Question

The following is a series of related transactions between Siogo Shoes, a shoe wholesaler and Sole Mates, a chain retail shoe stores. Both Companies use a perpetual inventory system. Do these journal entries for Siogo Shoes.

a) Feb 9​​Siogo Shoes sold Sole Mates 100 pairs of hiking boots on account, terms 1/10, n/30. The cost of these boots so Siago Shoes was $60 per pair, and the sales prices was $100 per pair.
b)​Feb. 12 Sole Mates returned 10 pairs of boots to Siogo Shoes because they were the wrong size. Siogo Shoes allowed Sole Mates full credit for this return.
c)​Feb. 19 Sole paid the remaining balance due to Siogo Shoes within the discount period.

Answer 1

The journal entries for Siogo Shoes include recording the initial sale, the return of goods, and the receipt of payment within the discount period using a perpetual inventory system.

Step-by-step explanation:

To perform the journal entries for Siogo Shoes for the transactions with Sole Mates, we must account for the sale of goods, the return of goods, and the receipt of payment. Here is how each of these transactions would be recorded in a perpetual inventory system:

• Feb 9: Recorded the sale of 100 pairs of hiking boots to Sole Mates at $100 per pair on account, with terms 1/10, n/30.
• 
  
• Accounts Receivable
• : $10,000 (Debit)
• 
  
• 
  
• Sales Revenue
• : $10,000 (Credit)
• 
  
• 
  
• Cost of Goods Sold: $6,000 (Debit)
• 
  
• 
  
• Inventory: $6,000 (Credit)
• 
  
• Feb 12: Recorded the return of 10 pairs of boots from Sole Mates.
• 
  
• Sales Returns and Allowances
• : $1,000 (Debit)
• 
  
• 
  
• Accounts Receivable: $1,000 (Credit)
• 
  
• 
  
• Inventory: $600 (Debit)
• 
  
• 
  
• Cost of Goods Sold: $600 (Credit)
• 
  
• Feb 19: Recorded the receipt of payment from Sole Mates, taking into account the 1% sales discount for paying within the discount period.
• 
  
• Cash: $8,910 (Debit)
• 
  
• 
  
• Sales Discounts: $90 (Debit)
• 
  
• 
  
• Accounts Receivable: $9,000 (Credit)
• 
  

Note that the numbers represented above are illustrative and assume all accounting principles are followed correctly. It's also assumed that there are no other factors affecting the transactions such as sales tax.

Answer 2

Journal entries for Siogo Shoes reflect the sale of goods, the return of items, and the receipt of payment after sales discounts, allowing accurate tracking of financial and inventory records.

Step-by-step explanation:

On **February 9th**, Siogo Shoes made a sale to Sole Mates, invoicing 100 pairs of hiking boots on account. The terms of the sale were 1/10, n/30, indicating a 1% discount if paid within 10 days, with the net amount due in 30 days. The cost to Siogo Shoes for each pair of hiking boots was $60, and the selling price was $100 per pair. The journal entry for this transaction would involve recognizing accounts receivable and sales revenue, along with accounting for the cost of goods sold.

**February 12th** saw a return of 10 pairs of boots by Sole Mates due to incorrect sizing. In response, Siogo Shoes allowed Sole Mates full credit for the returned items. The corresponding journal entry would involve reducing accounts receivable and adjusting the inventory to account for the returned goods.

Finally, on **February 19th**, Sole Mates paid the remaining balance to Siogo Shoes within the discount period. This prompt payment entitled Sole Mates to a 1% discount on the original invoice amount. The journal entry for this transaction would involve recognizing cash received, reducing accounts receivable, and accounting for any applicable sales discount.

In summary, the series of journal entries for Siogo Shoes would involve recording the initial sale, processing a return, and capturing the receipt of payment within the discount period. Proper documentation of these transactions ensures accurate financial records and reflects the dynamics of the business relationship between Siogo Shoes and Sole Mates.