Question

Cullumber Company buys merchandise on account from Bramble Company. The selling price of the goods is $790, and the cost of the goods is $470. Both companies use perpetual inventory systems. Journalize the transaction on the books of both companies. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Account Titles and Explanation Debit Credit
Cullumber Company
(To record credit purchase of inventory)
Bramble Company
(To record credit sale)
(To record cost of merchandise sold)

Answer 1

Cullumber Company

Dr Inventory $790

Cr Accounts Pay $790

Bramble Company

Dr Account receivable $790

Cr Sales Revenue $790

Dr Cost of goods sold $470

Cr Inventory $470

Step-by-step explanation:

Preparation of the journal entries on the books of both companies

CULLUMBER COMPANY

Dr Inventory $790

Cr Accounts Pay $790

(To record credit purchase of inventory)

BRAMBLE COMPANY

Dr Account receivable $790

Cr Sales Revenue $790

(To record credit sale)

Dr Cost of goods sold $470

Cr Inventory $470

(To record cost of merchandise sold)