Chapter 4 Accounting for Merchandising Operations 9 The company received $2.668

Question

Chapter 4 Accounting for Merchandising Operations 9 The company received $2.668 cash from Gomez Co, as full payment on its acco 11 The company completed a five-day project for Alex's Engineering Co. and bil uter Services which is the total price of $7,000 less the advance payment of $1,500. 0 The company sold merchandise with a retail value of $5,200 and a cost of $3,560 13 invoice dated January 13, 15 The company paid s600 cash for freight charges on the merchandis sol January 7 The company received $4,000 cash from Th Delta Co. for computer services provided. unt, 16 disc 17 e company paid Kansas Corp. for the invoice dated January 7, net of the 20 Liu Corp returned $500 oi defective merchandise from its invoice dated January a 22 The company received the balance due from Liu Corp., net of both the discount and the 24 The company returned defective merchandise to Kansas Corp. and accepted a credit 13. The Sales ec-Liu of turned merchandise, which had a $320 cost, is discarded. (The policy of Business Solum to leave the cost of defective products in Cost of Goods Sold.) nd for the returned merchandise. future purchases. The defective merchandise invoice cost, net of the discount, was $496 26 The company purchased $9,000 of merchandise from Kansas Corp. with terms of 1/10.ap FOB destination, invoice dated January 26. 26 The company sold merchandise with a $4,640 cost for $5,800 on credit to KC, Inc, inv dated January 26

Explanation / Answer

On January 13th there are basically two transactions involved. One is recording sale of goods and other is recording cost of goods sold.

Recording of sale will increase revenue of the company with the sale amount and at the same time accounts receivable will increase. Name of the buyer is given, so it is assumed that sale is on credit instead of cash.

Recoding of Cost of goods sold will reduce the inventory sold and record the cost of goods sold.

Journal entries are as follows:-

Date

General Journal

Debit

Credit

13-Jan

Accounts Receivable

$ 5,200.00

             Sales revenue

$ 5,200.00

(Goods sold)

13-Jan

Cost of Goods sold

$ 3,560.00

             Merchandise Inventory

$ 3,560.00

(Cost of goods sold recorded)

Feel free to reach out In case of any query in the comment section.

Date

General Journal

Debit

Credit

13-Jan

Accounts Receivable

$ 5,200.00

             Sales revenue

$ 5,200.00

(Goods sold)

13-Jan

Cost of Goods sold

$ 3,560.00

             Merchandise Inventory

$ 3,560.00

(Cost of goods sold recorded)

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