54.4k views
1 vote
Following are the merchandising transactions for Dollar Store.

a) Nov. 1 Dollar Store purchases merchandise for $1,100 on terms of 2/5, n/30, FOB shipping point, invoice dated November 1.
b) 5 Dollar Store pays cash for the November 1 purchase.
c) 7 Dollar Store discovers and returns $100 of defective merchandise purchased on November 1, and paid for on November 5, for a cash refund.
d) 10 Dollar Store pays $55 cash for transportation costs for the November 1 purchase.
e) 13 Dollar Store sells merchandise for $1,188 with terms n/30. The cost of the merchandise is $594.
f) 16 Merchandise is returned to the Dollar Store from the November 13 transaction. The returned items are priced at $270 and cost $135; the items were not damaged and were returned to inventory.
Required:
Journalize the above merchandising transactions for the Dollar Store assuming it uses a perpetual inventory system and the gross method.

User Dushmantha
by
8.5k points

1 Answer

5 votes

Answer and Explanation:

The Journal entry is shown below:-

a. Merchandise Inventory Dr, 1,100

To Accounts Payable $1,100

(Being purchase of inventory is recorded)

b. Accounts Payable Dr, $1,100

Merchandise Inventory Dr, $22 ($1,100 × 2%)

To Cash $1,122

(Being cash paid is recorded)

c. Cash Dr, $98 (100 × 98%)

To Merchandise Inventory $98

(Being cash receipts is recorded)

d. Merchandise Inventory Dr, $55

To Cash $55

(Being cash paid is recorded)

e. Cost of goods sold Dr, $594

To Merchandise Inventory $594

(Being cost of goods sold is recorded)

f. Sales Returns and allowances Dr, $270

To Account Receivables $270

(Being sales returns and allowances is recorded)

g. Merchandise Inventory Dr, $135

To Cost of goods sold $135

(Being cost of returned goods is recorded)

User Leandro
by
8.1k points
Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.

9.4m questions

12.2m answers

Categories