The following information pertains to Wicked Kitchen Supplies for the month of M

Question

The following information pertains to Wicked Kitchen Supplies for the month of March 2016 Mar1 Purchased merchandise for $16,000 on credit from Hotel Supplies terms 1/20, n/30 Mar Wicked paid $35 cash to have the merchandise from Hotel Supplies delivered Mar 5 Sold merchandise on credit to Four Boars Restaraunt for $8,000, terms 2/10, n/30; cost of goods $5,500 Paid $25 cash to ship the goods to Four Boars Restaurant. Four Boars returned $1,900 (sales price) of merchandise purchased March 5, cost $800. There was nothing wrong with the merchandise and it will be resold Returned $500 of the merchandise purchased March 1 as it was the wrong design Received payment from Four Boars Restaraunt for March 5 sale Paid for merchandise purchased from Hotel Supplies on March 1. Sold merchandise on credit to Black Kettle Kitchen for $4,000, terms 2/10, n/30; cost of goods was $2,000 Mar5 Mar 8 Mar 12 Mar 15 Mar 15 Mar 23 Mar 26 Black Kettle Kitchen returned $200 (sales price) of merchandise purchased Mar 31 Journalize the above transactions assuming that Wicked Kitchen Supplies uses a perpetual March 23; cost of goods was $50. The merchandise was returned to inventory Received payment from Black Kettle Kitchen for the March 23 sale. inventory system. Round all calculations to the nearest whole dollar

Explanation / Answer

Journal Entries are as under:

Date

Particulars

Debit

Credit

Mar 1

Goods Purchased

$16,000

Hotel Supplies

$16,000

(Goods Purchased from Hotel Supplies on 1/20, n/30 terms)

Mar 1

Freight Inward

$35

Cash

$35

(Paid cash to have goods purchased from Hotel Supplies Delivered)

Mar 5

Four Bars Restaurant

$8,000

Sales

$8,000

(Merchandise sold on credit terms 2/10, n/30)

Mar 5

Cost of goods Sold

$5,500

Inventory

$5,500

(Being Cost of goods sold is $5,500)

Mar 5

Freight Outward

$25

Cash

$25

(Cash paid for delivering merchandise to Four Bars Restaurant)

Mar 8

Sales Return

$1,900

Four Bars Restaurant

$1,900

(Goods returned by Four Bars Restaurant)

Mar 8

Inventory

$800

Cost of Goods Sold

$800

(Inventory reinstated at cost price on return of goods)

Mar 12

Hotel Supplies

$500

Purchase Return

$500

(Goods returned to hotel supplies for wrong design)

Mar 15

Cash ( ($8000-$1900) – 2%)

$5,978

Sales Discount ($6,100*2%)

$122

Four bars Restaurant

$6,100

(Payment received from four bars restaurant after allowing 2% discount as payment made within 10 days)

Mar 15

Hotel Supplies

$15,500

Cash ($15,500 – 1%)

$13,950

Purchase Discount($15,500 * 1%)

$1,550

(Payment made to hotel supplies and discount of 1% received as payment made within 20 days)

Mar 23

Black Kettle Kitchen

$4,000

Sales

$4,000

(Goods sold on credit terms 2/10, n/30)

Mar 23

Cost of goods Sold

$2,000

Inventory

$2,000

(Cost of goods sold $2,000)

Mar 26

Sales return

$200

Black Kettle Kitchen

$200

(Goods Returned worth $200)

Mar 26

Inventory

$50

Cost of Goods Sold

$50

(Inventory reinstated at cost price on return of goods)

Mar 31

Cash ( (4000-200) – 2%)

$3,724

Sales discount (3,800 * 2%)

$76

Black Kettle Kitchen

$3,800

((Payment received from Black Kettle Kitchen after allowing 2% discount as payment made within 10 days)

Terms 1/20, n/30 means 1%discount will allowed if payment made within 20 days, otherwise normal credit period for full payment is 30 days after which interest charges will apply.

Date

Particulars

Debit

Credit

Mar 1

Goods Purchased

$16,000

Hotel Supplies

$16,000

(Goods Purchased from Hotel Supplies on 1/20, n/30 terms)

Mar 1

Freight Inward

$35

Cash

$35

(Paid cash to have goods purchased from Hotel Supplies Delivered)

Mar 5

Four Bars Restaurant

$8,000

Sales

$8,000

(Merchandise sold on credit terms 2/10, n/30)

Mar 5

Cost of goods Sold

$5,500

Inventory

$5,500

(Being Cost of goods sold is $5,500)

Mar 5

Freight Outward

$25

Cash

$25

(Cash paid for delivering merchandise to Four Bars Restaurant)

Mar 8

Sales Return

$1,900

Four Bars Restaurant

$1,900

(Goods returned by Four Bars Restaurant)

Mar 8

Inventory

$800

Cost of Goods Sold

$800

(Inventory reinstated at cost price on return of goods)

Mar 12

Hotel Supplies

$500

Purchase Return

$500

(Goods returned to hotel supplies for wrong design)

Mar 15

Cash ( ($8000-$1900) – 2%)

$5,978

Sales Discount ($6,100*2%)

$122

Four bars Restaurant

$6,100

(Payment received from four bars restaurant after allowing 2% discount as payment made within 10 days)

Mar 15

Hotel Supplies

$15,500

Cash ($15,500 – 1%)

$13,950

Purchase Discount($15,500 * 1%)

$1,550

(Payment made to hotel supplies and discount of 1% received as payment made within 20 days)

Mar 23

Black Kettle Kitchen

$4,000

Sales

$4,000

(Goods sold on credit terms 2/10, n/30)

Mar 23

Cost of goods Sold

$2,000

Inventory

$2,000

(Cost of goods sold $2,000)

Mar 26

Sales return

$200

Black Kettle Kitchen

$200

(Goods Returned worth $200)

Mar 26

Inventory

$50

Cost of Goods Sold

$50

(Inventory reinstated at cost price on return of goods)

Mar 31

Cash ( (4000-200) – 2%)

$3,724

Sales discount (3,800 * 2%)

$76

Black Kettle Kitchen

$3,800

((Payment received from Black Kettle Kitchen after allowing 2% discount as payment made within 10 days)

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