Question

On March 1, Sather Co. sold merchandise to Boone Co. on account, $28,400, terms 2/15, n/30. The cost of the merchandise sold is $19,500. The merchandise was paid for on March 14. Assume all discounts are taken.Required:Journalize the entries for Sather Co. and Boone Co. for the sale, purchase, and payment of amount due. Refer to the appropriate company’s Chart of Accounts for exact wording of account titles.CHART OF ACCOUNTSSummit Co.General LedgerASSETS110 Cash121 Accounts Receivable-Beartooth Co.125 Notes Receivable130 Merchandise Inventory131 Estimated Returns Inventory140 Office Supplies141 Store Supplies142 Prepaid Insurance180 Land192 Store Equipment193 Accumulated Depreciation-Store Equipment194 Office Equipment195 Accumulated Depreciation-Office EquipmentLIABILITIES210 Accounts Payable216 Salaries Payable218 Sales Tax Payable219 Customers Refunds Payable221 Notes PayableEQUITY310 Owner, Capital311 Owner, Drawing312 Income Summary REVENUE410 Sales610 Interest RevenueEXPENSES510 Cost of Merchandise Sold521 Delivery Expense522 Advertising Expense524 Depreciation Expense-Store Equipment525 Depreciation Expense-Office Equipment526 Salaries Expense531 Rent Expense533 Insurance Expense534 Store Supplies Expense535 Office Supplies Expense536 Credit Card Expense539 Miscellaneous Expense710 Interest ExpenseCHART OF ACCOUNTSBeartooth Co.General LedgerASSETS110 Cash120 Accounts Receivable125 Notes Receivable130 Merchandise Inventory131 Estimated Returns Inventory140 Office Supplies141 Store Supplies142 Prepaid Insurance180 Land192 Store Equipment193 Accumulated Depreciation-Store Equipment194 Office Equipment195 Accumulated Depreciation-Office EquipmentLIABILITIES211 Accounts Payable-Summit Co.216 Salaries Payable218 Sales Tax Payable219 Customers Refunds Payable221 Notes PayableEQUITY310 Owner, Capital311 Owner, Drawing312 Income Summary REVENUE410 Sales610 Interest RevenueEXPENSES510 Cost of Merchandise Sold521 Delivery Expense522 Advertising Expense524 Depreciation Expense-Store Equipment525 Depreciation Expense-Office Equipment526 Salaries Expense531 Rent Expense533 Insurance Expense534 Store Supplies Expense535 Office Supplies Expense536 Credit Card Expense539 Miscellaneous Expense710 Interest Expense

Answer 1

Answer and Explanation:

The journal entries are shown below:

On the books of Sather Co.

On Mar 1

Accounts Receivable $28,400

To Sales $28,400

(Being the merchandise sold on credit is recorded)

For recording this we debited the account receivable as it increased the assets and credited the sales as it also increased the sales

Cost of goods sold $19,500

To Merchandise inventory $19,500

(Being the cost of merchandise is recorded)

For recording this we debited the cost of goods sold as it increased the expenses and credited the inventory as it reduced the assets

On Mar 14

Cash $27,830

Sales Discounts ($28,400 × 2%) $568

To Accounts Receivable $28,400

(Being the payment received is recorded)

For recording this we debited the sales and discount as it increased the assets and discount and credited the account receivable as it decreased the assets

On the books of Boone Co.

On Mar 1

Merchandise Inventory $28,400

To Accounts Payable $28,400

(Being the merchandise is purchased on credit)

For recording this we debited the inventory as it increased the assets and credited the account payable as it also increased the liabilities

On Mar 14

Accounts Payable $28,400

To Cash $27,830

To Merchandise inventory ($28,400 × 2%) $568

(Being the cash payment is recorded)

Fo recording this we debited the account payable as it reduced the liabilities and credited the cash and inventory as it also decreased the assets