the month of May 2013: John’s returned some of the merchandise purchased in (1).
ID: 2464626 • Letter: T
Question
the month of May 2013:
John’s returned some of the merchandise purchased in (1). The cost of the merchandise was $1,300 and John’s account was credited by the supplier.
Prepare the necessary journal entries to record these transactions. (If no entry is required for a particular transaction, select "No journal entry required" in the first account field.)
1. John’s purchased merchandise on account for $6,400. Freight charges of $1,000 were paid in cash. 2.John’s returned some of the merchandise purchased in (1). The cost of the merchandise was $1,300 and John’s account was credited by the supplier.
3. Merchandise costing $3,500 was sold for $6,600 in cash.Explanation / Answer
1. a. Purchases A/c Dr $6400
To Creditors $6400
(Being merchandise purchased on credit)
b. Freight A/c Dr $1000
To Cash A/c $1000
(Being freight paid in cash)
2. Creditors Dr $1300
To Purchase Returns $1300
(Being merchandise returned)
3. Cash Dr $6600
To Sales $6600
(Being merchandise sold for cash)
#Goods costing $3500 sold for $6600 therefore profit is $3100. However, entry for this profit shall be made at year end on preparation of final accounts, hence no entry is required right now.
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