Powell’s Book Warehouse distributes hardcover books to retail stores and extends

Question

Powell’s Book Warehouse distributes hardcover books to retail stores and extends credit terms of 2/10, n/30 to all of its customers. At the end of May, Powell’s inventory consisted of books purchased for $2,000. During June, the following merchandising transactions occurred.

Powell’s Book Warehouse’s chart of accounts includes the following: No. 101 Cash, No. 112 Accounts Receivable, No. 120 Inventory, No. 201 Accounts Payable, No. 401 Sales Revenue, No. 412 Sales Returns and Allowances, No. 414 Sales Discounts, and No. 505 Cost of Goods Sold.

Journalize the transactions for the month of June for Powell’s Book Warehouse using a perpetual inventory system. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Thank you in advance

June 1 Purchased books on account for $1,700 from Kline Publishers, FOB destination, terms 2/10, n/30. The appropriate party also made a cash payment of $50 for the freight on this date. 3 Sold books on account to Reading Rainbow for $2,700. The cost of the books sold was $1,620. 6 Received $100 credit for books returned to Kline Publishers. 9 Paid Kline Publishers in full, less discount. 15 Received payment in full from Reading Rainbow. 17 Sold books on account to Blanco Books for $2,300. The cost of the books sold was $1,380. 20 Purchased books on account for $1,600 from Dietz Publishers, FOB destination, terms 1/15, n/30. The appropriate party also made a cash payment of $60 for the freight on this date. 24 Received payment in full from Blanco Books. 26 Paid Dietz Publishers in full, less discount. 28 Sold books on account to Reddy Bookstore for $1,100. The cost of the books sold was $660. 30 Granted Reddy Bookstore $170 credit for books returned costing $102.

Explanation / Answer

Date Account Title and Explanation Debit Credit 1-Jun Inventory $1,700 Accounts Payable $1,700 3-Jun Accounts Receivable $2,700 Sales Revenue $2,700 (To record credit sale) 3-Jun Cost of Goods Sold $1,620 Inventory $1,620 (To record cost of merchandise sold) 6-Jun Accounts Payable $100 Inventory $100 9-Jun Accounts Payable $1,700 Inventory $34 Cash $1,666 15-Jun Cash $2,700 Accounts Receivable $2,700 17-Jun Accounts Receivable $2,300 Sales Revenue $2,300 (To record credit sale) 17-Jun Cost of Goods Sold $1,380 Inventory $1,380 (To record cost of merchandise sold) 20-Jun Inventory $1,600 Accounts Payable $1,600 24-Jun Cash $2,254 Sale Discounts $46 Accounts Receivable $2,300 26-Jun Accounts Payable $1,600 Inventory $16 Cash $1,584 28-Jun Accounts Receivable $1,100 Sales Revenue $1,100 (To record credit sale) 28-Jun Cost of Goods Sold $660 Inventory $660 (To record cost of merchandise sold) 30-Jun Sales Return and Allowance $170 Accounts Receivable $170 (To record merchandise returned) 30-Jun Inventory $102 Cost of Goods Sold $102 (To record cost of merchandise returned)

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