Problem 5-2A Powell Warehouse distributes hardback books to retail stores and ex

Question

Problem 5-2A Powell Warehouse distributes hardback books to retail stores and extends credit terms of 4/10, n/30 to all of its customers. During the month of June, the following merchandising transactions occurred. Purchased books on account for $1,940 (including freight) from Catlin Publishers, terms 4/10, n/30 sold books on account to Garfunkel Bookstore for $1,450. The cost of the merchandise sold was $800. Received $40 credit for books returned to Catlin Publishers. June 1 3 6 9 Paid Catlin Publishers in full. 15 Received payment in full from Garfunkel Bookstore 17 Sold books on account to Bell Tower for $1,450. The cost of the merchandise sold was $950 20 Purchased books on account for $800 from Priceless Book Publishers, terms 2/15, n/30 24 Received payment in full from Bell Tower 26 Paid Priceless Book Publishers in full. 28 Sold books on account to General Bookstore for $1,600. The cost of the merchandise sold was $890. 30 Granted General Bookstore $100 credit for books returned costing $90 ournalize the transactions for the month of June for Powell Warehouse, using a perpetual inventory system. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem. Round answers to 0 decimal places e.g. 15,222.) Date Account Titles and Explanation Debit Credit To record credit sale) To record cost of goods sold)

Explanation / Answer

Solution: Following is the required journal entries:

Date Particulars Debit($) Credit($) June 1 Merchandise Inventory 1,940 Accounts payable 1,940 June 3 Accounts Receivable 1,450 Sales 1,450 Cost of goods sold 800 Merchandise inventory 800 June 6 Accounts Payable 40 Merchandise inventory 40 June 9 Accounts Payable 1,900 Cash 1,824 Merchandise inventory(1900*4%) 76 June 15 Cash 1,450 Accounts receivable 1,450 June 17 Accounts Receivable 1,450 Sales 1,450 Cost of goods sold 950 Merchandise inventory 950 June 20 Merchandise Inventory 800 Accounts payable 800 June 24 Cash 1,392 Sales discount(1450*4%) 58 Accounts receivable 1,450 June 26 Accounts Payable 800 Cash 784 Merchandise inventory(800*2%) 16 June 28 Accounts Receivable 1,600 Sales 1,600 Cost of goods sold 890 Merchandise inventory 890 June 30 Sales return and allowances 100 Accounts receivable 100 Merchandise inventory 90 Cost of goods sold 90

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