O\'Quinn Co. distributes suitcases to retail stores and extends credit terms of
ID: 2346819 • Letter: O
Question
O'Quinn Co. distributes suitcases to retail stores and extends credit terms of 1/10, n/30 to all of its customers. At the end of June, O'Quinn's inventory consisted of suitcases costing $2,082. During the month of July the following merchandising transactions occurred.July 1 Purchased suitcases on account for $3,514 from Emerson Manufacturers, FOB destination, terms 2/10, n/30. The appropriate party also made a cash payment of $122 for freight on this date.
3 Sold suitcases on account to Straume Satchels for $2,801. The cost of suitcases sold is $1,681.
9 Paid Emerson Manufacturers in full.
12 Received payment in full from Straume Satchels.
17 Sold suitcases on account to The Going Concern for $2,730. The cost of the suitcases sold was $1,638.
18 Purchased suitcases on account for $1,734 from Hume Manufacturers, FOB shipping point, terms 1/10, n/30. The appropriate party also made a cash payment of $121 for freight on this date.
20 Received $343 credit (including freight) for suitcases returned to Hume Manufacturers.
21 Received payment in full from The Going Concern.
22 Sold suitcases on account to Desmond's for $3,006. The cost of suitcases sold was $1,804.
30 Paid Hume Manufacturers in full.
31 Granted Desmond's $241 credit for suitcases returned costing $145.
O'Quinn's chart of accounts includes the following: No. 101 Cash, No. 112 Accounts Receivable, No. 120 Merchandise Inventory, No. 201 Accounts Payable, No. 401 Sales, No. 412 Sales Returns and Allowances, No. 414 Sales Discounts, No. 505 Cost of Goods Sold.
Instructions
Journalize the transactions for the month of July for O'Quinn using a perpetual inventory system. (For multiple debit/credit entries, list amounts from largest to smallest e.g. 10, 5, 3, 2. Round answers to 0 decimal places, e.g. 125.)
Date Description/Account Debit Credit
July 1
July 3
(To record credit sale to Straume Satchels.)
(To record cost of merchandise sold.)
July 9
July 12
July 17
(To record credit sale to The Going Concern.)
(To record cost of merchandise sold.)
July 18
(To record goods purchased.)
(To record freight on goods purchased.)
July 20
July 21
July 22
(To record credit sale to Desmond's.)
(To record cost of merchandise sold.)
July 30
July 31
(To record credit to Desmond's for returned goods.)
(To record cost of goods returned.)
Explanation / Answer
No. 101 Cash, No. 112 Accounts Receivable, No. 120 Merchandise Inventory, No. 201 Accounts Payable, No. 401 Sales, No. 412 Sales Returns and Allowances, No. 414 Sales Discounts, No. 505 Cost of Goods Sold. At the end of June, O'Quinn's inventory consisted of suitcases costing $2,082. During the month of July the following merchandising transactions occurred. July 1 Purchased suitcases on account for $3,514 from Emerson Manufacturers, FOB destination, terms 2/10, n/30. The appropriate party also made a cash payment of $122 for freight on this date. Jul 1 Merchandise Inv Dr 3514 Acct Payable -Emerson Cr 3514 (FOB dest indicated that Seller pays shipping & hence is not recorded in Quinn books. Terms 2/10 N/30) 3 Sold suitcases on account to Straume Satchels for $2,801. The cost of suitcases sold is $1,681. Jul 3 Acct Rxable-Straume Dr 2801 Sales Revenue Cr 2801 Jul 3 Cost of goods sold Dr 1681 Merchandise inventory Cr 1681 (Sold merchandise on credit to Straume, recorded COGS also, Term 1/10, n/30) 9 Paid Emerson Manufacturers in full. Jul 9 Acct Payable -Emerson Dr $3,514 Cash Cr $3,444 Purch Disc Cr 70 (Paid Emerson 3514*98% = $3,444 ) 12 Received payment in full from Straume Satchels. Jul 12 Cash Dr $2,773 Sales Disc Dr 28 Acct Rxable-Straume Cr $2,801 (Rxd 2801*99% = $2,773 ) 17 Sold suitcases on account to The Going Concern for $2,730. The cost of the suitcases sold was $1,638. Jul 17 Acct Rxable-Going Dr 2730 Sales Revenue Cr 2730 Jul 17 Cost of goods sold Dr 1638 Merchandise inventory Cr 1638 (Sold merchandise on credit to Going, recorded COGS also, Term 1/10, n/30) 18 Purchased suitcases on account for $1,734 from Hume Manufacturers, FOB shipping point, terms 1/10, n/30. The appropriate party also made a cash payment of $121 for freight on this date. Jul 18 Merchandise Inv Dr 1734 Acct Payable- Hume Cr 1734 Jul 18 Freight-In Dr 121 Cash Cr 121 (FOB Shipping pt indicated that Buyer pays shipping & hence is recorded in Quinn books. Terms 2/10 N/30) 20 Received $343 credit (including freight) for suitcases returned to Hume Manufacturers. Jul 20 Acct Payable- Hume Cr 343 Merchandise Inv Dr 343 (Frieght was FOB Shipping pt. Hence Seller was not affected) 21 Received payment in full from The Going Concern. Jul 21 Cash Dr 2703 Sales Disc Dr 27 Acct Rxable-Going Cr 2730 (Rxd 2730*99% = $2,703 as 1/10 , N/30) 22 Sold suitcases on account to Desmond's for $3,006. The cost of suitcases sold was $1,804. Jul 22 Acct Rxable-Desmomd Dr 3006 Sales Revenue Cr 3006 Jul 22 Cost of goods sold Dr 1804 Merchandise inventory Cr 1804 (Sold merchandise on credit to Desmod, recorded COGS also, Term 1/10, n/30) 30 Paid Hume Manufacturers in full. Jul 30 Acct Payable -Hume Dr $1734 Cash Cr $1734 (PaidHumee 1734-343 = $1,391. No disc as purch dt Jul 18. SO paymentwas to be by Jul 28 for 1% disc) 31 Granted Desmond's $241 credit for suitcases returned costing $145. Jul 31 Sales Revenue Cr 241 Acct Rxable Dr 241 Jul 31 Merchandise inventory Dr 145 Cost of goods sold Cr 145 (Accepted for full credit a return from Desmonds and returned merchandise to Inventory)
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