Question

John's Specialty Store uses a periodic inventory system. The following are some inventory transactions for the month of May 2013:

1. John's purchased merchandise on account for $5,400. Freight charges of $500 were paid in cash.

2. John?s returned some of the merchandise purchased in (1). The cost of the merchandise was $800 and John?s account was credited by the supplier.

3.Merchandise costing $3,000 was sold for $5,600 in cash
Prepare the necessary journal entries to record these transactions. (If no entry is required for a particular transaction, select "No journal entry required" in the first account field.)

Record the purchased merchandise on account for $5,400
Record the payment of freight charges for $500.
Record the purchase return for $800.
Record the merchandise sold for $5,600.
Record the entry of cost of goods sold.

Answer 1

The journal entries to record John's Specialty Store transactions include debits and credits to Inventory, Accounts Payable, Cash, Sales Revenue, and Cost of Goods Sold, affecting the merchandise balance and current account balance.

Step-by-step explanation:

Journal Entries for John's Specialty Store

To record the purchased merchandise on account for $5,400:

• Debit Inventory $5,400
• Credit Accounts Payable $5,400

To record the payment of freight charges for $500:

• Debit Inventory $500
• Credit Cash $500

To record the purchase return for $800:

• Debit Accounts Payable $800
• Credit Inventory $800

To record the merchandise sold for $5,600:

• Debit Cash $5,600
• Credit Sales Revenue $5,600

Finally, to record the cost of goods sold of $3,000:

• Debit Cost of Goods Sold $3,000
• Credit Inventory $3,000

These entries would update the merchandise balance and current account balance reflecting the company's transactions.

Answer 2

Inventory 5400

Accounts Payable 5400

Inventory 500

Cash 500

Accounts Payable 800

Inventory 800

Cash 5600

Sales Revenue 5600

Cost of goods sold 3000

Inventory 3000