Question

For the following purchasing and sales transactions, prepare the appropriate journal entry assuming a perpetual inventory system is in place.

1. On January 1, Cougar Corp. purchased inventory from a supplier for $7,000. The credit terms on the transaction are 1 /10, net 30.

2. On January 2, Cougar Corp. paid a shipping company $150 for freight associated with the January 1 purchase.

3. On January 5, Cougar Corp sold inventory with a cost of $2,400 for $4,100. The credit terms on the transaction are 3/15, net 30.

4. On January 6, Cougar Corp. returned $800 of the inventory purchased on January 1.

5. On January 7, Cougar Corp. paid $240 to ship the goods sold on January 5.

6. On January 9, Cougar Corp. paid for the purchase on January 1. (Don't forget to consider the purchase return on January 6).

7. On January 10, Cougar Corp. received payment for the sale made on January 5.

Answer 1

Cougar Corp.

Journal Entries:

1. January 1, Debit Inventory $7,000

Credit Accounts Payable $7,000

To record the purchase of goods on terms 1 /10, net 30.

2. January 2, Debit Freight-in $150

Credit Cash $150

To record the payment for freight-in.

3. January 5, Debit Cost of goods sold $2,400

Credit Inventory $2,400

To record the cost of goods sold.

Debit Accounts Receivable $4,100

Credit Sales Revenue $4,100

To record the sale of goods on account, terms 3/15, net 30.

4. January 6, Debit Accounts Payable $800

Credit Inventory $800

To record the return of goods on account.

5. January 7, Debit Freight-out $240

Credit Cash $240

To record the payment of freight-out.

6. January 9, Debit Accounts Payable $6,200

Credit Cash $6,138

Credit Cash Discounts $62

To record the payment on account, including cash discounts

7. January 10 DebitCash $3,977

Debit Cash Discounts $123

Credit Accounts Receivable $4,100

To record the receipt of cash, including cash discounts.

Step-by-step explanation:

a) Data and Analysis:

1. January 1, Inventory $7,000 Accounts Payable $7,000

terms 1 /10, net 30.

2. January 2, Freight-in $150 Cash $150

3. January 5, Cost of goods sold $2,400 Inventory $2,400

Accounts Receivable $4,100 Sales Revenue $4,100

terms 3/15, net 30.

4. January 6, Accounts Payable $800 Inventory $800

5. January 7, Freight-out $240 Cash $240

6. Accounts Payable $6,200 Cash $6,138 Cash Discounts $62

7. Cash $3,977 Cash Discounts $123 Accounts Receivable $4,100