Question

Sandhill Warehouse distributes hardback books to retail stores and extends credit terms of 2/10, n/30 to all of its customers. During the month of June, the following merchandising transactions occurred.

June 1 Purchased books on account for $2,575 (including freight) from Catlin Publishers, terms 2/10, n/30.
3 Sold books on account to Garfunkel Bookstore for $1,300. The cost of the merchandise sold was $900.
6 Received $75 credit for books returned to Catlin Publishers.
9 Paid Catlin Publishers in full.
15 Received payment in full from Garfunkel Bookstore.
17 Sold books on account to Bell Tower for $1,150. The cost of the merchandise sold was $750. 20 Purchased books on account for $900 from Priceless Book Publishers, terms 3/15, n/30.
24 Received payment in full from Bell Tower.
26 Paid Priceless Book Publishers in full.
28 Sold books on account to General Bookstore for $1,900. The cost of the merchandise sold was $970.
30 Granted General Bookstore $130 credit for books returned costing $90.
Journalize the transactions for the month of June for Sandhill Warehouse, using a perpetual inventory system. (If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.)

Answer 1

The journalization of Sandhill Warehouse's June transactions involves recording purchases, sales, receipts, and payments that reflect buying and selling activities, credit transactions, and inventory management in a perpetual system.

Step-by-step explanation:

To journalize the transactions for Sandhill Warehouse for the month of June using a perpetual inventory system, one must record each transaction in chronological order. The entries would reflect the purchase and sale of merchandise, along with the receipt and payment of funds within the credit terms provided. The transactions show different aspects of business activities such as purchasing inventory, sales on account, receiving and providing credit, and timely payment of accounts payable to avail discounts.

Each transaction would be recorded in a double-entry system, affecting both balance sheet and income statement accounts. For example, a sale on account would require a debit to Accounts Receivable and a credit to Sales Revenue, and the cost of goods sold would be recognized through a debit to Cost of Goods Sold and a credit to Inventory.

It is also important to note the effects of transaction timing related to credit term discounts. For instance, when Sandhill Warehouse pays Catlin Publishers within the discount period, they avail a 2% discount, reducing the payable balance and recording a discount on purchases.