Question

The following selected transactions were completed by Affordable Supplies co., which sells supplies primarily to wholesalers and occasionally to retail customers.

Jan 6. Sold merchandise on account, $14,000, terms FOB shipping point, n/eom. The cost of merchandise sold was $8,400. Jan 8. Sold merchandise on account, $20,000, terms FOB destination, 1/10, n/30. The cost of merchandise sold was $14,000.

Jan 16. Sold merchandise on account $19,500, terms FOB shipping point, 1/10, n/30. The cost of merchandise sold was $11,700.

Jan 18. Recieved check of amount due for sale on jan 8.

Jan 19. Issued credit memorandum for $4,500 for merchandise returned from sale on jan 16. The cost of merchandise returned was $2,700.

Jan 26 Received check for amount due for sale on jan 16 less credit memorandum of jan 19 and discount.

Jan 31 Paid Cashell service $3,000 for merchandise delivered during jan to customers under shipping terms of FOB destination.

Jan 31 received check for amount dur for sale of jan 6.

Illustrate tge effects of each of the preceding transactions on the accounts and financial statements of affordable supplies co. Identify each transaction by date.

Answer 1

Date Accounts and explanations Debit

6-Jan Accounts receivable 14000

sales 14000

cost of merchandise 8400

merchandise inventory 8400

8-Jan Accounts receivable 20000

sales 20000

cost of merchandise 14000

merchandise inventory 14000

16-Jan Accounts receivable 19500

sales 19500

cost of merchandise 11700

merchandise inventory 11700

18-Jan cash 20000

accounts receivable 20000

19-Jan sales returns 4500

account receivable 4500

merchandise inventory 2700

purchase returns 2700

26-Jan cash 14850

discount 150

Accounts receivable 15000

31-Jan service charge 3000

cash 3000

31-Jan cash 14000

accounts receivable 14000