Question

Journalizing Sales, Sales Returns and Allowances, and Cash Receipts:

Prepare journal entries for the following transactions.
Oct. 5 Sold merchandise on account to B. Farnsby for $290 plus sales tax of 4%.
8 Sold merchandise on account to F. Preetee for $230 plus sales tax of 4%,
with 2/10, n/30 cash discount terms.
11 F. Preetee returned merchandise purchased on October 8 for $40 plus sales
tax for credit.
17 F. Preetee paid the balance due on her account.
18 B. Farnsby returned merchandise purchased on October 5 for $70 plus sales
tax for credit.
20 B. Farnsby paid the balance due on his account.

Answer 1

To prepare journal entries for the transactions, you need to understand the accounts involved and their balances. Here are the journal entries for each transaction, including the debits and credits.

Step-by-step explanation:

To prepare journal entries for the given transactions, we need to understand the different accounts involved and their balances. Here are the journal entries for each transaction:

October 5: Debit Accounts Receivable: B. Farnsby $301.60 ([$290 + ($290 imes 0.04)]) and Credit Sales Revenue $290 and Sales Tax Payable $11.60

October 8: Debit Accounts Receivable: F. Preetee $240.20 ([$230 + ($230 imes 0.04)]) and Credit Sales Revenue $230, Sales Tax Payable $9.20, and Sales Discounts $4.60 ([$230 imes 0.02])

October 11: Debit Sales Returns and Allowances $44.80 ([$40 + ($40 imes 0.04)]) and Credit Accounts Receivable: F. Preetee $40 and Sales Tax Payable $4.80

October 17: Debit Cash $195.00 ([$190 + ($190 imes 0.04)]) and Sales Discounts Lost $4.60 and Credit Accounts Receivable: F. Preetee $190 and Sales Tax Payable $9.20

October 18: Debit Sales Returns and Allowances $73.60 ([$70 + ($70 imes 0.04)]) and Credit Accounts Receivable: B. Farnsby $70 and Sales Tax Payable $3.60

October 20: Debit Cash $216.80 ([$210 + ($210 imes 0.04)]) and Sales Discounts Lost $4.60 and Credit Accounts Receivable: B. Farnsby $210 and Sales Tax Payable $10.20

Answer 2

Oct. 5

Dr Accounts Receivable (B. Farnsby) $301.6

Cr Sales Tax Payable $11.60

Cr Sales Revenue $290

Oct. 8

Dr Accounts Receivable ( F. Preetee) $239.20

Cr Sales Tax Payable $9.20

Cr Sales Revenue $230

Oct 11

Dr Sales Returns $40

Dr Sales Tax Payable $1.6

Cr To Accounts Receivable (F. Preetee) $41.6

Oct 17

Dr Cash Account $192.6

Dr Cash Discount $5

Cr Accounts Receivable (Preetee) $197.6

Oct 18

Dr Sales Returns $70

Dr Sales Tax Payable $2.80

Cr Accounts Receivable (B. Farnsby) $72.80

Oct 20

Dr Cash Account ($301.6 - $72.80) $228.8

Cr Accounts Receivable (B. Farns) $228.8

Explanation:

Preparation of the journal entries

Oct. 5

Dr Accounts Receivable (B. Farnsby) $301.6

($290+$11.60)

Cr Sales Tax Payable ($290 × 4%) $11.60

Cr Sales Revenue $290

(Being the sales revenue recorded on account)

Oct. 8

Dr Accounts Receivable ( F. Preetee) $239.20

($230+$9.20)

Cr Sales Tax Payable ($230 × 4%) $9.20

Cr Sales Revenue $230

(Being the sales revenue recorded on account)

Oct 11

Dr Sales Returns $40

Dr Sales Tax Payable $1.6

(4%*$40)

Cr To Accounts Receivable (F. Preetee) $41.6

($40+$1.6)

(Being the returned inventory is recorded)

Oct 17

Dr Cash Account $192.6

($197.6-$5)

Dr Cash Discount (($290 - $40) × 2%) $5

Cr Accounts Receivable (Preetee) $197.6

($239.20 - $41.6)

(Being receipt of cash is recorded)

Oct 18

Dr Sales Returns $70

Dr Sales Tax Payable $2.80

(4%*$70)

Cr Accounts Receivable (B. Farnsby) $72.80

($70+$2.80)

(Being the return of goods is recorded)

Oct 20

Dr Cash Account ($301.6 - $72.80) $228.8

Cr Accounts Receivable (B. Farns) $228.8

(Being receipt of cash is recorded)