Question

Prepare the journal entries to record the following transactions on Kwang Company's books using a perpetual inventory system.

a. On March 2, Kwang Company sold $900,000 of merchandise to Sensat Company, terms 2/10, n/30. The cost of the merchandise sold was $620,000.
b. On March 6, Sensat Company returned $90,000 of the merchandise purchased on March 2. The cost of the returned merchandise was $62,000.
c. On March 12, Kwang Company received the balance due from Sensat Company. From the information in BE5-4, prepare the journal entries to record these transactions on Sensat Company's books under a perpetual inventory system.

Answer 1

Solution BE5-4

Journal Entries

Date Particulars Debit Credit

(a) 02-Mar Accounts Receivable $900,000

Sales Revenue $900,000

02-Mar Cost of goods sold $620,000

Inventory $620,000

(b) 06-Mar Sales Return & allowances $90,000

Accounts receivable $90,000

06-Mar Inventory $62,000

Cost of goods sold $62,000

(c) 12-Mar Cash $793,800

Sales Discount $16,200

($810,000*2%)

Accounts receivable $810,000

($900000- $90000)

Solution BE5-5:

Journal Entries

Date Particulars Debit Credit

(a) 02-Mar Inventory $900,000

Accounts payable $900,000

(b) 06-Mar Accounts payable $90,000

Inventory $90,000

(c) 12-Mar Accounts Payable $810,000

($900000- $90000)

Inventory ($810000*2%) $16,200

Cash $793,800