Journal for Merchandise I System Webster Company was established on July 1. Its

Question

Journal for Merchandise I System Webster Company was established on July 1. Its sales terms arc 2/10. n/30. Credit terms for its purchases vary with the supplier. Selected transactions for the first month of operations arc given below. Unless noted, all transactions are on account and involve merchandise held for resale. Webster Company uses the perpetual inventory system. Paid freight on shipment to Ward. Inc.. S90. (debit Delivery Expense) Returned $500 worth of the goods purchased July I from Dawson. Inc.. because some goods were damaged. Dawson approved the return. Received returned goods from Ward, Inc.. worth $200 ($150 cost). Paid Dawson, Inc.. the amount due. Purchased goods from Dorn Company with a list price of $2,600. Terms 2/10. n/30. Paid freight on shipment from Dorn Company. $150. Received the amount due from Ward. Inc. Sold merchandise to Colby Corporation. $3,200 ($2,400 cost). Mailed a check to Penn Company for the amount due on its July 2 invoice Received an allowance of $200 from Dorn Company for defective merchandise purchased on July 10. Paid Dorn Company the amount due. Received the amount due from Colby Corporation.

Explanation / Answer

Journal Entries Date Account titles Debit Credit 1-Jul Inventory 2,500 to Accounts payable 2,500 Dawson 2-Jul Inventory 4,500 to Accounts payable 4,500 Penn 3-Jul inventory 300 To Cash 300 5-Jul account receivable 1,400 to sales 1,400 Delivery expense 90 to Cash 90 Cost of goods sold 1,100 to inventory 1,100 8-Jul accounts payable-Daw 500 To Inventory 500 9-Jul sales return 200 to Account receivable 200 inventory 150 to cost of goods sold 150 10-Jul accounts payable-daw 2,000 to inventory(2000@1%) 20 to cash 1,980 10-Jul inventory 2,600 to Accounts payable 2,600 Dorn 11-Jul inventory 150 to Cash 150 15-Jul Cash 1,176 Sales discount 24 to account receivable 1,200 15-Jul Account receivable 3,200 To sales 3,200 cost of goods sold 2,400 to inventory 2,400 16-Jul accounts payable 4,500 to inventory 90 to cash 4,410 18-Jul accounts payable 200 to inventory 200 19-Jul accounts payable 2,400 To inventory 48 to cash 2,352 25-Jul Cash 3,136 Sales discount 64 to account receivable 3,200

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