660
	Sales Discount (59500*1%)	$595
	Accounts Receivable		$61,255
31-Aug	Cash	$68,590
	Accounts Receivable		$68,590

Solution 2:

Beartooth Co.
Date	Account Title	Debit	credit
01-Aug	Inventory	$49,050
	Accounts Payable		$49,050
02-Aug	No entry required (as terms are FOB Destination)
05-Aug	Inventory	$68,590
	Accounts Payable		$68,590
09-Aug	Inventory	$2,440
	Cash		$2,440
15-Aug	Inventory (59500+1755)	$61,255
	Accounts Payable		$61,255
16-Aug	Accounts Payable	$49,050
	Inventory (49050*2%)		$981
	Cash		$48,069
25-Aug	Accounts Payable	$61,255
	Inventory (59500*1%)		$595
	Cash		$60,660
31-Aug	Accounts Payable	$68,590
	Cash		$68,590