4. Bames Utility Company uses the perpetual inventory system and had the followi

Question

4. Bames Utility Company uses the perpetual inventory system and had the following sales transactions during the month of July July 12 July 15 July 23 Sold merchandise to ABC Corp on credit for $4,800, terms 1/15, n/60. The items sold had a cost of $2,500 ABC Corp returned merchandise that had a selling price of $200. The cost of the merchandise returned was $110 ABC Corp paid for the merchandise sold on July 12 less the return, taking any appropriate discount eaned Prepare the journal entries that Barnes Utility Co. must make to record these transactions. (6 points) Date Account Name Debit Credit

Explanation / Answer

Journal Entries Sr. No. Date Account Title and explanation Debit Credit 1 July , 12 Account Receivable $4,800       To ABC Corp. $4,800 Cost of Sales $2,500 2 July , 12       To inventory $2,500 3 July ,15 Abc Corp. $200      To Account Receivable $200 Inventory $110 4 July ,15    To Cost of Goods Sold $110 5 July ,23 Abc Corp $4,600.00      To Cash ($ 4,600 X 99%) $4,554.00       To Discount on Sales ( $ 4,600 X 1%) $46.00

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