Question

Presented below are transactions related to Carla Vista Company.

1. On December 3, Carla Vista Company sold $622,200 of merchandise on account to Flint Co., terms 4/10, n/30, FOB destination. Carla Vista paid $330 for freight charges. The cost of the merchandise sold was $372,100.
2. On December 8, Flint Co. was granted an allowance of $20,300 for merchandise purchased on December 3.
3. On December 13, Carla Vista Company received the balance due from Flint Co.
Prepare the journal entries to record these transactions on the books of Carla Vista Company using a perpetual inventory system (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry for the account titles and enter for the amounts.)
No. Date Account Titles and Explanation Debit Credit
1. (To record credit sale) (To record cost of merchandise sold)
2.
3. Dec 13
Assume that Carla Vista Company received the balance due from Kingbird Co., on January 2 of the following year instead of December 13. Prepare the journal entry to record the receipt of payment on January 2. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry for the account titles and enter for the amounts.)
Date Account Titles and Explanation Debit Credit

Answer 1

1. Dec 3

Dr Account receivable-Novak Co $622,200

Cr Sales revenue $622,200

Dec 3

Dr Cost of goods sold $372,100

Cr Inventory $372,100

Dec 3

Dr Freight out $330

Cr Cash $330

2. Dec 8

Dr Sales allowance $20,300

Cr Account receivable-Novak Co $20,300

3. Dec 13

Dr Cash 599,492

Dr Sales discount 2,408

Cr Account receivable-Novak Co 601,900

2. January 2

Dr Cash 601,900

Cr Casta Vista co 601,900

Step-by-step explanation:

Preparation for the journal entries to record these transactions on the books of Carla Vista

1. Dec 3

Dr Account receivable-Novak Co $622,200

Cr Sales revenue $622,200

(To record credit Sales)

Dec 3

Dr Cost of goods sold $372,100

Cr Inventory $372,100

(To record cost of merchandise sold)

Dec 3

Dr Freight out $330

Cr Cash $330

(To record freight charges)

2. Dec 8

Dr Sales allowance $20,300

Cr Account receivable-Novak Co $20,300

(To record sales allowance)

3. Dec 13

Dr Cash 599,492

(601,900-2,408)

Dr Sales discount 2,408

[($622,200-$20,300)*4%]

Cr Account receivable-Novak Co 601,900

($622,200-$20,300)

2. Preparation of the journal entry to record the receipt of payment on January 2

January 2

Dr Cash 601,900

Cr Casta Vista co 601,900

($622,200-$20,300)