Question

Prepare separate entries for each transaction for Cullumber Company. The merchandise purchased by Pharoah Company on June 10 cost Cullumber Company $3,770, and the goods returned cost Cullumber Company $230. (If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.)

Answer 1

Journal entries for Cullumber Company's transactions have been provided, reflecting the costs associated with merchandise purchase and returns, to ensure accurate merchandise balance and current account balance.

Step-by-step explanation:

The student has presented a scenario involving transactions for Cullumber Company related to merchandise purchased and returned by Pharoah Company. The journal entries for these transactions would reflect the purchase cost to Cullumber Company and the return.

Journal Entries for Cullumber Company

1. Merchandise Purchase on June 10.
   

   Account Debit: Merchandise Inventory - $3,770

   Account Credit: Accounts Payable or Cash - $3,770

   This entry records the cost of goods purchased which will be reflected in the company's inventory.

2. Merchandise Return.
   

   Account Debit: Accounts Payable or Cash - $230

   Account Credit: Merchandise Inventory - $230

   This entry reverses part of the purchase cost due to the returned merchandise, reducing the inventory value and the amount owed or paid.

These entries ensure that the merchandise balance and current account balance are accurate, considering the cost of goods and returns.