Aug. 1 Purchased merchandise from Abilene Company for $5,000 under credit terms

Question

Aug. 1 Purchased merchandise from Abilene Company for $5,000 under credit terms of 1/10, n/30, FOB destination, invoice dated August 1. 4 At Abilene's request, Stone paid $210 cash for freight charges on the August 1 purchase, reducing the amount owed to Abilene. 5 Sold merchandise to Lux Corp. for $3,500 under credit terms of 5/10, n/60, FOB destination, invoice dated August 5. The merchandise had cost $2,450. 8 Purchased merchandise from Welch Corporation for $4,300 under credit terms of 1/10, n/45, FOB shipping point, invoice dated August 8. The invoice showed that at Stone’s request, Welch paid the $240 shipping charges and added that amount to the bill. (Hint: Discounts are not applied to freight and shipping charges.) 9 Paid $150 cash for shipping charges related to the August 5 sale to Lux Corp. 10 Lux returned merchandise from the August 5 sale that had cost Stone $490 and been sold for $700. The merchandise was restored to inventory. 12 After negotiations with Welch Corporation concerning problems with the merchandise purchased on August 8, Stone received a credit memorandum from Welch granting a price reduction of $645. 15 Received balance due from Lux Corp. for the August 5 sale less the return on August 10. 18 Paid the amount due Welch Corporation for the August 8 purchase less the price reduction granted. 19 Sold merchandise to Trax Co. for $3,000 under credit terms of 1/10, n/30, FOB shipping point, invoice dated August 19. The merchandise had cost $2,100. 22 Trax requested a price reduction on the August 19 sale because the merchandise did not meet specifications. Stone sent Trax a $500 credit memorandum to resolve the issue. 29 Received Trax's cash payment for the amount due from the August 19 sale. 30 Paid Abilene Company the amount due from the August 1 purchase. Prepare the necessary journal entries for Stone Company, which is a merchandising company that uses the perpetual system. (Hint: It will help to identify each receivable and payable; for example, record the purchase on August 1 in Accounts Payable—Abilene.) (Round your answers to 2 decimal places.)

Explanation / Answer

1-Aug Merchandise Inventory Dr 5000            Accounts payable Cr 5000 4-Aug Accounts payable Dr 210               Cash Cr 210 5-Aug Accounts receivable Dr 3500             Sales Cr 3500 5-Aug Cost of goods sold Dr 2450             Merchandise Inventory Cr 2450 8-Aug Merchandise Inventory Dr 4300            Accounts payable Cr 4300 8-Aug Freight charges Dr 240          Accounts payable Cr 240 9-Aug Freight charges Dr 150            Cash Cr 150 10-Aug Sales return Dr 700             Accounts receivable Cr 700 10-Aug Merchandise Inventory Dr 490           Cost of goods sold Cr 490 12-Aug Accounts payable Dr 645              Discount received Cr 645 15-Aug Cash Dr 2520 Discount Dr 280           Accounts receivable Cr 2800 ( 3500 - 700) 18-Aug Accounts payable Dr 3895         Discount received 36.55 (4300-645)*1%          Cash Cr 3858.45 (4300 + 240 - 645) 19-Aug Accounts receivable Dr 3000             Sales Cr 3000 19-Aug Cost of goods sold Dr 2100             Merchandise Inventory Cr 2100 22-Aug Discount Dr 500            Accounts receivable Cr 500 29-Aug Cash Dr 2475 Discount Dr 25           Accounts receivable Cr 2500 30-Aug Accounts payable Dr 4790              Cash Cr 4790

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.