Principles of Accounting 1 Chapter 5 Homework Problem 1 Record the journal entri

Question

Principles of Accounting 1
Chapter 5 Homework

Problem 1
Record the journal entries for the following transactions that occurred during the month of December for Magic Merchandisers, Inc using a perpetual inventory system.
Dec. 1st: Purchased merchandise on account from Starlight Inc., list price $25,000, trade discount 25%, terms FOB destination 2/10, n/30.
Dec. 3rd: Purchased merchandise on account from Oriental Industries $12,000 terms 1/10, n/30, FOB shipping point. $1,600 in freight cost was added to the invoice.
Dec. 5th: Returned $1,000 ($4,000 list price less trade discount of 25%) of merchandise to Starlight Inc.
Dec. 11th: Paid Starlight Inc. for Dec. 1st purchase less return of Dec. 5th and discount.
Dec. 12th: Sold merchandise inventory on account to Magic R Us for $16,000 terms 2/10, n/30, FOB destination. The cost of merchandise sold was $7,000.
Dec. 13th: Paid Oriental Industries for Dec. 3rd purchase, less discount.
Dec. 15th: Sold merchandise inventory for $8,000. Customer used a credit card to purchase the inventory. The cost of merchandise sold was $3,500.
Dec. 17th: Magic R Us returned $4,000 of inventory. Cost of the merchandise returned equaled $1,200.
Dec. 21st: Received cash on account from Dec. 12th sale to Magic R Us, less return on Dec. 17th, less discount.
Dec. 24th: Sold merchandise inventory on account to Magik, list price $6,000, trade discount 20%, terms FOB destination 2/10, n/30. The cost of merchandise sold was $1,800.
Dec. 29th: Paid credit card fees to National Processing Center $360.

Explanation / Answer

Journal Entries:

date Accounts Titles and explanation Debit $ Credit $ Dec 1 merchandise inventory 18750 Accounts payable 18750 Dec 3 merchandise inventory 12000 Freight Charges 1600 Accounts payable 13600 Dec 5 Accounts payable 3000 Merchandise return 3000 Dec 11 Accounts payable 18750 discount on cash payment 375 Cash 18375 Dec 12 Accounts Receivables 16000 Sales 16000 Cost of goods sold 7000 merchandise inventory 7000 Dec 13 Accounts Payable 12000 discount on cash payment 120 Cash 118800 Dect 15 Accounts Receivables 8000 Sales 8000 Cost of goods sold 3500 Merchandise Inventory 3500 Dec 17 Sales return 4000 Accounts Receivables 4000 Merchandise Inventory 1200 Cost of goods sold 1200 Dec 21 Cash 11760 Discount on Cash receipt 240 Accounts Receivable 12000 Dec 24 Accounts Receivable 4800 Sales 4800 Cost of goods sold 1800 Merchandise Inventory 1800 Dec 29 National Processing Center 360 Cash 360

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