Showcase Co., a furniture wholesaler, sells merchandise to Balboa Co. on account
ID: 2559221 • Letter: S
Question
Showcase Co., a furniture wholesaler, sells merchandise to Balboa Co. on account, $252,510, terms n/30. The cost of the goods sold is $141,390. Showcase issues a credit memo for $30,380 for merchandise returned prior to Balboa paying the original invoice. The cost of the merchandise returned is $18,740.
Journalize Showcase Co.’s entries for (a) the sale, including the cost of the goods sold, (b) the credit memo, including the cost of the returned merchandise, and (c) the receipt of the check for the amount due from Balboa Co. Refer to the Chart of Accounts for exact wording of account titles.
CHART OF ACCOUNTSShowcase Co.General Ledger
ASSETS
110
Cash
121
Accounts Receivable-Balboa Co.
125
Notes Receivable
130
Inventory
131
Estimated Returns Inventory
140
Office Supplies
141
Store Supplies
142
Prepaid Insurance
180
Land
192
Store Equipment
193
Accumulated Depreciation-Store Equipment
194
Office Equipment
195
Accumulated Depreciation-Office Equipment
LIABILITIES
210
Accounts Payable
218
Sales Tax Payable
219
Customer Refunds Payable
220
Unearned Rent
221
Notes Payable
EQUITY
310
Common Stock
311
Retained Earnings
312
Dividends
313
Income Summary
REVENUE
410
Sales
610
Rent Revenue
EXPENSES
501
Cost of Goods Sold
521
Delivery Expense
522
Advertising Expense
524
Depreciation Expense-Store Equipment
525
Depreciation Expense-Office Equipment
531
Rent Expense
533
Insurance Expense
534
Store Supplies Expense
535
Office Supplies Expense
536
Credit Card Expense
539
Miscellaneous Expense
710
Interest Expense
Journalize Showcase Co.’s entries for (a) the sale, including the cost of the goods sold, (b) the credit memo, including the cost of the returned merchandise, and (c) the receipt of the check for the amount due from Balboa Company. For grading purposes, use December 31 as the date for all transactions. Refer to the Chart of Accounts for exact wording of account titles.
PAGE 10
JOURNAL
ACCOUNTING EQUATION
DATE
DESCRIPTION
POST. REF.
DEBIT
CREDIT
ASSETS
LIABILITIES
EQUITY
1
2
3
4
5
6
7
8
9
10
ASSETS
110
Cash
121
Accounts Receivable-Balboa Co.
125
Notes Receivable
130
Inventory
131
Estimated Returns Inventory
140
Office Supplies
141
Store Supplies
142
Prepaid Insurance
180
Land
192
Store Equipment
193
Accumulated Depreciation-Store Equipment
194
Office Equipment
195
Accumulated Depreciation-Office Equipment
LIABILITIES
210
Accounts Payable
218
Sales Tax Payable
219
Customer Refunds Payable
220
Unearned Rent
221
Notes Payable
Explanation / Answer
DATE DESCRIPTION POST. REF. DEBIT CREDIT ASSETS LIABILITIES EQUITY 1 Accounts Receivable-Balboa Co. $252,510.00 $252,510.00 Sales $252,510.00 $252,510.00 2 Cost of goods sold $141,390.00 -$141,390.00 Inventory $141,390.00 -$141,390.00 3 Sales $30,380.00 -$30,380.00 Accounts Receivable-Balboa Co. $30,380.00 -$30,380.00 4 Inventory $18,740.00 $18,740.00 Cost of goods sold $18,740.00 $18,740.00 5 Cash $222,130.00 $222,130.00 Accounts Receivable-Balboa Co. $222,130.00 -$222,130.00
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