Sales-Related and Purchase-Related Transactions for Seller and Buyer Using Perpe

Question

Sales-Related and Purchase-Related Transactions for Seller and Buyer Using Perpetual Inventory System

The following selected transactions were completed during April between Swan Company and Bird Company:

Required:

1. Journalize the April transactions for Bird Company (the buyer).

2. Journalize the April transactions for Swan Company (the seller).

Apr.2. Swan Company sold merchandise on account to Bird Company, $18,600, terms FOB shipping point, 1/10, n/30. Swan Company paid freight of $265, which was added to the invoice. The cost of the merchandise sold was $11,700. 8. Swan Company sold merchandise on account to Bird Company, $31,000, terms FOB destination, 2/15, n/30. The cost of the merchandise sold was $18,600. 8. Swan Company paid freight of $460 for delivery of merchandise sold to Bird Company on April 8. 12. Bird Company paid Swan Company for purchase of April 2. 18. Swan Company paid Bird Company a refund of $2,000 for defective merchandise in the April 2 purchase. Bird Company agreed to keep the merchandise. 23. Bird Company paid Swan Company for purchase of April 8. 24. Swan Company sold merchandise on account to Bird Company, $14,200, terms FOB shipping point, n/45. The cost of the merchandise sold was $8,500. 26. Bird Company paid freight of $250 on April 24 purchase from Swan Company. 30. Swan Company granted a customer allowance (credit memo) to Bird Company for $11,300 for merchandise that was returned from the August 24 purchase. The cost of the merchandise returned was $6,500.

Explanation / Answer

1) JOURNAL ENTRIES FOR BIRD COMPANY--BUYER Date Account Debit Credit Apr. 2 Merchandise inventory 18865 Accounts payable-Swan Company 18865 Date Account Debit Credit Apr. 8 Merchandise inventory 31000 Accounts payable-Swan Company 31000 Date Account Debit Credit Apr. 12-payment Accounts payable-Swan Company 18865 Merchandise inventory (18865*1%) 189 Cash 18676 Date Account Debit Credit Apr. 18 Cash 2000 Inventory 2000 Date Account Debit Credit Apr. 23 Accounts payable-Swan Company 31000 Merchandise inventory (31000*2%) 620 Cash 30380 Date Account Debit Credit Apr. 24 Merchandise inventory 14200 Accounts payable-Swan Company 14200 Date Account Debit Credit Apr. 26 Merchandise inventory 250 Cash 250 Date Account Debit Credit Apr. 30 Accounts payable-Swan Company 11300 Merchandise inventory 11300 JOURNAL ENTRIES FOR SWAN COMPANY--SELLER Date Account Debit Credit Apr. 2-sale Accounts receivable-Bird Company 18600 Sales 18600 Date Account Debit Credit Apr. 2-freight Accounts receivable-Bird company 265 Cash 265 Date Account Debit Credit Apr. 2-cost Cost of goods sold 11700 Merchandise inventory 11700 Date Account Debit Credit Apr. 8-sale Accounts Receivable-Bird Company 31000 Sales 31000 Date Account Debit Credit Apr. 8-cost Cost of goods sold 18600 Merchandise inventory 18600 Date Account Debit Credit Apr. 8-freight Carriage outwards 460 Cash 460 Date Account Debit Credit Apr. 12-collection Cash 18676 Cash discount allowed 189 Accounts receivable-Bird Company 18865 Date Account Debit Credit Apr. 18 Sales returns and allowances 2000 Cash 2000 Date Account Debit Credit Apr. 23 Cash 30380 Cash discount allowed 620 Accounts receivable 31000 Date Account Debit Credit Apr. 24-sale Accounts receivable-Bird Company 14200 Sales 14200 Date Account Debit Credit Apr. 24-cost Cost of goods sold 8500 Merchandise inventory 8500 Date Account Debit Credit Apr. 30 Sales returns and allowances 11300 Accounts receivable-Bird Company 11300 Date Account Debit Credit Apr. 30 Merchandise inventory 6500 Cost of goods sold 6500

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